They laid down their political lives so that shareholders could remain unknown. We shall forget them.

Walter Bartoš + Radim Jirout + Václav Mencl + František Sivera + Igor Svoják + Jan Vidím + Jan Florián + Jan Bauer + František Dědič + Jaroslav Krupka + Boris Šťastný + Pavel Bém + Pavel Drobil + Aleš Rádl + Pavel Suchánek + Jiří Šulc + Pavel Svoboda + Tomáš Úlehla.

The plea of ignorance removed.






The lower house of the Czech parliament put in place the foundation stone for the Tomb to the Unknown Shareholder last night, approving by a strong majority the draft law on anonymous shares.

The proposal seeks to disadvantage hidden owners: It does not set out to expose them. It would oblige all firms, including those chasing public contracts, to deposit their bearer shares in paper form in the Central Depository or in a bank –so making them visible, at least to the authorities. If they did not do so, the bearer shares would be changed into registered shares –so making them visible to all as of January 1st 2014 .

Let us assume that the upper house approves the draft law, which seems likely enough. What would happen next? Would the hidden owners be revealed?

They would not. The firms they own secretly would most likely abandon further attempts to win public contracts, in order to preserve the anonymity of their owners, and, in many cases, their freedom as well. Or they would change their owners. The real risk posed by the new law is to those firms, with conflicted hidden owners, currently servicing public contracts.

It is inconceivable that today’s political elite would ever enact a law that obliged hidden owners to reveal themselves. This would be far, far too dangerous, given the scale and depth of the problem.

The exposure of so many conflicts of interests at the highest levels would cripple the political system. And it would cripple the legal system as well, as the victims of so much fraud set about recovering their losses. It might even bankrupt some state-owned companies.

Such exposure would require an amnesty vastly more sweeping than the one just granted by Vaclav Klaus. And that would cause a revolution.

The government bill on anonymous shares is far from revolutionary: It is a cautious step in the right direction. It seeks to impose a business disadvantage on the corrupt. If conflicted hidden owners walk away from public contracts in future, they will not be much troubled by the new law. It is not as if the banks into which the bearer shares will be deposited would make them public. But it would allow the authorities to trace the ultimate beneficiaries when needed (or better said, it would remove the plea of ignorance behind which the authorities have been hiding) - for instance when investigating companies applying for public procurement contracts.

The same principle was applied in the so-called lustration law from the early 1990s. If you sought a public position, you ran the risk of being exposed as a Communist agent. But if you stuck to the private sector, your past would remain private as well.

Time will tell whether the new law will be as ineffective as the lustration law has been in raising standards of good governance and in keeping criminals with a Communist past out of public life.

Nevertheless, it is the ‘velvet’ nature of the government proposal that exposed so vividly the revanchist nature of the proposal by ODS MP Pavel Suchanek, who himself is connected to a firm with anonymous owners.

Suchanek wanted to exempt existing owners of bearer shares from the new law, thus removing the advantage that the government intends to give to firms with transparent ownership structures.

Suchanek’s proposal was protectionist. It hoped to secure for a little longer the unfairly earned market share of incumbent hidden owners. Under his proposal, politicians and managers of ‘private’ firms in which the state holds a majority, would have continued to serve up contracts to each other, secure in the knowledge that their criminal conflicts of interest would have remained hidden.

The government bill on anonymous shares undermines that feeling of immunity by obliging the holder of bearer shares to leave a paper trail of their assets.

It will no longer be possible for Czech government ministers to claim, or for them plausibly to feign, ignorance when asked who the true owners are of companies like Skoda Transportation, I&C Energo and CEEI. (That's my shortlist, what's yours?)

Recall the response by then CEZ supervisory board chairman, Martin Kocourek (who, I read somewhere, is now an employee of Merit Government Relations, a lobbying firm allegedly owned by the country's 'top competition lawyer', Radek Pokorny), when asked if he was aware of who owned one of CEZ's favourite suppliers. He said: "CEZ is not a detective agency." Under the new law, it would not need to be. The supervisory board chairman of CEZ would need only to check the Central Depository.

When the tomb of the unknown shareholder is finally erected, I suggest in Plzen, the origin of so many beneficial owners, it might be appropriate to place the name of Pavel Suchanek and the seventeen ODS MPs who voted for him, on the tomb.

The citation could read as follows:

Walter Bartoš + Radim Jirout + Václav Mencl + František Sivera + Igor Svoják + Jan Vidím + Jan Florián + Jan Bauer + František Dědič + Jaroslav Krupka + Boris Šťastný + Pavel Bém + Pavel Drobil + Aleš Rádl + Pavel Suchánek + Jiří Šulc + Pavel Svoboda + Tomáš Úlehla.

They laid down their political lives so that shareholders could remain unknown. We shall forget them.