ARMS DEALING, CASE STUDY BAE, Part IV
The U.S. Department of Justice is looking at how an extremely fat commission fee connected to bank Československá obchodní banka (ČSOB) has apparently disappeared into a tax paradise and wants to know how it might be connected to the Gripen jet fighter corruption affair, a Czech state official has informed CBW.
Investigation looks for bridge connecting ČSOB and GRIPEN AFFAIRS
By: CBW, 21. 07. 2007, More by this author
The U.S. Department of Justice is looking at how an extremely fat commission fee connected to bank Československá obchodní banka (ČSOB) has apparently disappeared into a tax paradise and wants to know how it might be connected to the Gripen jet fighter corruption affair, a Czech state official has informed CBW.The Gripen bribery affair has always proved a frustrating labyrinth, but things just got that much more puzzling. American investigators, probing a series of international corruption claims that have erupted around U.K. defense contractor and Gripen International partner BAE Systems, are said to be exploring links between the Gripen case and a supposedly unrelated business deal between ČSOB and investment bank CA IB Corporate Finance. That deal saw ČSOB make a large payment of Kč 200 million (€ 7.1 million) to CA IB Corporate Finance for advice on how to ensure a contract extension on providing services of its subsidiary Poštovní spořitelna through post offices of national postal operator Česká pošta.
A state official close to the situation said the U.S. was taking an interest in ongoing Czech police enquiries into whether fictitious business agreements could be related to the money, who the true recipient of the sum was, where exactly the sum had ended up and if persons involved in arranging the transaction might be some of those who feature in the Gripen scenario.
CA IB Corporate Finance is the mergers and acquisition (M&A) advisory, equity capital markets origination and merchant banking house of Bank Austria Credit-anstalt, which is responsible for Central and Eastern Europe and Austria within the UniCredit group. Its media representation is provided by public relations firm Donath Burson-Marsteller (DBM). To-máš Jelínek, the DBM representative who serves as a CA IB Corporate Finance spokesman, refused to answer several ques-tions CBW sent him, including enquiries on who exactly is in possession of the Kč 200 million payment.Jelínek, however, said CA IB Corporate Finance strongly denies it is being investigated in connection with the Gripen affair. “There is no connection whatsoever between CA IB Corporate Finance and the Gripen affair. CA IB Corporate Finance has never worked either for BAE Systems or for [Czech defense and aviation equipment maker and Gripen affair player] Omnipol.”
Referring to the ČSOB/Česká pošta case, Jelínek said CA IB Corporate Finance is fully cooperating with the Czech police in the investigation of the contract. “All requested documents were provided to Czech police investigators almost one year ago,” he said. “To our knowledge no information regard-ing the current state of the investigation has been made available to either the concerned parties or to the public. As far as CA IB is concerned, the transaction was carried out in line with the all pertinent stipulations of applicable Czech laws.”
Jelínek also stated that the negotiated contract fee fully corresponds with the size and complexity of the deal and current investment bank remuneration standards.
Marek Roll, ČSOB spokesman, said where the paid fee ended up is solely CA IB’s business. “The commission was ade-quate to the business agreed, we don’t see anything special in this,” he said. ČSOB is cooperating with the investigation into the contract concerning Česká pošta, Roll said, but had not been contacted by any inves-tigators concerning the Gripen procure-ment. “ČSOB does not have anything in common with the buying of Gripen fighter planes. Even the company rules of ČSOB state clearly that ČSOB doesn’t want and will not in any case support any activities, connected with the weapons industry.ˇ
There and back again
So where is the connection between post office deal player CA IB Corporate Finance and the Gripen affair? CBW noted that Jelínek only said CA IB Corporate Finance had never worked for Omnipol and checked out whether it had ever worked with Omnipol. Enquiries quickly established that CA IB Corporate Finance and Omnipol came together within consortium Český Letecký Průmysl, an entity created for the sole purpose of buying Czech aerospace firm Aero Vodochody. The endeavor was unsuccessful. Aero Vodochody was sold to Penta Investments in January 2007.
Omnipol provides a clear link to the 2004 Gripen deal—in which the Czech Republic agreed to pay the Anglo-Swedish consortium Gripen International Kč 19.6 billion to lease 14 Jas-39 Gripen fighters for 10 years—because in February this year a Swedish TV documentary claimed that controversial commission payments went via figures including Omnipol former head Richard Háva.
British daily The Guardian has run a series of exposés focusing on how BAE Systems is said to have used bribery of politicians and government figures as a method for selling military hardware around the world. Háva does not deny cooperating with the company in the Gripen case, but categorically denies any wrongdoing. “Political lobbying was never my job description, neither was it a description for Omnipol. We don’t do it because we don’t know how to do it, and we haven’t hired anyone to do it for us,” he said.
Meanwhile, the Swedish journalists who revived interest in the long-running Gripen saga have been accused of doing little more than warming up old revelations. They have insisted to various media that they have delivered lots of circumstantial evidence that confirms corruption, but freelance publicist Jakub Horák said it was by now apparent that they haven’t made any big disclosures. “Those Swedish journalists conceded they’ve received so much money for that story that they won’t have to do anything for a year. … The question is to what extent were their investigative activities only an information leakage controlled by the British secret service, which is working on the case?” said Horák.
A state official close to the situation said the U.S. was taking an interest in ongoing Czech police enquiries into whether fictitious business agreements could be related to the money, who the true recipient of the sum was, where exactly the sum had ended up and if persons involved in arranging the transaction might be some of those who feature in the Gripen scenario.
he said.
