Post and telecoms fueled Interior Ministry battle

When Prime Minister Petr Nečas called for Public Affairs (VV) leader Radek John to be ousted from the Interior Ministry, it was widely explained as a preventive step to block the influence of de facto VV leader Vít Bárta on the police and security services. But control of the police was only part of the battle, with one of the main issues at stake being the business dealings of the ministry itself.

An offer to carve up and transfer of some of those business interests to the Ministry of Regional Affairs (MMR), headed by VV’s Kamil Jankovský, was made during negotiations by political leaders as they attempted to solve the coalition crisis, according to one version of events given to Czech Position.

The transfer of assets would have covered Česká pošta and the public administration’s communication infrastructure (KIVS), with the remainder of the ministry going to the ODS. The final outcome of the Cabinet reshuffle came out differently.    

Even so, control of the Interior Ministry is not the prize it always at first seems in today’s Czech political climate. Firstly, when some political “godfather” or politician wants to keep out of jail, he heads to the state prosecutors and the more influential part of the criminal system — the Justice Ministry — rather than to the police and Interior Ministry. The Interior Ministry is still a political battlefield, with most voters believing — mistakenly — that control of the police is the main prize.

Clever politicians have also come to understand that with so few competent and courageous police officers around, getting to grips with and trying to transform the underperforming police force is a losing and likely thankless battle. In spite of this, the ministry is still a political battlefield, with most voters believing — mistakenly — that control of the police is the main prize.

In fact, one of the understated prizes is the communications network of the KIVS, which offers voice and data services for government agencies as result of centrally organized tenders. KIVS enters the fray against the large telecoms giants and consulting companies with the division boasting an annual turnover of around Kč 1.8 billion.

Česká pošta, one of the biggest businesses in the country in terms of staff, is another big prize at the Interior Ministry. It is a tradition in Czech politics that the arrival of a new government means a new boss at the postal service. At the moment, the director’s job at the post office is still going begging, following the dismissal of Marcela Hrdá, who was appointed by the Social Democrats’ (ČSSD) choice for interior minister, Martin Pecina, and lasted 14 months.

A new boss should have already been chosen in March, according to a coalition deal, but the coalition crisis stalled the appointment. Meanwhile, the strategic challenge of transforming the state giant to make it better prepared for stepped up competition is progressing poorly and with major delays.

One annual fight that highlights how important Česká pošta is from a business perspective is the battle over where it deposits billions of crowns. Every year, lobbyists for various financial groups take up arms in this fight. It’s said that this battle is decided at the secretariat of the party that controls the Interior Ministry at the time. It’s said that the battle over where funds are deposited is decided at the secretariat of the party that controls the Interior Ministry at the time.

The banks themselves did not look twice at the opportunity to get billions of crowns on their accounts for, say, half a percentage point increase in costs. They are only too happy to comply with the party’s demands, which usually were denominated in cash terms. Whether this situation changed when Radek John was in charge at the ministry is not clear.

The stakes at the post office are now higher, as the deadline for increased competition looms. Česká pošta should be transformed into a shareholder company this year — and within 18 months its monopoly over postal services will end. 

As well as the transformation, Česká pošta is currently preparing at least two acquisitions this year. It already announced the purchase of the Czech and Slovak operations of Netherlands-based express mail company TNT Post although the transaction has still to be finalized. The final contract has not even been seen by the post office’s supervisory board let alone by John.

If VV lost the Interior Ministry, a new incumbent just might check whether the acquisition of a loss-making competitor for several million euros  is really the right move.

With regard to telecommunications and IT services, Česká pošta is also spreading its wings. Czech Position has information that it is weighing up whether to buy ČD Telematika, which is 59 percent owned by Czech Railways (ČD). If VV loses control of both the transport and interior ministries, that deal could clearly go off the rails. As it is, the Telematika deal is still far from sealed.