For More Beautiful But More Expensive Prague

The corruption scandal at the Council of the Capital City of Prague is getting ever more serious. It has been found out that the Navatyp company, which had sold apartments in a house called Alexandria in the town of Špindlerův Mlýn to several high officials of the city at half price, had really been advantaged in some contracts awarded by the Prague Metropolitan Council. The Inspection Committee of the Prague Metropolitan Council had a legal analysis prepared and Respekt has this analysis at its disposal. According to this analysis, Jozef Macko, the Director of the Metropolitan Investor Department, violated the law in many points; for example, he groundlessly increased the price of one contracted job by four millions - and he acquired an apartment in Alexandria from Navatyp at a price lower by one million in comparison with the other buyers. The metropolitan officials were also awarding contracts to Navatyp even if the company had not offered the best terms or they were waiving penalties, which the company should have paid for delayed deliveries.

The Case of Vodičkova

It was necessary to build new pipe tunnels in the Vodičkova street. In 2000, the Investor Department of the Capital City contacted six companies and organised a tender. The contract worth twenty million was awarded to Navatyp. There was a reason for this; the company offered the lowest price.

Less than a year after the contract had been signed, the director Macko increased the financial remuneration for Navatyp by four millions three hundred thousand Czech Crowns. Consequently, the work of Navatyp became the most expensive one; it was higher by nearly four millions than the highest price offered in the tender. Macko explained the change by pointing out that the conservationists and the future operator of the pipe tunnels had come with new requirements.

„I can only laugh at this,“ says Otakar Čapek, the managing director of the Kolektory Praha company, which will operate the pipe tunnels in the Vodičkova street. „We do not have any right to meddle in the construction. It is purely the responsibility of the metropolitan council. I can absolutely guarantee you that we did not have any additional requirements.“ The answer from the Prague Conservation Institute was the same. „We definitely did not request anything that could have increased the budget,“ says Olga Ambrožová, an employee of the institute. Thus, Macko is not able to explain why he agreed to a price higher by four millions: „I will not explain every detail to you. We are implementing more than one hundred projects simultaneously,“ he says in conclusion of the debate about the Vodičkova street.

Exactly at the time when Macko made the decision on the above-mentioned contract, he acquired an apartment in the Alexandria house from Navatyp for one million Czech Crowns. The price offered to the other prospective buyers was twice as high (refer to Respekt no. 29/2002 for more details). With his decision to increase the price of the job in the Vodičkova street, Macko violated the law because authorities can only increase the costs approved for a single contract by twenty percent. „The increase exceeded the twenty percent limit merely by eight tenths of a percent. This could have also been a result of an accounting error,“ Macko trivialises the case.

More Expensive But Still Delivered

According to the former statements made by the representatives of the city, Navatyp only won in those cases, in which it offered the lowest price. „I absolutely refuse any speculations that I advantaged Navatyp because of an apartment. They simply had the best bids,“ Macko claimed one month ago.

There is a new park being created in Prague 13. The desolate ground with subbase consisting of debris, situated near the local housing estate, will be changed into a place for peaceful walks amidst trees and water streams. The tender for this contract was again organised by the metropolitan authority and Navatyp won again. The company will be paid seventy eight million for the work on the park. A company called Dopravní stavby requested less, namely sixty million. IPS Skanska would have been satisfied with seventy three million. It is interesting that Navatyp offered the same terms like its competitors. It only offered shorter terms of delivery and higher penalties for a failure to meet the deadline in comparison with Dopravní stavby. Navatyp also had one strong disadvantage. It promised that all works would be performed by its own employees and yet, being solely a building contractor, it had never created any park before. The way, in which the members of the selection commission explain the reasons why the company won again, is very cautious. „I have selected a different building contractor, which wanted to cooperate with renowned garden companies in performance of the contract,“ says Kateřina Vaculová, one of the persons who made the selection and the director of the Metropolitan Green Vegetation Department of the metropolitan authority.

„I do not remember exactly for which company I voted. I think it was Navatyp,“ admits Petr Bratský (ODS), another member of the commission and the mayor of Prague 13. He says that Navatyp persuaded him at that time by having offered a fair price for planting trees at the exits from the underground in Prague 13. „However, we are not eventually content with the work of Navatyp. For example, they do not meet the deadlines for the works,“ adds Bratský. The director Macko was also one of the members of the commission. „I cannot speak for the entire commission. I cannot remember it exactly,“ he refuses to make any comment.

