Czech Republic

Czech Republic Corruption Report

Snapshot

Czech_Republic_250x163.jpgCorruption can impede business in the Czech Republic. Patronage and nepotism are considered especially problematic in the country. The Criminal Code criminalises attempted corruption, extortionactive and passive bribery, bribery of foreign officials and money laundering. Criminal liability for legal entities (Act No. 418/2011 Coll.) covers domestic and foreign corporate entities registered in the Czech Republic. Nonetheless, the government does not implement the legal framework for combatting corruption effectively. The Czech Republic prohibits facilitation payments, and although the majority of citizens do not encounter petty corruption in their daily lives, bribes or gifts are occasionally needed to speed up public administration processes.

Last updated: October 2015
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Judicial System

The Czech judicial system suffers from corruption (FitW 2015). Judicial independence is provided by the constitution but is undermined by political influence in high-profile cases (NiT 2015). More than half of surveyed households perceive the judiciary to be corrupt (GCB 2013), and businesses report the justice system to be inefficient in settling disputes and challenging government regulations (GCR 2014-2015). Recently, authorities have investigated several judges and one prosecutor for corruption charges (HRR 2014).

Police

Corruption among the Czech Republic police force is reportedly a problem (HRR 2014). Over half of surveyed respondents perceive the police as corrupt (GCB 2013). Despite businesses reporting the police as usually reliable to enforce the law (GCR 2014-2015), more than half of surveyed businesses pay for security (ES 2013). Authorities carry out regular 'integrity tests' to limit the abuse of police officers, and manage to crack down on the solicitation of bribes at traffic stops (HRR 2014).

Public Services

The Czech public administration is riddled with corruption. Surveyed companies consider government regulations to be burdensome, and report bribes or gifts as being needed to 'get things done' (GCR 2014-2015ES 2013). Before the government passed a law on civil service, which entered into force in January 2015, the public administration operated without a functioning civil service legislation and was susceptible to political interference, nepotism and corruption (NiT 2015). More than two-thirds of companies perceive nepotism and patronage to be a problem (European Commission, Feb. 2014), with a significant majority believing that bribery and the use of connections are the easiest way to obtain a public service (European Commission, Feb. 2014). Almost three-quarters of citizens perceive public officials and civil servants to be corrupt (GCB 2013), and inefficient government bureaucracy is ranked as the most problematic factor for doing business (GCR 2014-2015). Businesses also cite inconsistent competition policies among the deterrents to investment (ICS 2015).

Land Administration

The land and construction sector poses a corruption risk for businesses operating in the Czech Republic. Despite marking a decline in recent years, corruption most frequently occurs in the construction sector (HRR 2014). While only a small percentage of companies expect to give gifts in order to obtain a construction permit (ES 2013), almost half of surveyed citizens believe that bribery and abuse are widespread among officials issuing permits (European Commission, Feb. 2014). Property rights are protected by the law and are in practice (BTI 2014). Expropriation is unlikely to occur and government acquisition is carried out in full compliance with international law (ICS 2015). Foreign investors should nonetheless ensure they possess clear titles related to their land and property projects (ICS 2015).

Tax Administration

The Czech tax administration is susceptible to corruption. As revealed by statistics from the Supreme Public Prosecutor, tax fraud is as of recent among the most recurrent crimes accounted for (ICS 2015). Due to the lack of training and awareness-raising, tax authorities are unable to detect impermissible deductions of bribes given to foreign public officials from Czech companies (OECD, 2013 Phase 3 Report).

Customs Administration

The Czech border administration is considered transparent and corruption is ranked as the least problematic factor for both importing and exporting (GETR 2014). Nevertheless, to constitute a competitive disadvantage for the country, businesses report that instances of irregular payments frequently occur when exporting or importing goods (GETR 2014). The average time and cost required to deal with exports and imports is higher than the OECD average (DB 2015).

