(Repeats to additional subscribers)
* Business says graft is on the rise
* Anger among voters leads to rise in small parties
* Czechs slip seven notches in corruption rankings
By Jan Lopatka
PRAGUE, May 21 (Reuters) - Marek is fed up with facing ever
more graft in his business dealings in Prague, something he did
not imagine would still be a problem so long after the wild
early days of post-communist transformation two decades ago.
"A few years ago, officials went after bigger deals, now
they are interested in kickbacks from every little order," said
the event management entrepreneur, who like most businesspeople
interviewed for this article refused to give his full name.
As a May 28-29 general election nears, Czech media have been
full of stories of suspicious contracts, from small orders to
multi-billion crown deals to build highways, supply services, or
buy military equipment.
The rise in sleaze has turned many Czechs off the two main
established parties -- the right-wing Civic Democrats and the
left-wing Social Democrats -- which have alternated in power and
bear most responsibility.
That is likely to bring new parties into parliament which
may determine the make-up of the next government.
The Czech Republic has gone through a highly successful
transformation, giving its people democracy, better living
standards at 80 percent of EU average, and security through
integration into the European Union and NATO.
But, as in most other central and east European countries,
strong institutions and good governance have been slower to
evolve, resulting in a ineffective justice system unable to
punish corruption and fraud.
"Unless we can fix it quickly and comprehensively, the
opaque and inefficient system through which the state allocates
its resources could erode the very foundation of both the free
market and democracy," Weston Stacey, head of the American
Chamber of Commerce in Prague, wrote in an article last week.
"Despite all the accusations and outrage, the prosecutor's
office has been unable to put together any evidence of
widespread abuse," he added.
The chamber is leading a group of experts that has drafted a
a plan to improve public procurement, trying to force parties to
adopt it as an agenda item for the next government.
GETTING WORSE
Last year, the country of 10.5 million people dropped seven
spots to the 52nd in a ranking of perceived corruption by
Transparency International, a non-profit group. That is behind
its central European neighbours and most western countries.
The Czech Republic is still better placed than Bulgaria,
which had 1 billion euros in E.U. development funds stopped due
to endemic graft and ranks 71st on the list along with Greece
and Romania as the EU's worst performers.
But many Czech contracts are awarded without tenders; some
are not published; strange conditions are set to eliminate
rivals; final prices exceed those contracted; and winners often
have anonymous ownership structures, raising suspicion of
connections to politicians.
Jan, a Prague entrepreneur in information technology,
explained how some procurement deals he saw worked.
"You create a big project with not much actually in it which
costs a crazy amount of money. Award it to friends, who find
someone who does the real work for a fraction of the price, and
pocket the rest," he said.
He called the projects "Zeppelins" after the giant
gas-filled airships popular in the early 20th century.
An opinion poll by the CVVM agency found in March that 42
percent of Czechs believed most public officials take bribes.
Another 23 percent thought nearly all take bribes.
A Czech Confederation of Industry survey found in April that
29 percent of firms thought corruption had worsened from a year
ago. Only 2 percent said there had been an improvement.
The group's chief, Jaroslav Mil, said companies reckon
bribes and overpricing account for between 5 and 20 percent of
the cost of contracts, adding up to billions of dollars a year.
"It has been getting worse. It has become a tolerated thing,
something common," he said.
Among deals in the spotlight is a military purchase of
armoured personnel carriers worth 14.4 billion crown ($701.1
mln), which media said were three times as expensive as a
similar type bought by Portugal. The defence ministry said the
Czech ones have better equipment.
Vladimir Kovar, owner of a software firm, said on television
he lost a state software tender despite submitting a cheaper bid
than the winner after rejecting an offer by unknown lobbyists to
give 20 million crowns to members of the steering committee.
There have been no charges in either deal.
PRAGUE VOTERS RUN
Prague, the capital of 1.3 million people, has become a
national symbol of opaque governance.
The most notorious deal criticised in the press is a
contract to design passes to pay for public transport, similar
to London's Oyster card, which cost 880 million crowns ($42.84
mln) and was won by a firm whose owners were unknown.
The city leadership has denied wrongdoing, and there have
been no charges against officials.
Prague had been a firm power base for the conservative Civic
Democrats in the past two decades. That is over. The party won
48.3 percent in the capital in the last general election but
only polled 23.5 percent in an opinion poll this month.
Citizens' groups have sprung up to urge people to boot out
the established parties. One is called simply "Exchange the
politicians". Another calls on people to select candidates from
the bottom of party lists so they jump ahead of party leaders.
A new party with catchy anti-corruption rhetoric, Public
Affairs, has been polling around 10 percent and may become the
kingmaker in forming the next government.
A week before the election, it remains uncertain who will
lead the country for the next four years.
Helena Hejdova, an architect who finds it very hard to pick
who to vote for, was sceptical about whether it matters.
"There has been more and more theft; I wonder if anyone who
comes next will be any better," she said.
