THE BLOG

The Czech Culture of Corruption

The Czech playwright and dissident Vaclav Havel popularized the notion of "living in truth." He was dismayed at the degree to which lies had permeated Czechoslovak society under Communism. It wasn't only government and party officials who lied about history, the economy, the state of human rights, the opposition Charter 77 movement, and so on. Virtually everyone in society was complicit in those lies. His famous example, the green grocer who displayed propaganda in his shop window, demonstrated that nearly all citizens had to engage in lies to survive. Czechoslovak society had moved into a "post-totalitarian" phase in which conformity kept the regime in power rather than mere naked force.

When Havel became president of Czechoslovakia at the end of 1989 -- and later, the president of the Czech Republic -- he became a powerful symbol of a new era of politics. Surely the country would "live in truth" as long as it had a president of unimpeachable character. On the practical, day-to-day matters of politics and economics, however, Havel was not as influential. Czech culture succumbed to a new kind of falsity -- the lies of corruption.

"If you're a politician here and you lie and there's evidence that you lied, nothing happens," Marie Perinova points out. "You don't resign. We even have a member of parliament who has been sentenced to jail for corruption. He's now starting his jail term, and he has not resigned from his MP status."

Perinova is the communications manager at the Open Society Fund Prague (OSFP). I talked with her and colleague Robert Basch, the executive director of the OSFP, at their office in Prague last February.

"We don't have drug mafias or organized crime as in Bulgaria," Basch explains. "It's organized crime, but it's white collar. They're not mafiosos. The corruption is very often done by smart people doing business with the state, withdrawing state money through business."

There is corruption at the national level, dating back to the privatization process and the enrichment of a new class of businesspeople. There is also corruption in properties that have remained largely in state hands, like the Czech energy company CEZ.

But perhaps the more disturbing phenomenon is how deep the political-economic collusion goes at a regional and local level. "If you decide to do a career in a political party, it's not very difficult to become a member at the local level," Basch observes. "Members are nominated according to specific rules at the party congress. There's a regional and then a national congress. If you have more people at the congress, you can nominate the people you want. So, the people who wanted to make a career out of using the political party for their private business, they brought people in as party members, paid the membership fees for them, and were able to ensure that their people were nominated to the regional and national congress. If you decide to do business at a regional level, you can become a party member, get connected, and make money by getting public contracts. It's the same with the EU structural funds. At the end of the day, the top party people are not as influential as the party people at the regional level."

OSFP has promoted a number of projects on transparency and rule of law, from a Truth-o-Meter to the creation of watchdog organizations. "Two years ago, we started to make a map of watchdog organizations in the Czech Republic, from the biggest like Transparency International all the way down to the ones in the village that are just a bunch of people focusing on whether the village heads are spending the money correctly," Perinova reports. "There are more than 150 organizations in the Czech Republic."

We talked about how the lack of a civil service law perpetuates this culture of corruption, the disturbing level of racism in the mainstream population, and why the Czech Communist Party continues to appeal to a substantial number of people in the country.

The Interview

Corruption is usually top of the list wherever I go in this region. But in Bulgaria or Serbia, they blame it on the fact that there was no major transformation -- the same people are in power as in the Milosevic era or in the communist era. It's an atmosphere that breeds corruption. But here you had a revolution, a lustration law, a pretty substantial break with the personnel of the past. To what do you attribute corruption here?

Robert Basch: There are two issues. If you decide to do a career in a political party, it's not very difficult to become a member at the local level. Members are nominated according to specific rules at the party congress. There's a regional and then a national congress. If you have more people at the congress, you can nominate the people you want. So, the people who wanted to make a career out of using the political party for their private business, they brought people in as party members, paid the membership fees for them, and were able to ensure that their people were nominated to the regional and national congress. If you decide to do business at a regional level, you can become a party member, get connected, and make money by getting public contracts. It's the same with the EU structural funds. At the end of the day, the top party people are not as influential as the party people at the regional level. And because of the system of voting within the party, these top people are really dependent on people in the region.

The second issue has to do with the national level. At the end of the 1990s, there was an opposition agreement when the Social Democrats came to power. The Social Democrats were in charge of government, but they were supported by the opposition Civic Democrats. The two parties basically divided up the country. Each state-owned company was filled with political appointees who got quite good salaries for doing nothing, just using their positions as a financial channel to their businesses with the money then funneled back to the parties. The influential people at the regional level were party members of one party, but they also made sure to have representation in the second strongest party as well. They governed the regions this way. Any officials not willing to engage in corrupt practices were simply fired and replaced with new people. Again, because there's no civil service law, if there are people who are uncomfortable for you, you can just kick them out.

Marie Perinova: There's also a complete lack of political culture here. But I guess that's the same all around Central Europe. It's definitely a remnant of the past. If you're a politician here and you lie and there's evidence that you lied, nothing happens. You don't resign. We even have a member of parliament who has been sentenced to jail for corruption. He's now starting his jail term, and he has not resigned from his MP status.

Robert Basch: The new president was just elected. His campaign was full of lies and accusations that were not true. If he was caught in a lie, he didn't have any problem using another lie in his defense!

Do you have a Truth-o-Meter here?

Marie Perinova: We do. We actually supported it, and it started last year. It's very popular in the media. There are lots of articles about it. But it doesn't change the situation.

In Serbia, they've had a Truth-o-Meter for a couple years, and it's begun to have some effect. The most visible effect, however, is that politician no longer make promises. Part of the Truth-o-Meter was not just determining the veracity of statements but whether promises are kept or not. In terms of truth, it's a supreme irony that you are in this situation here in the Czech Republic, given how much Vaclav Havel and others emphasized the importance of "living in truth." But that tradition didn't apparently sink in.

Robert Basch: Definitely not. Vaclav Havel as president definitely had influence, but in regard to practical day-to-day politics, he was not so influential. On this, Vaclav Klaus was much more effective.

As part of the privatization of the national property in the 1990s, there are now a lot of businesspeople who are very rich guys. Klaus's government privatized the Czech insurance company, which is still the largest one here, and it was privatized for almost nothing and in a very strange way. The guy who bought it is worth about 30 billion crowns. He also has a huge business in Russia. Now he has built a Vaclav Klaus Institute. This guy and some other Czech oligarchs are around Klaus. Perhaps this will change when he's gone.

The state still owns 51 percent of the stock in the Czech energy company, CEZ. The board chairman is using his money for the Social Democrats. The CEZ should be governed and controlled by the state, but it's not. We do have an authority in the highest control office for controlling business. But they don't have the authority to control this energy company. The politicians are still trying to prevent putting CEZ under the control of this independent body. And what could be the reason? CEZ is making this huge amount of money. And many people are making lots of money because of bad legislation -

Bad legislation on?

Robert Basch: Photovoltaic cells. There were huge government subsidies for the photovoltaic industry. And CEZ, because it basically controlled the energy network, was the responsible body for collecting that money. And it made a huge amount of money by buying up some of the biggest photovoltaic power plants in the Czech Republic and receiving subsidies from the government. The state is responsible for the legislation, and it's clear that there was some deal behind it. For a long time, everybody thought CEZ wasn't involved in this business. But they did it through other businesses. The ministry of finance should have acted as the majority owner, but it didn't do anything -- probably because of all the money, which could be used to fund the political parties. Private businesses are now detached from the state. But these state businesses are still withdrawing more and more money from the state through these games.

How would you evaluate the watchdog organizations dealing with this problem? Are there a lot of individuals and organizations interested in this issue?

To read the rest of the interview, click here.