The next three weeks will decide the future of the Czech construction giant – Metrostav. Her future will not be at stake in business circles, but in room number 57 at the High Court in Prague.
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The largest construction company in the country will face two criminal convictions in March and April. In the case of an overpriced hotel built in Chrudim from Eurodotions and then in the well-known corruption scandal of former President David Rath.
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It was in Rath’s case that Metrostav had so far received a non-final, albeit harsh, three-year ban on applying for public contracts.
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And if he doesn’t reverse the verdict in the Supreme Court now, it could have a devastating effect on a company that draws 60 percent of its business from public tenders.
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Therefore, Metrostav’s management is now openly talking about its willingness to accept a high fine. But most of all, he wants to avoid the ban on participating in public tenders.
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“The case has been going on for over 10 years and it is damaging us in terms of reputation and business. Although we insist on our innocence, we are also prepared for the possibility that the court will find us guilty. In that case, it would be more acceptable for us to receive a financial penalty. Of course, we are ready for such a punishment, “said Vojtěch Kostiha, a spokesman for Metrostav.
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According to the findings, the List of Reports has a pragmatic background: Metrostav wants to use a fine to ensure that it does not lose vital access to public procurement.
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4 criminal cases of Metrostav
Bribes for Ratha et al.
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According to the indictment, Metrostav and its former managers bribed former Central Bohemian governor David Rath from the CSSD. They promised Rath and his co-workers 10 million crowns for a manipulated contract in a hospital in Kolín and 22.3 million for a contract in a hospital in Kladno. The company was sentenced to a three-year ban on contracts, with the final ruling in April.
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Inflated church repair
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Metrostav and its managers are judged that they should have participated in overpricing the repair of the Church of St. Mary Magdalene in Liberec. The contract paid from European funds was worth 65 million. However, the price, according to the prosecution, was inflated by 23 million. According to the Liberec Regional Court, nothing criminal happened, but last year its verdict was overturned by the High Court in Prague. And the process must be repeated.
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Another case concerns the quarter-billion reconstruction of a stud farm in Kladruby, East Bohemia. According to the police, a group of construction companies, with the participation of Metrostav, cut the giant contract in advance. So far, no invalid judgment has been handed down over Metrostav.
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Hotel from a stolen grant
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The year before, Metrostav was banned from operating on subsidies paid for six years during the 43 million repairs of the Hotel Bohemia in Chrudim. The verdict is invalid, the appeal will be decided by the High Court in Prague this week. According to the indictment, the construction companies artificially inflated the price of the work.
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Two years ago, without much public attention, MEPs amended the sections of the Criminal Code, which concern corporate criminal liability, in a few sentences. Previously, a convicted company was automatically given a stop to public tenders.
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The Public Procurement Act stipulates that a company competing for a tender must be of good repute.
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However, if the court fines a fine, for example in a corruption or subsidy case, the company can continue to enter competitions.
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“When a legal person pays a fine, it is treated as if it had never been convicted,” confirmed lawyer Tomáš Gřivna, a corporate criminal liability expert and head of the Department of Criminal Law at the Faculty of Law in Prague.
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Apart from Rath’s case, Metrostav has been waiting for a three-day appeal before the High Court in the aforementioned grant case of the Bohemia Hotel in Chrudim since Monday. Two years ago, the Regional Court punished Metrostav – again illegally – with a six-year ban on construction activities related to subsidies and public support.
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It is difficult to estimate how much fines they could make if the courts in both cases decided to turn the bans into fines.
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A company as important as Metrostav has never been tried in the Czech Republic for bribes. Previous legal experts have previously estimated that this “redemption” from the ban on public tenders could have a price tag in the tens, maybe hundreds of millions.
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“A financial penalty would be better for us in that we could work it out and that it would not be an obstacle for us to compete, so we would not lose our market share,” admitted a spokesman for Kostiha.
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A small detour into another story that may indicate the amount at stake: Detectives have been prosecuting Chief Justice Zdeněk Sovák for over a year, blaming him for wanting to offer Metrostav a deal – give 150 million and I will arrange for you to leave Rath’s case with a fine . Sovák and his accomplices in police wiretapping consider that an adequate fine could reach 100 million.
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What specific impact would a ban on contracts have on Metrostav? The entire group (consisting of 62 companies) would certainly see sales, reaching CZK 22.8 billion the year before. It would certainly lose a number of key transport projects and development projects.
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“Specific strategic steps are a trade secret, but I can say that our main interest will be to maintain jobs for our employees and our know-how in our core technologies,” said Kostiha, a spokesman.
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In the case of Judge Sovák, the police provided internal company analysis as evidence, which deals with the effects of this severe punishment. He calculates that Metrostav’s profit would be reduced by more than 550 million crowns during the three-year ban.
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In addition to the entire company, former CEO Pavel Pilát and his manager Jiří Anděl are also on trial in Rath’s case. Pilate received a three-year condition and a fine of three million for bribes on Rath’s hospital contracts. Angel has been jailed for five years and has to pay an extra 250,000.
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Even in their case, these are invalid sentences, which will either be confirmed or changed by the Court of Appeal in April.
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