“People continue to say that the contract for the commission was only ‘fictional’ and that it could conceivably serve as a cover for black money,”
CA IB Corporate Finance is the mergers and acquisition (M&A) advisory, equity capital markets origination and merchant banking house of Bank Austria Credit-anstalt, which is responsible for Central and Eastern Europe and Austria within the UniCredit group. Its media representation is provided by public relations firm Donath Burson-Marsteller (DBM). To-máš Jelínek, the DBM representative who serves as a CA IB Corporate Finance spokesman, refused to answer several ques-tions CBW sent him, including enquiries on who exactly is in possession of the Kč 200 million payment.Jelínek, however, said CA IB Corporate Finance strongly denies it is being investigated in connection with the Gripen affair. “There is no connection whatsoever between CA IB Corporate Finance and the Gripen affair. CA IB Corporate Finance has never worked either for BAE Systems or for [Czech defense and aviation equipment maker and Gripen affair player] Omnipol.”
Referring to the ČSOB/Česká pošta case, Jelínek said CA IB Corporate Finance is fully cooperating with the Czech police in the investigation of the contract. “All requested documents were provided to Czech police investigators almost one year ago,” he said. “To our knowledge no information regard-ing the current state of the investigation has been made available to either the concerned parties or to the public. As far as CA IB is concerned, the transaction was carried out in line with the all pertinent stipulations of applicable Czech laws.”
Jelínek also stated that the negotiated contract fee fully corresponds with the size and complexity of the deal and current investment bank remuneration standards.
Marek Roll, ČSOB spokesman, said where the paid fee ended up is solely CA IB’s business. “The commission was ade-quate to the business agreed, we don’t see anything special in this,” he said. ČSOB is cooperating with the investigation into the contract concerning Česká pošta, Roll said, but had not been contacted by any inves-tigators concerning the Gripen procure-ment. “ČSOB does not have anything in common with the buying of Gripen fighter planes. Even the company rules of ČSOB state clearly that ČSOB doesn’t want and will not in any case support any activities, connected with the weapons industry.ˇ
There and back again
So where is the connection between post office deal player CA IB Corporate Finance and the Gripen affair? CBW noted that Jelínek only said CA IB Corporate Finance had never worked for Omnipol and checked out whether it had ever worked with Omnipol. Enquiries quickly established that CA IB Corporate Finance and Omnipol came together within consortium Český Letecký Průmysl, an entity created for the sole purpose of buying Czech aerospace firm Aero Vodochody. The endeavor was unsuccessful. Aero Vodochody was sold to Penta Investments in January 2007.
Omnipol provides a clear link to the 2004 Gripen deal—in which the Czech Republic agreed to pay the Anglo-Swedish consortium Gripen International Kč 19.6 billion to lease 14 Jas-39 Gripen fighters for 10 years—because in February this year a Swedish TV documentary claimed that controversial commission payments went via figures including Omnipol former head Richard Háva.
British daily The Guardian has run a series of exposés focusing on how BAE Systems is said to have used bribery of politicians and government figures as a method for selling military hardware around the world. Háva does not deny cooperating with the company in the Gripen case, but categorically denies any wrongdoing. “Political lobbying was never my job description, neither was it a description for Omnipol. We don’t do it because we don’t know how to do it, and we haven’t hired anyone to do it for us,” he said.
Meanwhile, the Swedish journalists who revived interest in the long-running Gripen saga have been accused of doing little more than warming up old revelations. They have insisted to various media that they have delivered lots of circumstantial evidence that confirms corruption, but freelance publicist Jakub Horák said it was by now apparent that they haven’t made any big disclosures. “Those Swedish journalists conceded they’ve received so much money for that story that they won’t have to do anything for a year. … The question is to what extent were their investigative activities only an information leakage controlled by the British secret service, which is working on the case?” said Horák.
July 2007 — It emerges that the U.S. Department of Justice—looking at Amer-ican links to allegations that U.K.-based BAE Systems has committed massive international bribery, largely focused on its military hardware deals with Saudi Arabia—is examining claims that related clues could lie in the Gripen affair and the CA IB Corporate Finance/ČSOB/Česká pošta controversy.
February 2007 — Swedish public broadcasting television revelations revive interest in how BAE Systems allegedly led a huge bribery attempt to ensure that Czech politicians would vote to select the jet fighters of the Gripen International consortium.
April 2006 — It emerges that Czech financial police are probing CA IB Corporate Finance’s contract with ČSOB on placing its subsidiary services in post offices of Česká pošta. Claims that the fee for the contract were inflated using fictitious work descrip-tions have been made.
September 2003 — British daily The Guardian reports that the U.K.’s Serious Fraud Office (SFO) has obtained details of an alleged BAE Systems slush fund de-signed to bribe Saudi officials in arms deals. By 2004, the SFO is investigating BAE Systems’ approach to selling its wares in six countries including the Czech Republic.
February 2007 — Swedish public broadcasting television revelations revive interest in how BAE Systems allegedly led a huge bribery attempt to ensure that Czech politicians would vote to select the jet fighters of the Gripen International consortium.
April 2006 — It emerges that Czech financial police are probing CA IB Corporate Finance’s contract with ČSOB on placing its subsidiary services in post offices of Česká pošta. Claims that the fee for the contract were inflated using fictitious work descrip-tions have been made.
September 2003 — British daily The Guardian reports that the U.K.’s Serious Fraud Office (SFO) has obtained details of an alleged BAE Systems slush fund de-signed to bribe Saudi officials in arms deals. By 2004, the SFO is investigating BAE Systems’ approach to selling its wares in six countries including the Czech Republic.
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