Kalousek implicated in Czech EU Presidency budget controversy

In the middle of the Czech Presidency of the EU in 2009, then minister for EU affairs Alexandra Vondra asked Finance Minister Miroslav Kalousek for an extra Kč 371 million to finance events within the framework of the presidency. Kalousek obliged without verifying how the money would be spent. Hitherto, Kalousek has been among the most vociferous in calling for Vondra to be brought to account for spending on the EU presidency in connection with the firm ProMoPro.

ProMoPro received over Kč 500 mln for providing AV and interpreting services in a contract a PwC audit found to be problematic. From January through December 2009, ProMoPro received over Kč 500 million of budget funds from the Government Office for providing audiovisual and interpreting services for conferences and events organized by the Czech Republic during its EU presidency in the first half that year.

The large outlay caught the attention of the interim government headed by Jan Fischer (non-affiliated), who commissioned consultancy PricewaterhouseCoopers (PwC) to conduct an audit of the previous government’s spending on the EU presidency at a cost of Kč 2 million.

Damning audit

Reporters from Czech public television’s (ČT) weekly program 168 Hours applied freedom of information laws to gain access to the PwC audit. “The shortcomings identified [in the contract] considerably raise the risk of ineffective spending of funds and furthermore complicate verification of fulfillment of contractual obligations,” the auditors state, referring to the Government Office’s contract with ProMoPro.

In January 2011, the Finance Ministry’s anti-financial crime and money laundering watchdog, the FAÚ, announced that it had received a report from a financial institution about suspicious flows of money to and from the accounts of the firm ProMoPro and its owners.

At the time, Kalousek (TOP 09) claimed that only after several weeks of investigation did the FAÚ ascertain that the funds transferred by ProMoPro had come from the Government Office and Czech state coffers. He has repeatedly denied that he initiated the investigation in order to discredit Vondra (Civic Democrats, ODS) who is now Minister of Defense.

A number of commentators claimed Kalousek wanted to see Vondra removed from the Defense Ministry in order to ensure associates from the Christian Democrats (KDÚ–ČSL) — of which Kalousek was a member prior to joining the center-right TOP 09 — maintained key posts in the ministry.

Still no charges

Upon completing their investigation, the FAÚ announced that the state had lost as much as Kč 240 million as a result of a “disadvantageous contract” with ProMoPro and handed the case to police and the public prosecution service. The case is still under The proposal to raise the budget for the EU presidency was put forward by  both Vondra and Kalousek.investigation but nobody has been charged.

The revelation that Kalousek was instrumental in securing an extra Kč 371 million for the EU presidency budget certainly won’t bode well for the minister, who as chief architect of unpopular austerity measures has repeatedly said ordinary citizens must live within their means, and who several months ago said the majority of Czechs are “financially illiterate.”

“Responsibility for spending those funds isn’t with the government that allocated the money but with the custodian of the department who has jurisdiction over it,” Kalousek told ČT’s 168 Hours when asked about his role in releasing the extra government funds, almost all of which went to the firm ProMoPro.

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ProMoPro owner Jaroslav Veselý denies having known about the company Deeside, which indirectly received dozens of millions from his company, yet he built a golf club with Deeside’s representative

Prime Minister Petr Nečas (ODS) said in an email in response to the revelation about Kalousek’s role in the allocation of the funds that the proposal to increase the Government Office’s budget for the preparation and implementation of the EU presidency was put forward Kalousek and Vondra. “For the members of the government who didn’t directly take part in the organization of the Czech [EU] presidency, their standpoint was decisive,” Nečas said.

Money trail to Austria via UK

According to the FAÚ’s findings, over Kč 135 million of the money paid to ProMoPro ended on the Austrian account of the UK-registered company Deeside Service Solutions. A certain Libor Veverka had access to the account, which has since been blocked. ProMoPro’s owner and director, Jaroslav Veselý, confirmed he paid Kč 340 million to the Prague-registered company NWDC, which then transferred Kč 135 million to Deeside Services Solutions and the Prague-registered firm Kom-Forest CZ, which according to the commercial register is involved in the forestry sector.

When asked for what exactly he paid the company NWDC Kč 340 milion, Veselý responded “What my subcontractor did with the ‘Obviously, nonsensical invoices were paid for fictive work or work a thousand times overvalued.’money is his problem.” For his part, NWDC’s representative, Vlastimil Maxa, said he could not “summarize in a report or a couple of sentences,” what services Deeside Solutions Services and Kom-Forest CZ had provided for the money.

Veselý denied knowing about the existence of the companies Deeside Solutions Services and Kom-Forest CZ, yet admits to knowing Veverka. “We met each other a few times, then he disappeared, then two or three years ago we met again by chance and together we built a small indoor golf club,” Veselý told 168 Hours, adding that he had “no idea” Veverka had business dealings with NWDC.

Having examined the ProMoPro contract, auditor and accountancy expert Lubomír Harna said he had never seen such a vague contract. “I would understand if it had been drafted by the company offering the services — but not by the client,” Harna said, adding that he was “shocked” when he discovered it was prepared by the Government Office.

“Obviously, nonsensical invoices were paid for fictive work or work a thousand times overvalued,” lawyer Václav Láška, a former criminal investigator, told 168 Hours. He said the contract and sums paid amounts to theft on a grand scale.