Dirty rotten Bohemians

Recent acquittal in a high profile Czech case underscores a troubling trend with its roots in the chaotic privatization of state-run industries in the 1990s.

PRAGUE — Jana Nečasová may have directed military intelligence to spy on the Czech prime minister’s wife, but despite the resulting recordings being played in open court, she isn’t going to prison on charges of abuse of power.

Though she still faces charges of bribery and tax evasion, the May 29 acquittal of the woman who had been Prime Minister Petr Nečas’s chief of staff, his mistress and later his wife is the continuation of a troubling status quo. More than 25 years after the fall of communism, the rich, powerful and politically connected are rarely punished for wrongdoing. Since 1989, exactly one cabinet level official has done jail time.

“When you hear all the phone calls that clearly showed [Nečasová’s] role, of course it is a surprising result,” said David Ondráčka, the head of Transparency International’s Czech branch. “In such a politically charged case the public deserves an explanation. This will only fuel speculation.”

The verdict came despite recordings that had Nečasová (or Nagoyová as she was before she married the prime minister) calling Nečas’s then-wife “hysterical” and a “cow.” Nečas himself was berated by his then-girlfriend as a “primitive.” A subdued prime minister responded that he didn’t “have the power to fight, I am exhausted.”

Prosecutors have appealed the acquittal, which itself overturned an earlier 12-month suspended sentence handed out last year, but the inability to lock up well-connected Czechs is something of a pattern.

Until 2012, Czech MPs enjoyed legal immunity from prosecution not only while in office, but for life. Before that, a majority vote in parliament was required to waive that immunity and MPs were rarely willing to expose one of their own.

This culture of high-level corruption has its roots in the chaotic privatization of Czechoslovak state industries in the early 1990s.

So-called voucher privatization saw citizens issued coupons to buy stock in formerly state-owned companies. In practice, big investors gobbled up majority stakes, delisted the companies from the stock market and used that new economic power to curry political favor.

In other cases majority stakeholders sold off assets from publicly traded companies at discount prices to their own offshore subsidiaries. Financially illiterate minority shareholders were left holding worthless shares in the original, hollowed-out company. The process even gained its own Czech financial term — “tunelování” for the assets that were tunneled out of the companies.

The culture of corruption has continued and the country is now actually two spots lower on Transparency International’s Corruption Perception Index compared to when it joined the European Union in 2004.

Funding ban

EU funds are among the most common targets of dubious public-private partnerships.

Just this month, the European Commission lifted a two-year ban on the Czechs drawing money from the Operational Program for Enterprise and Innovation in the wake of a series of dubious public tenders.

Among Brussels’ biggest grievances was the country’s repeated inability to pass rules that guaranteed political independence in the civil service. The relevant law only passed in November 2014 and came into effect this year, making the country the last EU member state to implement such legislation.

Neighboring Slovakia had a similarly troubling start in capitalism.

After the split of Czechoslovakia in 1993, Vladimír Mečiar led Slovakia for six years, presiding over a culture of insider dealing and graft that continues today. A later reformist right-wing government brought in deep economic changes — Slovakia was even known as the “Tatra Tiger” — but did little to curb the influence of capital on politics and the courts.

The inventory of contemporary grievances in Slovakia is long.

Last year Pavol Paška, the parliamentary speaker, resigned over allegations he helped rig public contracts in the health care sector. He denies it and looks unlikely to face charges, but most anti-corruption groups believe the practice is widespread.

Slovakia’s political system was shaken in 2011, after transcripts of conversations collected by domestic intelligence services appeared to detail conversations between influential businesspeople and senior politicians in 2005-2006.

The recordings, called the “Gorilla file,” allude to conspiracies during privatization and the divvying up of commissions on public contracts (often financed by the EU). Many of those caught on tape remain active in the country’s politics and business. The country’s right-leaning parties were the most deeply implicated in the scandal, but Robert Fico, the current leftist prime minister, is also in the file.

The Gorilla file was also the subject of a bestselling book of investigative journalism and its implication is that the entire political class is engaged in the tawdry business of profiting from the state. EU funds are also a frequent target and last year the Commission temporarily suspended Slovakia’s ability to draw funding for nine of 11 operational programs over concerns of how the money was being handled.

Today, a full decade after some of the recordings were made, not only has no one been charged, but prosecutors are reluctant to even confirm if the transcripts are authentic. In May, special prosecutor Dušan Kováčik, who is now charged with investigating the case, twice refused to attend parliamentary committee hearings where he was meant to update MPs on the status of the investigation.

“Sadly, we do not perceive the public prosecutor’s office as independent from political power,” said Peter Horvath with Via Iuris, a Slovak NGO that pushes for reforms to the criminal justice system.

Turning a corner?

Still, there are signs in both countries that change may be coming.

New, more aggressive prosecutors have been appointed in the Czech Republic, and there is even a bill slowly making its way through parliament that would further bolster prosecutorial independence.

“Politicians are afraid of this, there is a lot of fear about what this might look like,” says one leading Czech legal thinker, reluctant to be quoted by name as he looks set to take a high level appointment in the near future. “When I was working I never saw primary corruption, where somebody was slipping an envelope. It’s a more secondary type of corruption, an exchange of services.”

In Slovakia, there is a shake-up in the justice system. Judges have a lot of power to police themselves, which is meant to protect judicial independence. But until late last year, the system was run by Štefan Harabin, a close ally of Fico, who was both a Supreme Court justice and leader of the council that oversees the judiciary.

He has been replaced on the judicial council by a reformist judge, Jana Bajánková, something Horvath said represents a “qualitative shift.”

Some cases involving powerful people are even starting to be prosecuted.

“In the 1990s you would never have gotten the Nečasová case to court,” says the Czech legal figure. “Now they at least do get into court.”

But convictions are another matter.

Benjamin Cunningham is a Prague-based writer and journalist. He covers Central Europe for The Economist, Time, the Christian Science Monitor and others. In 2014, he was a visiting fellow at the Institute for Human
Sciences (IWM) in Vienna.

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