Czech Ways of Bribery
The corruption affair at the Prague's City Hall has been gathering momentum. Respekt has found out that the people responsible for deciding on government contracts were provided an opportunity to buy flats in the high-profile mountain recreational town of Špindlerův Mlýn at half the price.

The corruption affair at the Prague's City Hall has been gathering momentum. Respekt has found out that the people responsible for deciding on government contracts were provided an opportunity to buy flats in the high-profile mountain recreational town of Špindlerův Mlýn at half the price. They have received the saucy offer from Navatyp, while each of the addressed buyers have saved about 1 million of Czech korunas. All of them strictly deny they would reward their benefactors of Navatyp in any way, however, one fact cannot be refuted: the amount of assignments for Navatyp by the Prague's City Hall increased three-fold by some miracle after the favourable purchase of the flats.
Wife paid, father bought


There is the Alexandria House not far away from the Špindlerův Mlýn centre. Navatyp built the house in the 1990's, with 38 flats behind the walls decorated with fake timber framework. Navatyp sold the flats to the weekenders from the capital. Still, the firm split the buyers in two groups: common citizens and those closely related to the Prague's City Hall. Even a cursory look at the contracts will reveal the differentiation tool: the „common“ owners had to pay a double of the price paid by the people from the City Hall.
„We have got quite a usual flat there. We were not requiring anything above-the-standard,“ says Václav Toman, an inhabitant of the Alexandria House. For a kitchenette and two rooms of 60 sqm total floorage, he has paid CZK 2.25 million. One of his neighbours, Prague Municipal Board Member Rudolf Blažek, has paid CZK 1,185,000 for a flat of the same size. You need to employ but most simple mathematics here. While, for the common citizen, one square meter ranges from CZK 35 to 40 thousand, the price will be some CZK 20 thousand for a City Council Member, City Hall official or for a boss of a leading Prague's company. Apart from Mr Blažek, there have been others to get the cheap flat, e.g. father of Filip Dvořák, another Municipal Board Member; Jozef Macko, City Capital Project Department Head in the City Hall; Councillor Luděk Fiala; František Dušek, CEO of the Prague's Congress Centre; and Milan Houfek, CEO of Prague's Public Transport Company. Coincidentally, all of them are responsible for deciding on assignments in Prague.
„My wife went to consult a real property agency and was told that CZK 20,000 per sqm were in correspondence with the location and furnishing of the flat,“ Board Member Blažek explained in his e-mail response. Blažek refused a personal meeting on the grounds the money was paid by his wife. Also, his wife has been recorded as the sole proprietor in the Land Register. However, the purchase agreement has been signed by Blažek who also stays at Alexandria House. Board Member Dvořák has provided a similar response: „Purchase of a flat in Špindlerův Mlýn is a private action by my father who, by the way, is an avid skier and I am truly not going to provide any comments, given the tenor of your article,“ writes Dvořák.
What else do you want of me
Quite the opposite, Milan Houfek, CEO of the Prague's City Public Transport (Dopravní podniky), readily agreed to meet personally: „It's just fine with me to show you the contracts and payment documents. My wife and me have nothing to hide, I make quite a good money and, naturally, we can afford a flat like that.“ To show the contracts he did - the final price, however, was blinded with a sticker and, in the memorandum of understanding, he left only the amount of the advance - CZK 1.45 million. „The amount represents an advance and the final price is higher but my wife and me have agreed to abstain from its publication for the privacy protection reasons,“ says Houfek. Yet, his representation is not accurate: according to the purchase agreement, he made no payup at all. The flat cost him CZK 1.24 million, while he only paid another CZK 210,000 for the garage parking space (even that goes to the City Hall people for almost a half the sum).
„First of all, I would like to know where you have got my purchase contract from,“ is Houfek's response to the question why he has mentioned payups, while, in reality, he has paid none. Following the information that the purchase contract is legally and publicly available at the Land Registry, he closes the interview: „That's my business and I don't gather what in fact you want of me.“
The price CZK 20,000 per sqm is something close to a miracle in Špindlerův Mlýn. „You need to think of two or three million,“ says Jaroslav Sogel of TANA, a real property agency in Vrchlabí, to the question what money would buy a newly refurbished 50-sqm flat in Špindlerův Mlýn. „Slightly more than a million? Absolutely out of question,“ adds he, pointing out that the prices have been stabilized over the years. According to him, flats in the town come more expensive than in Prague. They are in an enormous demand. Any flat that appears is sold right away. „It may be some ten times more difficult to get a flat here than in Prague. Rather, people mostly rent them,“ describes Sogel.
