Political corruption in the usage of EU funds in the Czech Republic

The low efficiency in disbursing EU funds is exacerbated primarily by instability in the public administration, which is caused by the politicization of public officials. The main problem is the ineffectiveness of practically the entire Act No. 218/2002 on the Service of Public Servants, which the current government is determined to amend substantially during this summer. However, the amendment is anything but perfect.

Foto: CreativeCommons/verto jan

11. 08. 2014

The low efficiency in the usage of funds correlates with the inadequate overall condition of the public administration in the Czech Republic. This problem is indicated by the still-declining position of the Czech Republic compared with other countries in, for example, the corruption perception index. The reports of GRECO from the second evaluation round also focus on public administration, corruption and the links between corruption, organized crime and money laundering, identifying a number of problems that affect the operations of clientelist groups in the Czech Republic.

In its Annual Reports for 2010 and 2011, the Czech Security Information Service (BIS) repeatedly warns against the risks related to clientelist groups: “Czech organized crime at the highest level consists of clientelist networks and structures of business power relationships. Using legal economic entities, it profits mainly from systematic accumulation of wealth from public budgets and companies with a state ownership share. However, the entrepreneurial activities of representatives of such structures (via legal commercial entities) also involve exertion of influence on state and local administration authorities, on the legislative process, and also on state-controlled enterprises.”

Indicators of corruption

The data from the study „Public money and corruption risks. The risks of systemic political corruption in the management of EU funds and state-owned enterprises in the Czech Republic, Slovakia and Poland” on the overall allocation of funds, the resources spent so far, and corrections (meaning returned amounts) reveals—at best—inefficiency in the usage of EU funds. It has identified indicators of corruption throughout the system of disbursing EU funds, including

  • the staffing of public authorities and the consequent politicization of the public administration;
  • the risk of conflict of interest, which is made possible by the anonymous ownership of companies that receive public funds; and
  • problems concerning the efficiency of independent audits conducted by the Supreme Audit Institutions of the individual countries.

These gaps and deficiencies in the legislation indicate a high risk of systemic political corruption. This statement is based on an analysis of existing cases in which the corrupt behavior of specific persons has already been proven, or in which the occurrence of corrupt behavior on the political level is suspected, while in all cases there was a misuse of public funds and specific, quantifiable losses of those funds. These gaps in the legal regulations for the protection of public property, together with the laws regulating the decision-making and supervisory procedures related to public property are clear indicators of an increased risk of systemic political corruption.

The cases described below illustrate the politicization of public administration, conflict of interest, non-transparent assessment of project applications and other misconduct:

  • The Rath case: This case deals with a clientelist group that allegedly influenced the activities of the management and control bodies of the Regional Operational Program of Central Bohemia during the period of 2008–2012. The result was manipulation of at least eight public procurements: the clientelist group wanted to illegally obtain CZK 300 million from EU funds in this way. This case illustrates the politicization of public administration, conflict of interest in disbursing funds from the EU, and managing a company with equity participation of the Central Region (MOE). In this case, the Governor of the Central Region, David Rath, and several other persons were accused and the case is still open.
  • The Řebíček system: The politicization of the Czech Ministry of Transport and its subordinate bodies of public administration (the Road and Motorway Directorate, the State Fund for Transport Infrastructure) from 2007 to 2009 was made possible by the ineffectiveness of almost the entirety of Act 218/2002 Coll., The Civil Service Act. This politicization led to the awarding of public procurement contracts co-financed by EU funds to a narrow circle of companies whose co-owners belonged to a clientelist group. There is a reasonable suspicion that the Minister for Transport, Aleš Řebíček, was a member of this clientelist group. The value of procurements awarded in this way exceeds CZK 14 billion. This case illustrates the politicization of public administration, conflict of interest, non-transparent assessment of project applications and other misconduct.
  • Regional Operational Program North-West: This case is concerned with the politicization of management and audit bodies of the Regional Operational Program in the Programming period of 2007–2013, and its consequences: provision of subsidies and granting of public procurement contracts to a narrow circle of people – members of clientelist groups.

