Defence scandal hits Czech Republic before polls (News Feature)

By Katerina Zachovalova Mar 3, 2010, 2:08 GMT

Prague - A cross-border defence-contract scandal has rocked the Czech Republic just months before the country's general election.

But the latest batch of corruption allegations is unlikely to sway voters, who are tired of frequent scandals, the investigations of which tend to peter out without resolution.

In recent weeks, Czech and Austrian police launched separate corruption probes after a Czech newspaper reported that an Austrian firm allegedly counted on paying hefty provisions to Czech politicians in return for a defence deal.

However, it remains unknown whether any bribes actually reached Czech politicians for agreeing to buy Pandur wheeled armoured carriers from the US-owned, Austrian-based firm, Steyr-Daimler-Puch Spezialfahrzeug AG & Co KG.

In 2006, the Czech Republic signed a deal to buy 199 Pandur carriers for 20.8 billion koruna (1 billion dollars). The contract drew much criticism as the then-outgoing defence minister inked it just days after a lost general election.

The subsequent government of former premier Mirek Topolanek pulled out of the deal and, in March 2009, signed a new 14.4-billion-koruna contract with Steyr for 107 vehicles.

Caught on a hidden camera, two former Steyr managers told the Mlada Fronta Dnes daily this January that the firm had allegedly planned to bribe Czech political parties through local consultants in order to get the business.

The newspaper published a secret agreement that Steyr had signed in 2002 with a Czech lobbyist, who was promised a 7-per-cent success fee. A portion of that lobbyist's fee, the former Steyr managers said, was intended for political parties. 'Part of the success fee is not only for the company, those guys. Because they also pay their expenses to somebody who helped them,' Wolfgang Habitzl, a former Steyr manager mentioned in the document, said on the tape.

'It's part of the game. You know that of course it is forbidden to pay something,' he continued. 'You can have your advisers ... It's part of the game that they do it, but you officially do not know. It's the expenses.'

'I think it was 2 or 3 per cent for each party,' Habitzl whispered, after an undercover reporter, posing as a businessman, asked how much money was meant for the politicians.

Habitzl and another former Steyr employee, Herwig Jedlaucnik, also implicated several top-level politicians on both sides of the aisle for allegedly taking part in unofficial talks with Steyr lobbyists in the years before the firm closed the deal.

The managers, whose credibility on the issue has been called into question, as they left Steyr several years before the Pandur contracts were sealed, described their words as 'a bad joke' soon after the scandal broke in mid-February. Czech politicians also hurried to deny wrongdoing.

Nevertheless, it was also revealed that the Czech Republic paid three times more for the Steyr-made vehicles than Portuguese authorities had.

Czech defence officials ascribed the vast difference in price to superior features requested for the Czech army.

Meanwhile, Czechs appear to have lost all illusions about their elected leaders.

According to an opinion poll conducted by the Sanep polling agency, 83 per cent of 6,377 respondents polled online believed that the Steyr contract was tainted by corruption.

Slightly more, or 84.7 per cent, were convinced that the case will be swept under the carpet.

The scandal is unlikely to influence the outcome of the May 28-29 parliamentary election, analysts said. The economy will play a bigger role.

Jan Kubacek, a political science lecturer at the Prague-based Charles University, said that the result of the scandal result is to merely confirm the voters' current choices.

'The core supporters of the large parties are indifferent. They view it as a pre-election trick,' he said. 'It confirms the centrist voters in their choice to vote for small parties and non-voters in their choice to avoid the polls.'

At least - if they decide to trust Habitzl - frustrated Czechs can console themselves that their country does not stand out in any way. The financial arrangement he described involving lobbyists and parties isn't unique to the Czech Republic.

'But it's everywhere. It's anywhere, every country,' the former Steyr manager said on the tape.

'Every country? Is it? Even in Austria?' the reporter asked.

'Yes, it's worse,' Habitzl replied with a smirk. Video at http://zpravy.idnes.cz/skryta-kamera-mf-dnes-manazeri-steyru-popsali- jednani-o-transporterech-1n6-/domaci.asp?c=A100217_223822_domaci_iky