Northern Bohemia often gets a bad press. There are green mountains, spas, picturesque rock formations, and some of Europe’s most northerly vineyards up there, but more often you hear about racial problems, smog and unemployment (all of which are interconnected, but that’s a story for another day).

These days, the northwestern corner of the country is looking like the corruption capital of the Czech Republic. As I noted in my blog on the David Rath EU funding scandal, that investigation began when police were looking into manipulation of EU funding in the north, with charges pending against one former official.

There are several reasons for thinking the north is the least socially cohesive part of the country, and thus perhaps more corruption-prone on the theory that people who lack pride in their home region are more likely to steal from the public till. But only a very brave or naïve analyst would venture to predict that other parts of the country will not soon throw up similar funding scandals. For one thing, “everyone knows” politicians and business interests have long been diverting EU structural funds into their own pockets. The strange thing is how few cases like this have come up so far.

The dam may be about to burst. The accusations that led to the arrest of the north Bohemian official also prompted the European Commission last spring to suspend funding for several projects he oversaw. This week the chairman of the council of ROP Severozapad, the agency that disburses EU funds in the northwest, was recalled for failing to spot the problems in the agency. The chairman, Jiří Šulc, is a member of the Civic Democratic Party and a former regional governor. His recall was engineered by members of the rival Social Democrats on the council, according to Aktualne.cz. Yet in other instances, the two parties have allegedly worked happily together to manipulate tenders and inflate contracts involving EU funds, Czech media are saying. Politics makes strange bedfellows, especially when money enters the equation.

And the contagion is spreading across the frontiers. Item: A few days ago an official of the Nitra region in Slovakia resigned amid allegations he and local businessmen tampered with public tenders – exactly the kind of thing “everyone knows” is rife in the Czech Republic as well.

Item 2: The EU’s OLAF fraud squad confirmed in May it was investigating possible cases of EU fund tampering in Hungary. A construction company with ties to the ruling Fidesz party may be part of the investigation, although the company denies the rumors.

My sense that joining the EU was a gift horse for sticky-fingered pols is shared by the good folks at Transparency International. TI’s new report, “Money, Politics, and Power: Corruption Risks in Europe” points the finger at several new EU members:

“In the Czech Republic, Hungary and Slovakia, while the legal frameworks are relatively well developed, many problems are identified when it comes to implementation of anti-corruption rules and reforms. Indeed there is evidence that since accession to the EU in 2004, there has been a roll back on progress made in the fight against corruption.”

Public procurement is singled out for special concern in the report. “Immediate attention” is required to stem fraud in this area, it warns: “Problems appear to be most acute in Bulgaria, the Czech Republic, Italy, Romania and Slovakia. Legislative frameworks have been brought in line with EU law, but the rules are often systematically circumvented with impunity.

“In the Czech Republic according to a survey carried out by the Association of Small- and Medium-Sized Companies in February 2010, three out of five managers of such companies believe that it is impossible to win a public contract in the Czech Republic without resorting to bribery, a kickback or some other ‘incentive.’ ”

Yet what the Rath case and others are showing is that the “incentive” works both ways. The ordinary way, where the weaker player (a small business for instance) offers something extra to an official, or a business partner higher up the pecking order, is easier to root out, because the money involved is small in each case. The other way, when the stronger player (a top official, for instance) sets up a whole parallel structure of “incentive” payments, is always going to tempt a certain class of politician. Until now, they could be pretty confident of getting away with it, but maybe that is starting to change.

Ky Krauthamer

Ky Krauthamer is a senior editor at Transitions Online. Email: ky.krauthamer@tol.org

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