State forestry enterprise Lesy České republiky (Lesy ČR) is plowing Kč 10 million crowns into a private conference called “USA and EU Days.” Apart from the fact that the firm is supposed to look after and manage the country’s forests, officially the money spent on the conference is supposed to be for the company’s promotional activities. The conference organizer, Czech Teleaxis, was the only bidder in a tender issued by Lesy ČR which wasn’t made public. Czech Teleaxis is owned by the entrepreneur Peter Kovarčík, a friend of President Václav Klaus and other politicians.
Kovarčík: ‘amazed by the fuss’
“I’ve made offers to Lesy ČR for 15 years, and this is the first time something is to their liking. I know they sent 150 documents and enquiries. I’m amazed at the big fuss about it,” Kovarčík told Czech position. It was upon his request that Lesy ČR organized a tender for the provision of promotional activities and invited Teleaxis to put forward an offer.
Nevertheless, by inviting only one firm to provide its promotion at the conference, Lesy ČR may have broken rules on public tenders, which could result in the cancellation of the contract with Teleaxis and the state enterprise being fined by the anti-monopoly office (ÚOHS).
The “USA and EU Days” conference take places at Prague’s Žofín Palace on October 24–25 under the patronage of Prime Minister Petr Nečas (Civic Democrats, ODS). Apart from Václav Klaus, others scheduled to speak at the event include US media mogul Steve Forbes; economic advisor to Barak Obama, William H. Donaldson; former French prime minister Dominique de Villepin; and former Spanish prime minister Jose Maria Aznar.
Topics to be discussed at the conference include:
- Fight against violent religious and racial extremism;
- Issues concerning financial stability, the position of the euro and the dollar, ways out of the global economic crisis;
- The importance of peaceful uses of atomic energy and the risk of the further spread of nuclear weapons;
- The modern structure and the present situation in the European Union and NATO
Conspicuously absent from that list is anything to do with forestry. Lesy ČR says that it is supporting the event because leading Czech politicians will be speakers.
“It’s not sponsorship of the event but an advertising agreement for advertising content, presenting the state enterprise in promotion for the event and during the actual event. This sort of international event is an advantageous opportunity to present the state enterprise,” Lesy ČR spokesman Zbyněk Boublík told Czech Position, adding that the Ministry of Agriculture is also supporting the event due to PM Nečas’ patronage and the list prominent speakers.
“Before the decision to sign a deal, the enterprise requested the Ministry of Agriculture for its opinion on the offer for advertising cooperation with the company Czech Teleaxis and discussed potential participation in the event with the enterprise’s board,” Boublík said. He says due notification of the tender was made public at the central address where information on public tenders issued by state institutions and state enterprises is gathered and published. Potential contractors did not have a chance to learn of the tender. And no firm other than Kovarčík’s Czech Teleaxis was invited to put forward an offer.
Publically accessible sources show that only one entity submitted an offer while other potential contractors did not have a chance to even learn of the tender. And no firm other than Kovarčík’s Teleaxis was invited to put forward an offer. “Services can only be provided by a specific provider for reasons relating to protection of exclusive rights,” the documentation for the tender states. In other words, only the conference organizer, Teleaxis, is allowed to provide promotional and advertising activities and services at the event.
Potential fine
“It’s a tender that is above the [financial] limit when an issue procedure must be implemented to allow an unlimited number of applicants. Having read the notification of the issue of the tender, I don’t think it would be possible to argue exclusive rights,” Lenka Zdvíhalová, who specializes in public tender laws with the law firm Pokorný, Wagner & Co., told Czech Position.
Exclusive rights apply when the object of the tender is subject to copyright such as author rights, patents or protected trademarks. Nevertheless, application of these exceptions is extremely limited.
Kovarčík gave an uncertain response when asked about the exclusive rights granted to Teleaxis: “You’re quizzing someone who doesn’t have knowledge of these things. I’ve never worked in the state administration. My people deal with these things,” Kovarčík said.
Other lawyers were equally critical about the way the tender was issued. “From the webpages for the conference, we understand that Teleaxis is the organizer of the event, and therefore it would have been possible to approach other subjects; moreover, it was necessary to proceed according to the law on public tenders and hold an open selection process. In this case, nobody has exclusive rights to providing advertising services,” Jiří Hrádek of the law firm Schönherr said.
Hrádek added that in line with the law on financial management and in the interests of the state enterprise, the spending of funds should be as economical as possible and in the case of the conference its efficacy is doubtful because the international–political theme is not related to Lesy ČR’s field of business.
Exclusive rights
The Czech branch of corruption watchdog Transparency International (TI) says the use of exclusive rights in this case is irregular. “Lesy ČR tried to justify implementing a selection process without a tender public tender on the grounds of exclusive rights as defined in Article 23 of the Law on Public Tenders, but what’s important to establish is whether the company Czech Teleaxis can hold such exclusive rights,” Petr Leyer, a legal expert with TI told Czech Position.
Sectors where exclusive rights often apply include irrigation, energy, telecommunications and transport. “Advertising services do not fulfill the specialized criteria. I cannot say for 100 percent that exclusive rights could not exist in this case; nevertheless, it seems to me to be extremely unlikely,” Leyer said.
When asked if Lesy ČR is contravening laws or regulations by supporting such a conference, Leyer said the question is more an economic than legal one. “Of course, doubts may be arise about whether events such as ‘USA and EU Days’ are beneficial for Lesy ČR. But it’s the people at the top of the state enterprise who are responsible for its management,” Leyer said.
International prestige
Kovarčík told Czech Position that the cost of organizing the conference would reach up to Kč 25 million and that entrance will cost several thousand crowns.
“The Prime Minister has undertaken patronage of this event, just as he did when he was a minister in previous years. He considers it to be beneficial for transatlantic ties. The financing is a matter for the organizer,” Czech government spokesman Jan Osúch told Czech Position via text message.
The organizers, including the Ministry of Agriculture, gave a similar response. “We consider the ‘USA and EU Days’ conference, which will take place under the patronage of the Chairman of the Czech Government [the PM], to be a significant international event that is beneficial for the representation of the Czech Republic on the international level,” Agriculture Ministry spokeswoman Tereza Dvořáčková told Czech position. “Therefore, participation as an advertiser and representation of the state enterprise Lesy ČR can be considered desirable.”
The ministry says it considers the cost of Lesy ČR’s involvement as corresponding to the significance and prestige of the “USA and EU Days” conference.
