Anti-corruption police raid Czech investment agency

By bne IntelliNews August 10, 2012

Tim Gosling in Prague -

Anti-corruption police raided the offices of investment agency Czech Invest on August 8, confiscating computers and documents in connection with an investigation into a tender for prospecting industrial zones for foreign investors.

While police have refused to release details, information confirmed by the trade and industry ministry suggests the state agency is suspected of manipulating a tender on managing the real estate database that serves potential investors in searching for industrial zones in the Czech Republic, reports Radio Praha.

The agency allegedly failed to publish the tender publicly, instead quietly handing the CZK3.2m (€127,000) contract to Grafin, a private company whose ownership remains unclear. The tender was also back-dated, according to unconfirmed information. The contract was later unexpectedly cancelled.

Stanislav Beranek from Transparency International said that his organisation has turned up some disturbing facts. "When we investigated the case, we followed a chain of companies which finished in an offshore company in Panama. And according to the Panama Trade Register, this company was owned by a certain lawyer. There is suspicion that this company is personally connected with friends of Mr. Krizek, the director of Czech Invest."

Alongside Transparency International, the trade and industry ministry has also questioned the tender and had sent auditors into the agency. Trade and Foreign Minister Martin Kuba told journalists he welcomed the police investigation and said heads would roll if the suspicions were confirmed. "I want the matter thoroughly investigated and if it reveals any evidence of mismanagement or fraud, I will hold the general director Miroslav Krizek fully accountable," Kuba insisted. "He would be sacked and I am sure he is fully aware of the fact."

Police and Czech Invest have been less forthcoming about the raid. Krizek has refused to comment, and on August 8 CzechInvest spokeswoman Stepanka Filipova would only say: "An investigation is underway, which is why we are not able to provide further information at this time. Our employees are co-operating with the police as best they can to help facilitate their enquiries." The following day, another spokeswoman - Veronika Forejtova - admitted that the police investigation concerns the tender awarded to Grafin, only to claim obtusely that there is no case since the tender has already been cancelled.

The case only extends the growing sense of spreading corruption in the Czech Republic, particularly over public procurement. It also shakes the reputation of what was once one of the most highly regarded investment agencies in the region, which over the last decade helped move the Czech economy from competing with its neighbours for simple assembly operations to limiting investment incentives to high value added projects.

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