Business: The Prague Post Online

'Clean Hands' groping for answers

By J.M. Giordano and Dennis Moran

Government should alter laws to deter future corruption, critics say

A new list of companies to be investigated as part of the government's "Clean Hands" campaign is being questioned by analysts, business people and the European Union who feel the more important effort will be the legal reforms necessary to prevent future corruption.

The Social Democratic (CSSD) government of Prime Minister Milos Zeman has used the term "Clean Hands" as a promise to investigate corruption and review questionable privatizations. The list of companies, presented to the Cabinet during the week of Nov. 913, is one of the few indications of concrete actions the government has taken under the Clean Hands rubric.

Jaroslav Basta, the government's minister without portfolio heading the ad hoc Clean Hands project, said the names of the more than 200 companies on the list will not be released. The list remains open-ended, he said.

"We want to keep it open to a company we feel needs to be looked into," Basta said.

However, Basta admitted, the government does not have the funds to look into every company on the list.

"Our job now is analysis -- the government does not currently have the funds to carry out investigations into all of the companies," he said.

Companies should take the list seriously, Basta said, and he is asking for the help of all government branches, including the judicial.

Some companies previously singled out by the interim government of Josef Tosovsky have been dropped from the new list, Basta said. "We did not agree with the old list in some ways," Basta said, "and some companies were dropped."

Martin Hlusek, analyst for Expandia Finance, said that "I'm not satisfied with what is going on. Something like the Clean Hands does not look good to foreign investors. When the government changes, this is going to start all over again."

Such a project is politically motivated, Hlusek said, and not much concerned with the country's financial agenda.

Czech daily Mlada fronta Dnes on Nov. 11 published a list of 26 companies slated for investigation by the Tosovsky government. The newspaper also listed eight companies it said are on the CSSD's "Clean Hands" list.

"We welcome this because it's a chance that the whole investigation will be finished and the results published, and we won't have to answer separate questions referring to parts of the investigation that was already conducted," said Bohdana Horackova, spokeswoman for the steelmaker Trinecke Zelezarny, which is on the list published by Mlada fronta Dnes. "They were investigating separate issues. It should be a complete investigation of privatization."

Trinecke Zelezarny has been on a short list of questionable privatizations since former Finance Minister Ivan Pilip decided in January to open privatization archives following the Civic Democratic Party (ODS) funding scandal that toppled the government of former Prime Minister Vaclav Klaus one year ago. State investigations into the matter revealed that companies involved in the privatization of Trinecke Zelezarny had donated about 15 million Kc to the ODS, news agency CTK reported in February.

The CSSD's Clean Hands is a step forward for the Czech Republic, economically and politically, according to the European Union.

"The Czechs need to understand and abide by the rule of law that the EU highlights," said David Ringrose, second secretary of the EU delegation in Prague. "We have a number of programs set up here to help them, not only to deal with economic crime, but also reform in the judiciary area as well."

Prague lawyer Robert Pergl said there is "no legal vehicle" for reviewing privatizations if the government's intent is to reverse those done improperly. And it's unlikely that the government would change the law to allow for a review of privatizations, when companies have by now changed hands, received bank loans and conducted other business since being privatized, he said.

"It doesn't mean that if a crime was committed, people can't be prosecuted," Pergl said. "As far as giving back [companies] to state hands, that's hard to believe."

Prosecutions will be difficult because files on the conduct of privatizations aren't very extensive or informative, Pergl said.

"If there are some serious cases that can be proven, [the government] should go after them," said Michal Burian, executive director of the Czech Republic's branch of the corruption-watchdog Transparency International.

It's not realistic to think that property improperly privatized will be "given back and handed to a new owner," Burian said.

As far as preventing future corruption, he said, the reviews won't have a major effect.

Legal reforms -- such as passage of a "criminal law to define what is corruption and specify it" -- would be much more important for preventing future corruption, Burian said.

Arms maker Zbrojovka Vsetin a.s. is another of the companies included on the list published in Mlada fronta Dnes.

"Zbrojovka Vsetin was listed among the companies published by the daily press in relation to the Clean Hands program," said the company's general director, Rostislav Levicek. "I cannot judge what the list is really supposed to be for. I know that there was no official announcement" made to the company or any of its officials.

"I take seriously everything that our governments say and do," Levicek said. "There are no ends without beginnings, but there are beginnings without ends."

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The Prague Post Online contains a selection of articles that have been printed in The Prague Post, a weekly newspaper published in the Czech Republic. Unauthorized reproduction is strictly prohibited.

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