An Extraordinary Story of Bribery and Bravery

A whistleblower prompts a political revolution in one of the most corrupt Czech cities

Milan Šťastný has been in the construction business for 20 years. His company employs around 70 people, with annual revenues totaling hundreds of thousands of crowns. "I knew our industry was far from being corruption-free but this is just too much," says Šťastný, recalling an unexpected recent event.

Milan, this is crazy!
It all began quite innocently. He received a phone call from one of the country's major construction entrepreneurs, Svatoslav Outulný. Mr. Outulný refused to talk on the phone and asked Šťastný out for a coffee. Outulný and Šťastný had both been competing for a lucrative 40-million-crown contract to build a gym at a school in the town of Třebíč. "He told me that the tender had been designed to go to him but I had complicated it all because my offer was lower," says Šťastný.

As the business newspaper Hospodářské noviny reported later, Outulný offered to compensate Šťastný if he increased the price of his bid. "He told me he would give me 250,000 crowns if I raised my price," claims Mr. Šťastný. "He said he couldn't give me more because there were a number of firms competing in the tender and he would have to distribute money to all the lower bidders."

It came as a surprise to Mr. Šťastný. "I have only ever heard about this kind of thing before, then, all of a sudden, I encountered it myself," he says. Accepting the bribe never crossed his mind. "I don't want my kids to grow up with this shit, though," he explains. So he was quick to report the case to the local mayor at that time, Ivan Uher (Civic Democrats – ODS), whom he knows personally. "I expected him to jump up and shout, 'Milan, this is crazy, I will do something about it this very minute -- this is public money after all!' But instead he just told me it was a problem between me and Outulný."

Dangerous condition
After unsuccessfully approaching the mayor, Mr. Šťastný consulted the police. Detectives from Brno's anti-corruption unit visited him and asked him about the details of the case. At the same time, they told him the investigation could take a long time, because they would have to interrogate a number of people, verify the contracts, etc. While the police worked on the case, events took a new turn.

Šťastný insisted on submitting the lower offer. Suddenly, the city council cancelled the tender, saying that a number of bidders had failed to submit all the necessary paperwork.

Experts at Prague's Charles University recently published an analysis in which they found that tenders for public money are often non-transparent and tailored toward a specific bidder. This resulted in the wasting of around 300 billion crowns in the past five years. Apparently, it works this way: the contracting authority will draw up the conditions in such a way that only one specific bidder is capable of meeting them all.

That is exactly what happened in Třebíč. The new tender that the local city council called for included a requirement that the bidders be holders of a top-level work safety certificate. But, when asked, the officials couldn't explain why they'd added this new condition, which subsequently disqualified all of Outulný's competitors. Outulný's bid subsequently won, despite the fact it was 10 million crowns more expensive than the original winner.

It's all a conspiracy
None of the officials responsible for the tender seemed worried. "I don't care what they say about me," says former Deputy Mayor Miloš Mašek (Social Democrats – ČSSD) over the phone. "I don't want to talk about it. Goodbye." Mašek was among the committee members responsible for setting the tender conditions. "I don't know why we had the safety measures," says another committee member, Stanislav Mastný (Civic Democrats – ODS). "We just decided to, that's all."

"I have no fear of anyone trying to prove that I'm corrupt," says former Mayor Ivo Uher. "I don't subscribe to the view that I have done something suspicious." Uher lost last year's election and now imports tractors from Belarus for a living. "I wasn't a member of the committee and, as regards Mr. Šťastný's visit to my office, I don't recall very much about it. I don't remember what we talked about or if we talked about corruption."

The only one worried now is Svatoslav Outulný. "I have never offered a bribe to anybody," he says in front of his spacious villa in Hartvíkovice. "It is all a conspiracy to discredit me and my business." The anti-corruption unit has charged him over his actions related to the bid and he now faces up to two years in prison. More people could be charged, including former Třebíč council officials. The police are expected to present a clearer picture of the case in just a few weeks.

Třebíč used to be among the most corrupt cities in the country but the attention it has received from the media has prompted locals to speak up. Local activists organized several public debates and new political groups ran on an anti-corruption ticket in last year's election. For the first time in eight years, the people of Třebíč voted out the ODS-ČSSD coalition and the city council is now in the hands of new faces who promise to bring transparency to the city's public tenders.

The new administration has conducted a study into why corruption was so rampant, who was behind it and who was directly involved, which should be published next week. "Part of it should be the tender for the school gym," says Pavel Heřman, who had been in opposition for several years before becoming mayor again at the last election.

The new administration also publishes complete documentation relating to public tenders online, including the criteria, information about the offers received and detailed information about individual bidders. The bid committee includes members of the opposition, which should help secure more transparency and control. "We certainly plan to continue with this trend," says Heřman.

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