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Defense Corruption Scandal Rocks Czech Republic

Bribes, Corruption and the Pandur APC

by TOM CLIFFORD

The Czech government’s purchase of Pandur military vehicles is hitting rough terrain amid political sniping, allegations of corruption and a police probe as it has emerged that the Czechs paid three times as much for the armored personnel carriers (APCs) than the Portuguese.

Czech anti-corruption police have launched an investigation into the purchase of the APCs from the Austrian company, Steyr, by the Czech military, police official Roman Sk?epek confirmed.

“The police department responsible for uncovering corruption and financial crime has initiated an investigation,” Sk?epek said.

“We have started collecting all available material. Only after a thorough evaluation will it be decided if further action is needed. For tactical reasons any further detailed information will not be made available.”

Prime Minister Jan Fischer demanded that the purchase of the Pandurs be investigated and the leader of the Social Democrats, one of the two main parties, Ji?í Paroubek said he will lodge a criminal complaint, for alleged corruption, related to their tender.

The investigation will center on two main issues; the alleged bribery of politicians and the military’s reasons for paying three times more for the Pandur as Portugal who also purchased the APCs.

The military took delivery of the first batch of 17 out of a total of 107 last September and will receive the balance from Steyr between now and 2013.

The first operational theater where the vehicles will be deployed will be Afghanistan, with the Provincial Reconstruction Team in Loghar Province.
Government plans to send an extra 55 troops as part of the Obama surge strategy are in serious doubt due to opposition in parliament but even if the plan is voted through they will have twice as many Pandurs as surge troops.
The Pandur saga has seen more twists and turns than the rugged landscape it is meant to operate in.

In 2003 the coalition government agreed with the purchase of 240 APCs. Steyr won the tender in 2006 and the military then agreed to buy 199 vehicles for 23.5 billion K? (US$1.2 billion). In 2007, another coalition government withdrew from the contract, saying that the Pandurs failed military tests. However, a contract for 107 Pandur II APCs worth 14.4 billion K? was finally signed with Steyr in March 2009.

The Czech Republic paid 134 million K? (US$ 7 million) for a single vehicle while Portugal paid 40 million K?.

Both the main parties have attempted to dodge the corruption flak amid allegations that Steyr (part of General Dynamics), bribed leading politicians, according to comments attributed to two former Steyr managers.

Defense Minister Bartak claimed the growing controversy over the purchase of the armored personal carriers was nothing but political expediency ahead of the May election.

While Bartak admitted signing the controversial contract in March 2009 when he was deputy defense minister he claimed he did it on the orders of the then defense minister Vlasta Parkanová.

The bribery allegations centers on reports that Steyr’s former head signed a contract with Czech lobbyist Jan Vlcek in 2002 which mandated Vlcek to facilitate Steyr’s contacts with Czech politicians for an alleged commission worth seven percent of the order’s price.

According to reports the Austrian police have requested secretly recorded statements by two former Steyr managers, Wolfgang Habitzl and Herwig Jedlaucnik, who, allegedly, in a conversation with an undercover reporter described the system of commissions accompanying the Pandur deal.

The Defense Ministry claims that the difference in price for the Czechs was due to added technology that the Portuguese did not request and that with the Pandurs being assembled in the Czech Republic it will help boost the economy.

But this was disputed by Joe Katzman, editor-in-chief of the U.S.-based Defense Industry Daily.

“Politicians around the world frequently claim that the technology benefits for national industry justify these extra costs,” he said. “Most of the time, that’s not true in a strict economic sense, though it might be true in a strategic sense (ammunition production is a common example of a nationally strategic capability). But the added technology skills don’t usually have major domestic spinoffs, and aren’t part of a supply chain that results in a lot of new exports.”

Allegations of corruption involving politicians and the military are nothing new. In 2005 politicians were allegedly involved in a bribery scandal over the Czech Republic’s 19.6 billion K? lease of 14 Gripen jet fighters from Sweden. The case was reopened in 2007, but no one in the Czech republic has been prosecuted.

In October 2009 the anti-corruption unit of the military police was shut down, officially for budgetary purposes but there were charges that the real reason was because it was too successful in tracking fraud.

TOM CLIFFORD is the news editor with The Prague Post. He can be reached at: tclifford@praguepost.com.