By Peter Annear
PRAGUE — It has already been dubbed Murongate. Jaroslav Muron, a deputy privatisation minister, was allegedly offered a bribe to favour one bid for a dairy enterprise in the south of the Czech Republic.
The manager of the South Bohemian Dairies, Milan Teply, and the president of the Cesky Budejovice Investment Fund, Miroslav Velat, allegedly visited the ministry on January 7 and offered Muron $300,000 if he would approve their privatisation project in preference to a French offer. There is fear the case could adversely affect foreign investment in Czechoslovakia.
Muron said he had been approached regularly by many people with a view to bribery and paid little attention in this case. His mistake was not to report the approach.
Teply claimed the case became public because of competition between the Teply-Verlat proposal for Czech ownership and the bid of the French-owned Normandy Dairies. He said that, when they didn't win approval, the French investors accused the Czechs of bribing the ministry.
The intervention of Michael Kocab — a rock star and MP who is now a member of the millionaire Golem club — brought the case to the attention of the secret police (FBIS), with whom he has close connections. Kocab's cousin worked for the Czech consultancy advising Normandy Dairies.
According to economist Adam Novak, potential foreign investors have often complained of corruption in the ministries, and there is also rising dissatisfaction that the conditions under which foreign capital is accepted are very opaque — the government vacillates between favouring foreign investment and preferring domestic control.
The weekly paper Respect, which broke the story, wrote there was a terrible danger the left would demand a halt to privatisation pending an investigation into corruption. Respect said the last word would go to the federal government's Economic Council, headed by finance minister Vaclav Klaus.
Klaus is shepherding other concerns too. Potentially, the biggest scandal involves the state-owned Investicni Banka. Bank managers and their families secretly borrowed money from the bank to establish their own privatisation investment fund, using the offices and the address along with the files and the clients of the bank to develop an investment strategy. They also planned to use Investicni Banka's power as a major creditor to affect the behaviour of companies in which their fund would be a major shareholder.
In utmost secrecy, the federal Economic Council conducted an investigation. However, when Klaus sighted the contents of the Council's report two hours before it was due to appear, he called in all copies and had them shredded. Now he is personally rewriting the report. Novak said the original report correctly highlighted the absence of any regulation of investment funds, which are obliged only to register the names of their owners with the federal Finance Ministry. Often looking for get-rich-quick schemes based on asset stripping, most fund managers benefit from contact with friends and informers inside the ministries.
Much of the activity of these funds would fall within criminal insider-trading statutes in western financial markets, but their activities are officially tolerated here — indeed, all the big funds openly advertise their access to insider knowledge.
There appears also to be a behind-the-scenes struggle between the proponents of local and predominantly foreign ownership, the former national-capitalist group represented by Tomas Jezek and the later comprador tendency by Klaus.
This is evident in the case of the on-again, off-again privatisation of the Pilsner Brewery, one of the most profitable enterprises in the country. While Dutch and German interests have wanted to win control of the brewery, Jezek's ministry at the moment favours majority Czechoslovak control.
Opposition to corrupt practices has so far been weak. The major trade unions have uncovered many cases where managers have attempted to privatise and take over their own factories, but the role of the unions is limited by their belief that only a quick privatisation can save the economy from going under.
Moreover, talk of a scandal similar to the Investicni Banka affair at Bohemia Banka, which is run by the trade unions and which has also set up investment funds, seems to limit the unions' critical role.