By meeting the deadline, albeit barely, the government opened the door for Czech businesses to access billions of crowns in EU funds, thus staving off disaster — or so it seemed.

Now, another controversial issue related to drawing EU funds has cropped up. This time it's not about chasing deadlines, but rather who will be making the payments.

The dispute over which bank should maintain EU accounts escalated after Anti-Monopoly Office (ÚOHS) Chairman Martin Pecina said Jan. 9 that the previous government's tender — from which HVB Bank emerged victorious — had to be revised. The Finance Ministry signed a contract with HVB Bank in November and began paying out EU subsidies to Czech businesses Jan. 1. The contract runs through 2010.

"We've learned that the tender was not properly managed and that it needs to be revised," Pecina said.

Pecina explained that the winner of the tender, HVB Bank, did not submit to the Finance Ministry a trial version of the software that would manage EU accounts, thus failing to meet a minor condition of the tender. Also, Pecina pointed out, the ministry wrongfully demanded that the bidder have its headquarters in Prague.

Should the ÚOHS's revision of the deal confirm the preliminary findings, the exclusive contract between the Finance Ministry and HVB will have to be canceled, Pecina said.

This is an important announcement, not just for HVB but for banks that lost the initial tender. The tender to manage EU funds is lucrative because it would bring the administrator thousands of would-be customers. While the actual payouts of EU subsidies would not bring immediate profit, handling the finances of literally thousands of new business clients could.

Pecina said he plans to suggest, in a meeting with Finance Minister Miroslav Kalousek later this month, that the ministry cancel the contract with HVB. But he also said he would recommend Kalousek sign another contract with the bank without calling another tender, which is legal with low-cost tenders such as this one.

HVB won thanks to an offer to manage the accounts for a symbolic 0.50 Kč (2 U.S. cents) over the next four years.

HVB Bank spokeswoman Petra Kopecká insisted the bank was a legitimate winner of the tender, and said it would continue with all payments as planned.

"Regardless of the current turmoil, we're committed by a legal contract to pay out the subsidies," she said.

But Česká spořitelna, which managed the EU funds from 1997 until the end of last year, demanded swift action to remove HVB Bank's exclusivity.

"It would be unprecedented if the government were forced to cancel a tender due to omissions and then go ahead and re-sign a contract with HVB Bank without opening another tender," Česká spořitelna spokeswoman Klára Gajdůšková said. Should this happen, Česká spořitelna will further appeal the deal, she said.

In order to bring the crisis to an end, Česká spořitelna is ready to lobby for opening the EU account at any commercial bank interested in doing so. Gajdůšková said the bank's CEO, Jack Stack, is set to present this proposal to the Bank Association board this month.

"Right now," Gajdůšková said, "there is a danger that payments of subsidies will be delayed as a result of the legal dispute. The involvement of all banks could significantly speed up a settlement of the controversy."

Based on Česká spořitelna's initiative, businesses eligible to draw money from EU funds should be eligible to contact their own banks and get the money from there, rather than being limited to drawing from one selected bank.

"It would create fairer conditions for both the banks and also their customers," Gajdůšková said.

Over the next seven years, Czech businesses could draw up to 780 billion Kč from funds.

Dušan Hladný, director of corporate clients' department at HVB Bank, told The Prague Post last summer that the assignment to distribute EU subsidies was invaluable.

"We'll get in touch with a number of subsidy recipients who are not among our current clients, and we'll have a chance to make them our customers," Hladný said.

That's why bidders came in with rock-bottom prices, despite the Finance Ministry's previous estimate that the cost of administering the EU accounts was about 200 million Kč over the life of the contract.

HVB Bank's bid undercut ČSOB's 1,200 Kč bid. Česká spořitelna asked for 12 million Kč and Komerční banka sought 100 million Kč.

Last summer, Hladný predicted Česká spořitelna — which accused HVB of price dumping — would attempt to force another tender.

"Česká spořitelna would then be able to adjust its offer in such a way that it would win," Hladný said.

Gajdůšková admitted access to managing EU funds is strategic for commercial banks.

"Apart from paying out EU subsidies, the bank can also offer customers other services," she said.