The Czech anti-corruption and financial crime police unit (ÚOKFK) has asked for Vlasta Parkanová (TOP 09), deputy speaker of the lower house of Parliament, to be stripped of immunity so that she may be prosecuted on abuse of office and other charges for her role in the 2009 purchase of CASA transport aircraft, when she was defense minister.
An appraisal of the Kč 3.6 billion deal ordered by the ÚOKFK found that it had been deliberately overpriced by at least Kč 658 million, the amount in damages that form the basis for the charge that Parkanová violated her fiduciary duties regarding the purchase of four CASA C-295M planes for the Czech Army from Spanish aircraft maker EADS, a subsidiary of Airbus Military.
Parkanová, who served as defense minister from 2007 to 2009, said she was shocked to learn of the police request, which came in a letter to house speaker Miroslava Němcová (Civic Democrats, ODS). She had signed the contact on the day before she was replaced as minister by Martin Barták (ODS) — who later came under investigation for having allegedly solicited a bribe from former US ambassador William J. Cabaniss after the latter joined the Tatra truck maker.
There have long been suspicions regarding the CASA deal. In September 2010 — a month before the European Court of Justice (ECJ) in Luxembourg began looking into allegations of corruption related to the purchase (which the European Commission later investigated for breaching public procurement rules, as it was done without a tender) — Parkanová said in a statement:
“I do not dispute the claim that we could have bought the aircraft for less if we had had more time. The previous government, however, left us with its ill-considered decision on the purchase of [Steyr’s Pandur] armored personnel carriers, which for years precluded any major purchases of military equipment, a development that threatened to leave the Czech Army without air transport because the existing AN 26s, which the CASAs replaced, had reached the end of their operating life.”
Public Affairs (VV) chairman Radek John of the immunity and mandate committee has said he will recommend his party’s MPs vote in favor of lifting her immunity. Her own party, a junior member of the center-right coalition government, appears ready to back her, while there has been no signal yet from Prime Minister Petr Nečas (ODS).
Unwanted and overpriced
As Czech Position reported in October 2011, a market study showed that the Czech Republic could have obtained four CASA transport planes from the EADS consortium for Kč 2.83 billion back in 2006. In May 2009, under Parkanová the Defense Ministry was looking to buy three of the same aircraft through the controversial Czech arms dealer Omnipol — under similar delivery conditions and without holding a tender — for Kč 3.577 billion, far more than Poland and other NATO countries had paid.
The final price per unit turned out to be even higher, as the Czech side had in fact traded five L-159 fighters for one of the planes. Furthermore, according to the findings of the Supreme Audit Office (NKÚ), which has examined past questionable military purchases, representatives of the Czech Army general staff did not even want the CASA planes.
“Acquisition of the four tactical CASA aircraft is not the end solution for replenishing the Czech Army transport fleet, in light of operational and operational-tactical conditions, due to the range of the aircraft, and the load capacity does not adequately fully address the Czech Army’s requirements,” NKÚ experts said citing a review by General Vlastimil Pick from 2008. “It would be necessary to acquire another two planes to meet the higher load capacity requirements.”
The Czech military took delivery of the four CASA C-295M transport planes in early 2011 and had hoped to deploy them in Afghanistan soon thereafter. However, tests revealed that the planes’ DAS anti-rocket systems were not functioning, and there were serious faults with the navigation systems. The planes were deemed unfit for military use and immediately grounded.
Brussels: Don’t do it again
The cabinet of Mirek Topolánek (ODS) in April 2009 approved a proposal to trade five Czech L-159 fighters, which the army had been trying to unload for years, for a CASA transport plane, but to buy the other three well above market price. Whereas the original basic price per unit stood at Kč 638 million, suddenly it shot to nearly Kč 1.2 billion following the partial barter deal. Just how the total contract price was arrived has not been made public.
Finance Minister Miroslav Kalousek (TOP 09), himself a former deputy defense minister responsible for budget and acquisitions (1993–1998), has said is absurd to look to prosecute only one minister when the entire Cabinet approved the CASA deal, and said the ÚOKFK’s appraisal lacked credibility. Furthermore, he said the Defense Ministry has no obligation to order expert appraisals as this is done internally in case of the trade of “special materials.”
The European Commission had criticized the Czech Army’s purchase of the CASA planes without holding a tender, allegedly in breach of EU rules on public procurement —a violation carrying fines that could have added to the final cost of the CASA purchase by hundreds of millions of crowns. But in November 2011 the European Commission dropped the investigation, saying that while it still had doubts about the deal, Czech authorities had provided assurances that in future EU rules on public tenders would be strictly adhered to.
According to the public procurement Directive 2004/18/EC, the award of public contracts must be made on the basis of an EU-wide tender procedure. However, it provides for an exemption in cases where the contracting authority buys specific military material and a public tender would put the essential security interests of the relevant EU Member State at risk.
The Czech authorities considered that no public tendering procedure would be necessary as the aircraft would be used mainly for military missions of the Czech Republic, i.e. for the protection of essential security interests of the State.
Kalousek and Omnipol
The contract for the purchase of four CASA C-295Ms was signed by Parkanová on the day before she was replaced as minister by Martin Barták (ODS) — who later came under investigation for having allegedly solicited a bribe from former US ambassador William J. Cabaniss, who went on to join the Tatra truckmaker.
Among the principals signing off on the CASA deal were Kalousek and Parkanová (both then members of the Christian Democrats, KDU-ČSL) and Barták. The finance minister himself has long been criticized for his close friendship with the former chairman of the arms dealer Omnipol, Richard Háva, leading to possible conflicts of interest. Háva was discovered to have been paying the rent of a luxury apartment in which Kalousek lived, raising allegations of corruption, but no trial was held.
It was Kalousek who inserted the requirement to utilize intermediaries into the defense procurement law. Last March, the government approved amendments to the law put forward by Defense Minister Alexandr Vondra (Civic Democrats, ODS) to cut out the middlemen in armament and equipment purchases made by the Defense Ministry. Between 2004 and 2010 the ministry made acquisitions running into tens of billions of crowns through Omnipol, and fellow Czech arms dealers MPI Group, Praga-Export, and A.M.T. Kalousek opposed but did not block the move.