Saturday, 24 August 2019

BIS report: Some state-owned firms harm Czech economic interests

ČTK |
2 September 2016

Prague, Sept 1 (CTK) - The Czech Republic's economic interests have been harmed by bad contracts that some state-owned companies signed in the past, when there was no will to control the deals appropriately, the counter-intelligence service (BIS) writes in its annual report released yesterday.
Shortcomings in valid contracts mainly concern the sectors such as energy, banking and road transport, BIS writes.
Some of the controversial contracts were signed more than ten years ago.
In many cases, the problem is to blame on the careless approach by the responsible persons in the period following the contract signing, when there was clearly no will to control and assess the deals in question and possibly amend contracts disadvantageous to the state, BIS writes.
Such cases often developed into a critical situation where it became difficult or impossible for state representatives to solve the problem satisfactorily, BIS writes.
As an example it gives the recent trouble with Czech oil in the storage tank of the bankrupt Viktoriagruppe company in Krailling, Germany.
Problems also accompany IT services, BIS writes.
"Some state-controlled firms became significantly dependent on their suppliers," it writes.
It also focuses on the people "assisting" in the emergence of problems.
Some of them have left civil service in the meantime, and as part of the business sector, they tried to renew their influence on state companies.
"In some cases they succeeded, after using their previous contacts and often the personal loyalty of state employees. This also affects the state's capability of solving problems its [firms are] faced with," BIS writes.
According to it, another threat to the state economic interests are leaks of information.
Another risk is the controversial way of pushing through the state interests in joint-ventures.
"Mainly in the energy sector, there are many companies whose management de facto controls the supervisory board, which, for its part, ceases to fulfil its basic role and the state thus loses its crucial control instrument as a shareholder in the periods between the general meetings," BIS writes.
It highlights shortcomings in public tenders and the economic competition and mentions illegitimate lobbying linked to the drafting and passing of bills mainly concerning the energy and health sectors.
BIS also writes about problems in the state administration where the clerks often did not bear responsibility for their bad decisions and state money was transferred to private owners.
"Disadvantageous contracts were often signed and public orders were often placed with companies with an unclear ownership structure, or were placed without a tender. As a result, the management of the relevant state property was ineffective, but no crimes occurred and it was very difficult to prove someone's guilt," BIS writes.

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