Corruption risk indicators

The cases above give a fairly clear idea of the corrupt practices and show how such behavior uses specific gaps in legislation. The first prerequisite of the operation of clientelist networks is the high politicization of management and control bodies. Every change of public officials (ministers, regional representatives, etc.) leads to the fluctuation of some senior officials in the public administration who are responsible for dispensing funds from the EU.

The main shortcoming is the ineffectiveness of Act No. 218/2002 Coll., the Civil Service Act. Clear separation of political and non-political posts in state administration bodies is therefore completely absent in the effective legal regulation. Clear separation of political and non-political posts is also absent in the Act on Officers of Territorial Self-Governing Units.

The amendment of the public service law limits the possibility of grossly abused “organizational changes” to sack state officers, as it is in the § 18 of the amendment of the discussed law. However, the legislation does not guarantee transparent staff selection procedures for positions in the institutions overseeing the use of EU funds.

The amendment of the public service details the selection procedure, but it has several shortcomings.

  • Among these, the most serious is that there is an internal staff selection procedure on almost all positions. The permeability between the public service and public sector is thus strongly limited which is being criticized by the political parties in opposition, namely TOP09 and ODS. The selection procedure does not state the specific qualifying requirements that persons in such institutions must meet and the amendment lists only very general requirements for an applicant to the public service.
  • Public administration officials are not adequately protected against political pressure on their decision making, because the legislation does not distinguish between political and apolitical posts in public administration. The post of a ministerial deputy remains a political function and the law on service of public servants does not apply to it. Although the candidates are not selected by the regular selection process, they do have important decision-making powers.
  • Public administration officials can be dismissed easily. The proposed amendment does not solve this. An ordinary official can be dismissed after being negatively reviewed two times consecutively in 6 months (or if he or she is put under disciplinary procedure); a highly-ranked official can be dismissed only after one negative review. This clearly goes against the stabilization of the public service.  
  • There is no legislation protecting whistle-blowers from the ranks of public officials. The amendment does not address this issue directly: it only presumes that this would be solved by administrative measurements issued by the newly-established general directorate.
  • Another indicator of politicization is the answer to the question of whether and in what way public administration officials are protected in the case of an illegal order issued by their superiors (top-level officials and politicians), i.e. whether and in what way public administration officials can refuse an illegal order or instruction without the risk of legal recourse. In the new amendment, the newly-established general directorate should be responsible for monitoring the compliance with laws and enforcing of internal regulations.
  • The last indicator of the politicization of the public administration is whether or not public administration officials are protected from persecution if they expose alleged corruption or other illegal behavior in the public administration body which employs them.

This increases the systemic risk that political representatives will occupy leading positions in the bodies implementing the use of EU funds on the basis of their economic, social or political ties. These persons will subsequently participate in corruption in the assessment of project applications and when making decisions on the granting of subsidies to specific projects (in some cases, politicians also took part in the assessment of projects).

The law clearly states which specific positions are to be staffed on the basis of political affiliation and which positions are apolitical, meaning purely official, and should therefore be staffed on the basis of transparent selection procedures. A clear division of responsibilities between politicians and officials and the prevention of the politicization of decision-making on the level of officials would ensure the independent functioning of the public administration.

The politicization of the public administration

The politicization of the public administration is indicated primarily by changes in the positions of public officials in the governing bodies of individual operational programs, depending on the change of political representation. The securing of important positions in the public administration bodies can be achieved in two ways:

  • either by replacement of a sufficient number of senior officials (which will be manifested by a significant fluctuation of officials), or
  • by a change in the organizational structure of public administration bodies, so that all the important positions will be subordinate to a small group of persons appointed by a minister.

