The corruption system operates at various levels in the state. It thrives best where decision-making is concentrated in the hands of a small group of individuals, where the function of a sound yet careful regulator is neglected, and, most importantly, where there is an abundance to surplus of resources.
This is also why a large part of corruption schemes have attached themselves to subsidy systems – both national and European. European subsidies are often the target of criticism in our region, precisely on the grounds that they cause economic crime and corruption. However, the truth is that corruption is not caused by the resources themselves, but mainly by the environment in which they are allocated. The European institutions do not oversee the allocation system or the control of each individual subsidy project. The Union allocates subsidies to the Member State, which itself sets up mechanisms to allocate and control the subsidies. Only in the case of huge breaches of basic rules and directives does the EU ask states to remedy the situation and return the embezzled money. Any corruption is the responsibility of the state and the one who embezzles the money. Therefore, in simple terms, critics of EU subsidies say: “Don’t be silly, don’t give us money, because we will steal it.” As if it were impossible not to steal resources.
European resources are and have been allocated to all countries of the Union, and far from all countries have perceived them as a source of corruption. These differences are best described by surveys of perceptions of corruption and statistics on the number of infringement proceedings related to EU subsidies.
One of the biggest blows to the perception of EU subsidies and corruption in the Czech case was the case of the Regional Operational Programme Severozápad (ROP Severozápad). The aim of the subsidy scheme was to support the regions of Ústí and Karlovy Vary and their development. However, the proclaimed idea of ROP Severozápad – to finance the construction of schools, cultural centres, sports grounds or the revitalisation of parks – remained only on paper. In reality, local organised crime was attached to the scheme, which was most visible in the case of towns such as Chomutov, Litvínov, Cheb and Teplice. Shortly after the launch of the subsidy projects, the observer discovered that the subsidies were not going to the areas where they were most needed, but instead to overpriced investment projects backed by local businessmen and their political allies. As it was later shown, the regional leadership had agreed in advance with the entrepreneurs, in return for commissions, which projects would be supported by the subsidies and to what extent.
In addition to politicians and businessmen, dozens of officials fed into the scheme, falsifying documents and audit reports in exchange for rewards. According to the prosecution, the organised group included former Ústí nad Labem governor Jana Vaňhová (ČSSD), Cheb mayor Petr Navrátil (ČSSD), businessman Daniel Ježek and former senator and well-known Chomutov boss Alexandr Novák (ODS). Of the roughly CZK 20 billion in subsidies, up to two-thirds were embezzled.
The result was billions of crowns unpaid to the EU and several heavy fines for the regions concerned. For example, due to an audit by the European Commission, the Karlovy Vary Region had to return hundreds of millions of crowns in subsidies to Brussels. Contracts such as the reconstruction of the Becher Villa in Karlovy Vary were a problem.
A small group of entrepreneurs has been involved in similar projects. In 2010-2012, Alexander Novák’s projects did well in the region, as did the companies Prefa Beton, Tekaz and Západní stavební DL of the influential ČSSD MP Tomáš Zuckermann.
His companies also worked on the project of reconstruction of the hospital pavilion in Karlovy Vary. The contracts were awarded when Zuckermann sat on the financial commission of the Karlovy Vary Region. In addition to the suspicion of a conflict of interest of Tomáš Zuckermann, it was also strange that Jakub Pánik, the then regional chairman of the ČSSD, served as a commercial director at Prefa Beton.
In December 2016, the police charged 24 people in connection with ROP North-West. In the following years, the circle of accused expanded. However, the stolen subsidies had to be recovered by taxpayers through local governments and the state.