Public Procurement

A significant percentage of businesses consider corruption to be widespread in national and local public procurements (European Commission 2014). The energy, rail, forestry and postal services are particularly susceptible to undue influence and conflicts of interest (EUACR 2014). Businesses report that due to corruption, diversion of public funds to companies, individuals or groups are very common (GCR 2014-2015). The Czech government officials show favouritism towards well-connected companies and individuals when deciding upon policies and contracts (GCR 2014-2015). Among the main corruption risks are customised criteria for certain bidders and closing a deal on a contract before the call of a tender have been identified (European Commission, Feb. 2014). In one corruption case, a former aide to Prime Minister Mirek Topolanek had been charged for demanding a multi-million dollar bribe from a foreign company in return for a government defense procurement contract (HRR 2014). The case is still pending.

According to a recent analysis carried out by the NGO zIndex, sponsors of political parties received contracts worth USD 19.5 billion, and companies owned by political donors acquired 40% to 60% more public contracts than companies owned by non-donors (HRR 2014). Almost half of businesses cite that partly funding in exchange for public contracts or influence over policy is common (European Commission, Feb. 2014). A practice that is perceived by many businesses to be widespread is the abuse of emergency grounds to justify the use of non-competitive procedures (European Commission, Feb. 2014). 

Legislation

The Criminal Code criminalises attempted corruption, extortionactive and passive bribery, bribery of foreign officials and money laundering. Money laundering is also regulated under Act No. 253/2008 Coll. For officials, the punishment of bribery and abuse of power can be up to 12 years in prison (ICS 2015). Legislators, members of the cabinet and public officials are required by the Conflict of Interests Act 2006 to annually declare their assets. Asset information can be viewed by sending a written request, but the provided information often lacks sufficient detail. The conflict of interest provisions are considered inadequate as they do not provide sanctions (NISA 2011). The government passed a Law on Civil Service, which prohibits political interference in the public administration and operations of state-owned enterprises (ICS 2015). In 2013, the government cancelled the lifetime immunity of politicians. It also abolished the practice of losovacka (or lottery), the selection of bidders in public procurements by drawing lots, which no longer allowed the government to limit the number of bidders (ICS 2015). The Ministry of Defence established a special unit to audit defence contracts (HRR 2014). Anti-corruption laws are not always effectively implemented, and government officials often engage in corruption with immunity (HRR 2014). The Czech Republic ratified the OECD Anti-bribery Convention, but enforcement is reportedly very weak. The Czech Republic is among the OECD countries to reject an exception for facilitation payments, and has signed and ratified the United Nations Convention against Corruption (UNCAC). Whistleblower protection is insufficient (HRR 2014).

The Government of the Czech Republic approved the Government Anti-Corruption Conception for the years 2015 to 2017, as well as a Anti-Corruption Action Plan for 2015. The strategy focuses on issues such as combatting corruption within the public administration, access to information and civil society development (NRPoCR 2015). 

Civil Society

Freedoms of speech and of the press are guaranteed by the Constitution of the Czech Republic and are respected by the government (HRR 2014). The media is independent from the government, and in 2011, authorities amended the 'muzzle law' to legalise and allow the media to publish information and the names of individuals involved in criminal cases. Previously the law hindered journalists from reporting on corruption cases (FotP 2014). During the past few years, the independence of the media has been jeopardised by the concentration of major newspapers to a few magnates (NiT 2015). Access to information is guaranteed under Czech law and authorities generally provide access to the public and foreign media (HRR 2014). The media environment is considered 'free' (FotP 2014). 

Freedoms of assembly and of association are protected by the Constitution and are also respected in practice (HRR 2014). Civil society is well developed and varied with many forms of civil society organisations (NISA 2011). National, regional and local authorities reportedly cooperate with civil society actors (NiT 2015). Anti-corruption NGOs have been reportedly very active and played a significant role in the creation of an anti-corruption department (NiT 2014). With the support of national businesses and international donors, more than 20 NGOs launched an anti-corruption campaign named the "Reconstruction of the State".

Sources

Topics: Europe & Central Asia