Miles to go for public cleanup

The way the Czech Republic has done business must change, or the country will face a crisis. It's a sentiment shared by politicians, business leaders and the public at-large, but reforming the public-procurement process, the very mechanism by which the government spends its money, remains difficult.

The Cabinet voted Jan. 5 to approve a government anti-corruption strategy, proposed by Interior Minister Radek John, but changes to the public-procurement law will require further discussion for the Cabinet to agree on a proposal. Regional Development Minister Kamil Jankovský will have until March to submit a draft public-procurement law - an exercise that has already garnered the attention and advice of the business community and the government-appointed National Economic Council (NERV), an advisory panel made up of economists and industry leaders.

However, some politicians have balked at cooperating with outside advisers such as the American Chamber of Commerce and Transparency International (TI), a corruption watchdog group. NERV member Vladimír Dlouhý told the daily Hospodářské noviny (HN) Jan. 7 that he was "skeptical" of the past two organizations. On their side, American Chamber of Commerce Executive Director Weston Stacey admitted there are certain politicians the chamber simply cannot work with.

"There is a real battle, both in the political community and the business community, between people who want to do it the right way and people who are satisfied and enriched by doing it the wrong way," Stacey told The Prague Post.

The complaints have been traded in both directions, however, with TI telling HN that Jankovský's ministry is not taking its proposals seriously.

That allegation does not come as a surprise to Pavel Kohout, a current and original member of both NERV councils since 2009, who said politicians can certainly say one thing and do another, but he hopes there will be enough who are listening to suggestions in good faith.

"Many politicians have mastered the technique of constructive obstruction," he told The Prague Post. "They listen, they ask intelligent questions, they nod their heads in agreement, then they do nothing. The hope, however, is that not all politicians are the same."

There is the political will to fight corruption in a real way, but there remain powerful interest groups that could delay or dilute real measures, he added.

Thirty-nine measures were created and offered to the Cabinet by the Platform for Transparent Public Tenders (PTPT), a confederation of business representatives organized by the American Chamber of Commerce. Their work was taken as whole and incorporated into John's measures, but it remains to be seen whether all will be implemented fully, said Daniel Weinhold, chairman of the PTPT and founder of Weinhold Legal. Public contracts are often the most attractive targets of corruption, however, and therefore the government has the most to gain by cleaning up the process.

"[Public procurement] is about a significant amount of money. It's about savings and efficiency, so public procurement's connection to corruption is quite natural," Weinhold said.

Wringing out corruption from public-private partnerships is key for citizens who want their tax money spent responsibly, but it's also important for potential investors to know that they can be successful without compromising their ethics.

"There are many people who complain about the situation but at the same time feel forced to play by the rules. If they don't, they believe they'll be out of business," Weinhold said of business owners who may feel threatened by what they view is a totally corrupt climate. "They may not want to participate in this, but many of them feel they have to act this way - not in order to get an advantage, but rather to avoid having a disadvantage. This is crazy."

Anti-corruption measures for the public-procurement process will certainly include tougher punishments for transgressions, but at the heart of the reform should be the idea of rewarding and protecting those who report corruption and refuse to engage in it, said Stacey.

"It's the carrot and the stick, so companies and individuals that behave well should be rewarded for it," he told The Prague Post.

Greater protections for whistleblowers are included in the proposals, as well as greater accountability for both the government and the companies they do business with by involving the public. Each step of the process must be completely transparent, Weinhold said, from the initial creation of the project idea by the government to the final execution by the company, including the final cost of the project, which can often be different from the estimated cost.

The public's involvement in public-private partnerships can be an important safeguard against corruption, Stacey added.

"You have to make this information available to the public on the premise that the public are ultimately the financiers of projects, through taxes, and ultimately the receivers, through government spending, and they have to know who the government is giving money to," he said.

Participants in the efforts to reform public procurement are giving it urgency. Stacey said the government will have an increasingly hard time governing if they fail this task, as citizens will once again find themselves disillusioned with their political representation.

The relatively new government still has time to set an important precedent if it moves quickly enough, Kohout said, but more important than the advisers and organizations involved in reform are the electorate themselves.

"When I spoke to the prime minister last Friday [Jan. 7], I told him, 'The people demand change, sir.' He seemed to have understood the message," Kohout said.

Claire Compton can be reached at
ccompton@praguepost.com