Temelin is heading the way of the supersonic fighter tender a decade ago.







Monday, December 3rd 2012, Prague: Secretary of State Clinton has been ‘talking Temelin and transparency' with her Czech counterpart this morning, of this we can be sure. When a senior US diplomat starts a sentence with the phrase, "If the tender is transparent, which we have no reason to doubt…," you know they think it stinks.

Recall Gripen. In May 2001, four of the five bidders to supply the Czech Republic with supersonic fighters pulled out on the grounds that the process was being rigged in favor of BAE Systems/Saab and their JAS-39 Gripen.

Temelin is heading the way of the supersonic fighter tender a decade ago, and for the same reasons: a rent-seeking industry in decline and dependent upon corruptible foreign governments to boost sales. In such an environment, the fewer scruples you possess, the better your chances are of grabbing the rents.

Rent-seeking industry

The allegation that BAE Systems funded bribes paid to Czech politicians in the build-up to the critical parliamentary vote on the state guarantee for the bank loan to pay for the 24 JAS-39 Gripen jets, a vote which the government lost by one vote in June 2002 –this allegation remains unproven in a court of law. But the scandal and several others like it were serious enough to force BAE to settle out of court with the British and US authorities at a cost of hundreds of millions of dollars to the firm. And to usher in a new law, the UK Bribery Act 2010.

The nuclear power industry, like the arms industry, is not known for its probity. In recent memory in the Czech Republic, we have the ludicrous example of CEEI, which I have written about ad nauseam. Once again and in brief, Europe’s leading manufacturer of spent nuclear fuel casks and designer of the buildings in which they are housed, a German business called GNS/WTI, made contractual commitments to sell the complete documentation of a brand new Bavarian spent nuclear fuel storage facility to a shell company represented by a lawyer in Liechtenstein. CEEI at the time of the agreement was managed by a certain Martin Peter, the owner of a PR firm who had worked with Helena Vondrackova and is now serving time for assaulting the man who took his job at CEEI, the golfing ODS lawyer from Moravia, JUDr. Jiri Kovar. Kovar served as the right hand man of the prime minister twenty years ago (Vaclav Klaus), before being kicked out of office after his party colleagues accused him of trying to blackmail them. Two years ago, he ran unsuccessfully for president of the Czech Golf Federation and so on.

Peter’s CEEI was the company Daniel Benes, now CEO of CEZ, chose in 2008 to build, at a spectacular price, Temelin’s spent fuel storage facility, on the grounds that it was the only company bidding for the work that had the right to use the German know-how (which was never used). It appears that the agreement between the German firm and the Liechtenstein shell was simply a cunning ruse to lend plausibility to the preferred choice of Benes, with the Germans playing their part by providing his preference with the paper credentials to bid –and win.

Corrupt administration

Moving swiftly on, what about the corruptible foreign governments? We all read the newspapers, so there is no need to elaborate on the ethical standards of the Czech defence sector. That part of the Czech state which will decide upon Temelin is intimately connected to that part which decided CASA, Pandur and the rest. The key owners and evaluators of Temelin include the majority shareholder of CEZ, represented by Miroslav Kalousek, and CEZ’s top management, represented by Daniel Benes as CEO and Martin Roman as chairman of the supervisory board. All three gentlemen have been directly and indirectly linked to enough scandals to undermine any confidence one might once have had in their probity. Then there are two prominent local lawyers hired to handle the Temelin brief on behalf of them all. Both Karel Muzikar Junior and Radek Pokorny have reputations that should make any respectable lawyer wince.

Who needs economics when you have geopolitics?

In the case of the supersonics, there was no independent oversight because, as Kalousek so endlessly explained last summer, when trying to stop ex-defence minister Parkanova from being arrested, this is all about national security, and national security does not require value-for-money justifications.

When the prime minister (or was it the outgoing defence minister?) said recently that we need Gripens to protect Temelin, the logical loop was closed. Gripen to protect Temelin; Temelin to justify Gripens! Its brilliant! Temelin is geopolitics, and geopolitics requires no economic justification. It's the trump card.

Temelin is different to Gripen at least in one respect: There was no special envoy for supersonics. Would it have helped? Bartuska’s task is to ensure that Temelin is clean as a whistle. Apart from doubts (jokes?) about his influence, I wonder how independent he is -not of the bidders but of CEZ? We all know that he has excellent dissident credentials and a handle on the big strategic issues. Less well known is that he used to work for Martin Roman’s PR guru, Milan Hejl, the owner of AMI Communications. AMI is very much an establishment firm, working predominantly on state contracts, and for state-owned businesses such as CEZ. In my opinion, Bartuska is more influential than he is independent. And few consider him influential.

And then there was Areva.

The peremptory disqualification of the French bid for Temelin smells very Gripen-like. Back in 2001, we all thought that the credibility of the supersonic tender, and the tender itself, was buggered when four out five bidders pulled out because of doubts about its fairness. Not a bit of it!

Gripen, the last left in the ring, went on to win (14 leased jets rather than 24 bought, but still a win). Expect the same scenario for Temelin. The French have been scrubbed on a legal technicality by Muzikar&Pokorny. The Americans will be next. The issue now is whether they will jump before they are pushed.

And that will leave the Russians, for whom transparency is an affectation adopted when sueing each other in London's High Court. In Prague, they can be more authentic.

So Mrs Clinton, when talking Temelin, think Gripen.