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EY: Corruption is still considered a major problem in the Czech Republic

Survey conducted by EY and the AMSP ČR (Czech Association of SMEs and Sole Traders: While bribery is no longer a requirement to obtain a public contract, corruption is still considered a major problem in the Czech Republic

  • 35% of Czech entrepreneurs and managers stated it is not possible to get a public contract without a bribe
  • For 81% of respondents, corruption is a widespread phenomenon and 4 out of 10 respondents consider corruption to be a barrier to business
  • Every fifth respondent had been asked for a bribe in connection with a public contract

Some 30 years after the Velvet Revolution, corruption remains a major problem for Czech entrepreneurs and managers. According to one fifth of respondents, the government's anti-corruption efforts have actually decreased over the past 5 years. This is based on a recent survey conducted by EY in cooperation with the Czech Association of SMEs and Sole Traders (AMSP CR) among 600 entrepreneurs and managers in the Czech Republic.

EY_Corruption

Some 21% of respondents consider corruption to be a very widespread phenomenon in our country; another 61% consider it to be relatively widespread. In addition, 41% of Czech entrepreneurs and managers identify corruption as a barrier to business.

“Such a negative perception of corruption is often criticized for not reflecting the actual state of affairs, but basically copying the views of the media. Still, the results reflect the overall atmosphere in the business sector, which has a real impact on decision-making in specific situations and thus on the level of business ethics. Expectations of corruption can increase your willingness to offer a bribe,” explains Tomáš Kafka, Partner, EY Forensic & Integrity Services for the Czech Republic and Slovakia.

Thirty percent of those surveyed indicated “big” corruption, i.e. corruption in the area of public procurement and links between businessmen and the political sphere, as an obstacle. When it comes to “small” corruption, 23% of respondents consider corruption in the clerical sphere a barrier, while for 47% both forms are equally burdensome.

As for the government's anti-corruption efforts over the past 5 years, the prevailing view is that nothing has changed (50% of respondents); 29% of respondents believe these efforts have increased, and 21% believe they have decreased.

“Things have improved since the 2010 AMSP ČR survey, but corruption is still a major problem that is holding back our economy. Corruption is very actively being combated in the world – new anti-corruption legislation has been created in the UK and France, and the authorities in many countries have intensified the fight against corruption and money laundering. Even the private sector is looking for remedies – more and more companies are introducing anti-corruption programs and trying to reduce the risks of corruption; in fact, an anti-corruption ISO standard was even created, which is slowly finding its way to the Czech Republic,” says Tomáš Kafka.

Is public procurement a synonym for corruption?

Some 35% of Czech entrepreneurs and managers believe a public contract cannot be obtained without a bribe, which is an improvement over the last 10 years. The number in the AMSP ČR survey of 2009 was 59%. Nineteen percent of respondents admitted they had been solicited for a bribe in connection with a public contract, while 81% said they had not. In 2010, 82% of those surveyed said they had not been asked for a bribe. It follows from the above that the overall impression of entrepreneurs has improved, though in reality the same percentage of entrepreneurs has been solicited for a bribe.

The average respondent believes that when a commission is paid for a public sector contract, it is 10% (median); the average commission value is 17.5%. In the private sector, according to the average respondent, the commission is also 10% (median), though the average commission is 11.1%. Average values have risen compared to 2010 – estimated commissions at that time were 15.72% and 8.89%, respectively.

“Entrepreneurs have for years been calling for a faster and more efficiently functioning judiciary and greater transparency in the decisions of state authorities. Unfortunately, this situation has not improved much and the results of notorious cases have robbed entrepreneurs of their hope for improvement. There is a positive shift compared to 2010 when it comes to acquiring contracts, where 90% of respondents say it is possible to obtain a contract in the private sector without a commission or bribe (in 2010, it was 74%) and 65% of respondents say this is so for government contracts (30% in 2010). It is also gratifying that 84% of respondents say they have not been asked for a bribe in the private sector, which is a very good report for entrepreneurs,” comments Karel Dobeš, Board of Directors Chair of the Czech Association of SMEs and Sole Traders.

How to resolve the situation?

“A faster and more efficiently functioning judiciary” – preferred by 49% of respondents – figures very prominently among the measures to reduce corruption. This is followed by “Greater transparency of state authorities” (39%) and “Limitations on subsidies”, which is supported by 37% of respondents. A high number of respondents also stresses “Stricter sanctions for corruption” (33%) and “Emphasis on morality / ethics in the education system” (30%). “Simplicity and Clarity” and “Tougher Sanctions” dominated 10 years ago, both being preferred by 21% of respondents. Unsurprisingly, no one is demanding “More detailed legislation” (1%).

Entrepreneurs see that the investigation and prosecution of a number of complex corruption cases has been in the process for many years, and ultimately there is often no clear exemplary punishment. However, it is also heartening to see a greater emphasis on the teaching of ethics. Promoting the right values, not just fear of punishment, also needs to be given greater attention,” comments Radim Bureš, Manager, EY Forensic & Integrity Services for the Czech Republic.

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