Not so open, not so smart in Prague

By bne IntelliNews August 16, 2012

Jacy Meyer in Prague -

A fairly straightforward smart card scheme by the city of Prague has become emblematic of the corruption and cronyism that exists between Czech state institutions and business. Yet on August 8 the anti-corruption police referred five individuals to the Prague state attorney office for charges, raising hopes that at last some transparency and accountability will be brought into the system.

Opencard was launched by City Hall five years ago as a chip card to facilitate people's payments for a variety of public services. However, a majority of the roughly 850,000 Opencard carriers only use it as a transport pass, meaning the estimated CZK800m (€32m) spent on the project is a lot for what is a glorified tram pass.

Getting to this stage has been a long, winding and uphill road for campaigners. The project was openly challenged back in late 2009, leading to the resignation of then-deputy mayor Marketa Reedova, along with Petr Stepanek of the Green Party, which left the Civic Democrats with an absolute majority in the 70-seat Prague assembly and crowned it the sole party on the 11-seat council. Ironically, it is exactly these sorts of situations that allow shifty schemes like the Opencard to get off the ground in the first place. "I started to understand the mechanisms through which money was being channelled away from where it should go - and I was angry about it," says former Prague councilwoman Jana Ryslinkova about her time at City Hall from 2006-2010 as a European Democrat. "I found out stealing was very easy, especially when one party had a majority in town hall."

Ryslinkova, along with a group of people who also realised there was something fishy with the project, filed a criminal complaint in 2010. The complaint was based on a 2009 audit that found the project was not adequately managed, badly conceived and had awarded a number of disadvantageous contracts. "The audit wasn't saying it was all fraud, but pointing to areas where it wasn't all right," she says. "We consulted with a lawyer, who said there was enough to file a complaint and the group of us working on this decided to do it."

Following the filing, people involved with the scheme stepped forward to offer additional information and Ryslinkova said the initial police investigation went well initially. But within several weeks, the investigation started to deteriorate as the powers-that-be began to circle the wagons. "It was clear the police couldn't go to the prosecutor, they weren't being allowed to investigate, they were not given the permission," says Ryslinkova, adding that by the time permission to gather evidence was given, several months had passed and "in the meantime City Hall had cleared and cleaned everything they could."

Allegations of foot-dragging have plagued the case since the beginning. The head of the anti-corruption police, Tomas Martinec, said in early August that vital documents on the case were shredded during the time Pavel Bem was the Prague mayor (he left office in 2010). And in an interview with the daily Hospodarske noviny at the beginning of August, Zdenek Ondracek, the original investigator into the alleged Opencard corruption, accused his superiors of delaying the search of City Hall in March 2010. When the team eventually arrived, he told the paper, he had the feeling that people inside City Hall were already aware a search was about to happen.

Ryslinkova said the original investigating team eventually disintegrated. "Some quit (the police department), some moved to other departments; they said it was their own choice, but I think they weren't given the space to really investigate."


Now it seems people will finally be appearing in court, though that's by no means assured - the Prague state attorney's office has confirmed it has received the police proposal, but now has to decide whether to take the five City Hall officials to court.

And whether these five are actually or solely responsible for the fiasco is another matter. Ryslinkova says the original complaint covered seven points, some dealing with laws that were broken concerning the public tender laws, a few that said the process was not accounted for in the proper way, and some were aimed at "organised crime." The accused men, who all worked in City Hall's IT Department at the time, were part of the committee assigned to review the bids submitted by the tech companies looking to design the system. They are alleged to have broken binding rules of an economic contact and a breach of trust in property administration.

The anti-corruption police accuses these five of being responsible for the public procurement-concluded contracts that were disadvantageous for Prague, causing roughly CZK70m in damages. Opencard has already cost Prague CZK800m. The firm Haguess, who was under contract to implement the programme yet its ownership remains murky, has received CZK417m for its services. Original estimates predicted it would cost about CZK82m to build and implement the system.

Haguess is allegedly partly controlled by controversial Civic Democrat "godfather" and lobbyist Roman Janousek, who is also at the centre of a probe into cronyism and corruption during the administration of the previous Prague mayor Bem, also a Civic Democrat. Prague City Hall has cancelled its contract with Haguess, throwing the future of Opencard again into doubt. A tender for a new supplier was cancelled in June and as yet has not been rescheduled.

This isn't the first time someone has been charged in connection to Opencard. In February 2011, police filed a lawsuit against a City Hall employee over a breach in binding rules of an economic contact. The employee was in charge of putting up small-scale bids relating to the legal and project services connected with Opencard. However, two weeks later, the charge was cancelled by a supervising state attorney on the grounds that no crime was committed. "I hope the court can make a difference between the heads and the hands," says Ryslinkova. "It is still under public scrutiny so the hope is there."

She adds that she and two anti-corruption groups, Nadacni fond proti korupci (Foundation against Corruption) and Verejnosti proti korupci (Public against Corruption) are set to file another complaint. "The goal is to make sure the true heads don't get away without any punishment," she says. "And I'm hoping it will again force rules to be set up on how money is spent at the magistrate. The public needs to keep an eye on the process."

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