The Navatyp company refused to communicate at first. „We will not spend a word with you, instead we are going to sue Respekt,“ was a threat made by Vladislav Košler, the spokesman and deputy manager of Navatyp, on Tuesdy. When it comes out, three days later, that Respekt has got the sale contracts, Navatyp's lawyer František Gebauer rings and proposes a meeting. According to him, the meeting should prevent „subsequent oral or other confrontations“. So, what explanation can Gebauer provide relating to the differing prices for the flats in Špindlerův Mlýn? „It is a case of consensus, a result of a contractual procedure,“ says the lawyer. According to Košler the spokesman, owners of cheaper flats actually „have built a lot of things by themselves“ in the flat. „However, we would not be ready at the moment to answer e.g. a question what finishing works Board Member Blažek has performed. Supporting information is being collected,“ says Gebauer the lawyer in addition to the spokesman's words.
Contracts 150 million worth
The following information may be derived from an overview of the government contracts assigned to Navatyp by the Prague's City Hall. Over 1997 to 1999, the firm got not a single contract from the City Hall. In 2000, the year when negotiations on the purchase contracts for the flats in the Alexandria House commenced, the firm obtained contracts worth CZK 50 million. A year later, i.e. after the signature of the purchase contracts and recording of the new proprietors in the Land Register, the contracts awarded to Navatyp by the City Hall rocketed up to CZK 150 million. „We have substantially increased our firm's throughput,“ is Košler's explanation of the phenomenon.
In addition to that, the City Hall signed an agreement with Navatyp and two more firms on a ten-year lease of one of the prime parking sites in Prague - next to the Main Railway Station. The annual turnover at this single site makes about 16 million korunas. The firm manages several houses in the Prague's downtown and has been engaged in lively business doings with the City in relation to land purchases. Furthermore, it has been obtaining assignments also from the City-owned companies - the Congress Centre booked work worth CZK 15 million with the firm in 2000 and Dopravní podniky have been annually booking works worth CZK 20 million with Navatyp.
Decisions on the assignments by the City are the responsibility of the Municipal Board. „I have voted for the best bid for the City at all times,“ swears the Board Member Blažek, and the same claims Dvořák. The winner firm, however, is selected through a tender organised by the City Capital Project Department. The head of the department is Jozef Macko, another inhabitant of the Alexandria House. He used to sit on all selection committees through which Navatyp won. „I am absolutely refuting any speculations suggesting I might have favouritised Navatyp because of a flat. Simply, their bids were the best,“ claims he.
„I have no weekend house. And kindly set that out in the papers. Today, nine million people in this country own weekend houses or cottages but I have got none,“ explains Jozef Macko the reason of purchasing the flat in Špindlerův Mlýn and adds that, originally, Navatyp was asking even a lower amount from him. „I can't recall exactly how much the price increased, but I was quite infuriated by that and was even considering to withdraw from the contract,“ adds Macko. In the end, however, he says, his attraction to the location won.
Affair may affect City Mayor election
„The case of the house in Špindlerův Mlýn is a clear case of corruption. The people have got a cash compensation and abused their powers of a public official,“ says Councillor Martin Bursík of People's Party (KDU-ČSL). He intends to make a big thing of it in the City Council session on Monday, 15 July: „I will ask for Mr Macko to be demoted from his posts. Board Members Blažek and Dvořák should resign.“
The Council comes into session today to elect the new City Mayor. The Mayor should represent Prague until the November municipal elections. According to the coalition agreement, the City Mayor post should go to ODS (Civil Democratic Party). The party have nominated the current Board Member Igor Němec. „I am going to make personnel changes at the City Hall,“ said to proposed candidate on Friday. „At the moment, I am going neither to confirm nor exclude that this should include also a recall of Mr Macko.“
The Špindlerův Mlýn affair, which involves only the people of the Prague organisation of ODS, could significantly affect the City Mayor election. While ČSSD (Social Democrats) have agreed to support Němec and abstain from nominating their own candidate, the vote is secret and Councillors for the coalition member ČSSD do not necessarily need to vote for an ODS man. Nonetheless, Němec is not anxious he could have any problems because of his colleagues: „I have not got any flat anywhere. I imagine this will have no bearing on my being elected.“ It is still hard to tell what ODS themselves will do about the case. „Let me thank you for the set of information and I am definitely going to verify it. It includes most important outlines for me. Still, first of all, I have to talk to the other party,“ says Jan Bürgermeister, Council Chairman of the Prague 1 District. The same says Němec. „I promise I will deal with the case,“ swears the candidate for City Mayor.
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