Half a Year without a Penalty

In a contract on construction of the „Bubenské nábřeží“ embankment, Navatyp had to increase the penalties for delays in works. This is why Navatyp undertook to pay 15 thousand Czech Crowns for each day of delay (other companies offered 40 or 50 thousand in the tender). The work of Navatyp really fell behind the schedule by full six months. The metropolitan authority never saw a single Crown from the penalties. Before occurrence of the delay, Jozef Macko signed an amendment to the contract, by which he reduced the scope of work to be performed by Navatyp and also prolonged the time limit for the construction. „It was given by the bad documentation, which we received from the district council of Prague 7,“ excuses Macko his action.

According to the information provided by the metropolitan authority, Navatyp was awarded contracts worth two hundred million over the last five years. In addition to this, there are even longer-term works being performed. For example, in 1998, Navatyp took over a contract from a company called „Výstavby inženýrských sítí“. The original price amounting to two hundred million was increased to half a billion in the same year. According to the Metropolitan Investor Department, the reason was an increase in the prices of materials; the first budget was prepared as far back as in 1990. It is not clear from the legal analysis whether the increase in the price was justified.

Zavos, another interesting Prague-based building contractor, also participates in performance of the said contract. As a mandatary, it is responsible for supervising correct processing of invoices; it recommends or does not recommend increase in the price and checks on the quality of work. Zavos also participates as a mandatary in a number of other contracts performed by Navatyp for the city. Pavel Přikryl, the managing director of Zavos, also often appears as an expert in tenders. It is worth mentioning that a twenty-six-year-old daughter of Přikryl purchased two apartments in the Alexandria house in Špindlerův Mlýn from Navatyp.

Silent Disagreement

Investigation of the corruption scandal at the metropolitan authority has not by far been completed. The only thing that the Control Committee of the members of the Prague Metropolitan Council has in their hands is a legal analysis prepared by the Jansta, Kosta & Co. lawyer's office. „I do not agree with the legal opinion of this lawyer's office. I have sent my objections to the Control Committee,“ protests Macko but does not intend to publish his objections.

The work of the Control Committee has been made more difficult by the fact that Navatyp does not want to provide the Committee with all the contracts, under which six high officials of the city acquired apartments in the Alexandria house at half price (only the purchase agreements at the Land Registry Office are publicly available). „The owners of the apartments allegedly prohibited Navatyp in writing from providing the metropolitan authority with any source materials,“ shrugs his shoulders Tomáš Kubík (US), the head of the Control Committee. However, it is not clear, which owners did so. „I do not know about this anything. Nobody consulted us on whether we are in favour or against this,“ says Eva Zouzalová, one of the occupiers of the Alexandria house. Other three apartment owners, who paid the normal price for their apartments to Navatyp, have the same experience. There are thirty eight apartments in the Alexandria house. The data in the Land Registry Office indicate that Navatyp sold twenty four apartments at half price. These apartments were acquired by Rudolf Blažek, a member of the metropolitan council; the father of Filip Dvořák, an ex-member of the metropolitan council; Jozef Macko; Milan Houfek, the chief executive officer of Dopravní podnik; František Dušek, the managing director of the Congress Centre; Luděk Fiala, the managing director of Diplomatický servis (he resigned from his office on the last day of August), and Vlastimil Brabec, his subordinate. All these people were deciding on public procurement contracts; all of them chose Navatyp several times. Other cheap apartments were acquired by the owners of the companies, which cooperate with the metropolitan authority; these companies include Zavos, which provides advice on tenders and supervises the construction process.

Combating Corruption According to the Candidate Bém Pavel Bém, the mayor of the sixth Prague district, won the fight over the position of the leader on the list of the ODS party candidates in Prague. He won even though he was not quite dazzling as the chief of the Prague election campaign during the elections to the House of Deputies. The well-handled floods, which partly affected even his district, as well as his great supporter Václav Klaus helped him. Bém has thus become one of the hottest candidates to the post of the mayor of the capital city. He is also getting ready to combat corruption. „I am a supporter of the policy that any incident must immediately be investigated and punished,“ says Bém and points out that over the last four years, five employees left his administration because of proved corruption and he dismissed another twenty employees for mere suspicion of corruption. „If I have more reliable indications, then the clerk must leave his or her office,“ he adds. Apart from that, he also has a plan for preventing corruption. He intends to include more incentive fees and performance-related fees in the salaries of the clerks; he will put across organisation of educational stays abroad or further education.

However, Bém himself has already experienced one scandal, in which the word corruption was mentioned. The sixth district of Prague sold Hotel Praha to the ill-famed Falkon company (which mediated the disadvantageous sale of Russian debt to the state) for half a billion Czech Crowns even though the winner of the tender was a company called J and J Top, which offered six hundred and twenty million Czech Crowns.