Looking for Truth about BAE, Bungs and the Czechs; ANALYSIS

The Evening Standard (London, England), October 19, 2009 | Go to article overview

Looking for Truth about BAE, Bungs and the Czechs; ANALYSIS


Byline: StephenWeeks in Prague

WhY is there so much fuss over the Serious Fraud Office's BAe Systems corruption investigation? If a few bungs means saving jobs, you might say, and over there they get good planes -- and the guys at BAe didn't actually put the money into their pockets -- then what's the problem? If you have ever lived in a country where corruption is rife -- I am currently residing in the Czech Republic -- then you will know what corruption does. It corrupts.

And this is hard for a country which is trying to recover, even after 20 years, from the total destruction of its society under communism, which had bribery and deceit at its core.

The acquisition of the 14 Gripen fighter jets at a cost of about [pounds sterling]1 billion was already controversial when the ordering process began in the late 1990s.

Many locals argued that the Czech Republic, already in Nato and soon to join the eU, didn't need them at all.

One enterprising Czech company proposed taking their existing Russian Mig planes and completely reconditioning them to Nato operational standards at a fraction of the cost. But there are no "brown envelopes" in such a clever solution. Cash only swishes around the system when high-value, shiny new contracts are at stake.

The scramble to supply the Czech Republic with brand-new planes was merciless. A US ambassador had to threaten Prague with a rift in diplomatic relations if they didn't buy American F16s. And Tony Blair intervened to encourage purchase of Gripens -- basically a Swedish plane with marketing by BAe.

The Gripen company's own promotional carrot was its "off-set" deal, which is that Gripen would stimulate economic activity to 130% of the contract price in whichever country bought its aircraft.

This programme is halfway through its schedule in the Czech Republic and hungary, another Gripen customer, and has generally been a success. That has encouraged and financially kick-started companies mainly in the armaments industries to export, and linking them to long-term overseas buyers.

BAe's contribution would appear to have been more direct: to simply stuff cash in the pockets of the decision-makers, then the ruling Czech Social Democrat Party.

Milos Zeman, then Prime Minister, and his Minister of Finance, Ivo Svoboda, have already been named in Austria as recipients of BAe money. It was doled out by the dashing aristocratic middleman, Count Alfons Mensdorff-Pouilly, according to Austrian sources, under the umbrella of BAe's country manager in Prague, Steven Mead. The late Brigadier Timothy Landon, the super-rich and secretive White Sultan, so-called because he made a fortune from helping Oman, is said to have masterminded the whole operation.

There is no shame in the former communist countries. The public is completely used to being lied to, and its confidence in pretty much all politicians is zero.

A recent Czech prime minister was questioned as to how he managed to buy a luxury house on his ministerial salary when previously he had been a train driver. …

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