The main shortcoming of the Czech legal regulation is the ineffectiveness of Act No. 218/2002 Coll., the Civil Service Act. Act No. 262/2006 Sb., the Labour Code, which is used instead of the Civil Service Act, does not stipulate the duty to conduct selection procedures, nor does it regulate such procedures in significant detail.

The gap in the legal regulation of government officers is only partially compensated for by “The methodology of the selection of employees implementing European Union funds in the 2007–2013 program period”, subordinate legislation (government resolution). It concerns only the selection of government officers who secure the drawing of EU funds. Therefore it cannot be considered an adequate substitution for the ineffective Civil Service Act.

The selection of persons for the position of public administration officers is regulated only partially and does not comply with EU requirements regarding the adoption of a special law on public administration officers.

The main imperfection of the Czech legal regulation is again the ineffectiveness of Sec. 54 et seq. of the Civil Service Act, regulating the termination of service relation with a government officer. Therefore, the termination of service relation of government officers is subject only to general legal regulations, contained in Act No. 262/2006 Coll., the Labour Code. The Labour Code provides relatively good protection of ordinary officers (who can be dismissed only on grounds stipulated by the law).

In case of senior officers (directors of sections, directors of divisions and directors of departments), whose service relation is created by appointment, the legal protection against dismissal is insufficient, as they can be removed without being given a reason by whoever appointed them. Unfortunately, the amendment of the discussed law preserves this unequal level of protection.

In case of dismissal of officers of regional councils of cohesion regions, the legal regulation distinguishes the removal from office in the case of senior officers (including heads of offices) and other officers. Senior officers can be removed only for a very narrowly defined range of reasons. In regards to other officers, the range of reasons for terminating employment is stipulated in the Labour Code. Particularly senior government officers can be removed very easily, which constitutes quite a high system risk of possible politicization of state administration.

The provision of Sec. 68 of the Civil Service Act, which would provide legal protection to officers against unlawful instructions, is not effective. Therefore, government officers are not protected against unlawful instructions, in contrast to officers of territorial self-governing units. If an officer of a territorial self-governing unit believes that the instruction given to him/her is in violation of legal regulations, he/she has to notify immediately the person who gave him/her the instruction. Subsequently, he/she is obliged to carry out the instruction only if he/she receives a written order from the head of the office to do so. Only where the officer would commit a crime or an administrative infraction by following the instruction or order, must he/she not carry out such instruction or order and he/she must notify the head of the office of this fact.

In case of government officers, the ineffective Civil Service Act does not provide sufficient protection to whistle-blowers (not even if the relevant provisions were effective). A government officer has a general duty to notify according to Sec. 367 and Sec. 368 of Act No. 40/2009 Coll., the Criminal Code. In case of officers of regional councils of cohesion regions, an officer has to refrain from all acts that could violate in a serious manner the credibility of the territorial self-governing unit and also maintain confidentiality about facts that he learned during the performance of his employment.

At the same time, information about possible corruption or problematic practice undoubtedly violating the credibility of the office is in conflict with the duty of confidentiality. An officer can be released from the duty of confidentiality by the head of the office; however, the Act on Officers of Territorial Self-Governing Units does not anticipate a situation when an officer makes a request that he should be released from the duty of confidentiality with the office’s head whose possible corruption acts he wants to report.


The comparison of legislation in various countries shows that the selection of officials into the management and control bodies of the individual operational programs in the Czech Republic is at least partially regulated by legislation of public tendering and, among other things, participation of selection committees. However, there is no clear definition of the line between political and apolitical positions in the public administration. Czech legislation thus  cannot prevent cases of the “Řebíček System” type (in which a concentration of departments involved in the usage of EU funds under a jurisdiction of a few politician-appointed persons occurred) and the case “ROP North-West” (in which there was a politicization of assessment committee which, by definition, should have been composed of apolitical officials and independent experts, not members of political parties).

Petr Bouda

Petr Bouda

works for the Environmental Law Service at the programme "Responsible Energy". He is also a PhD student at the faculty of law at Masaryk University in Brno.