Individual acts of
building, IT upgrades, and unnecessary con-
as grand a scale as they did in the 1990s. Back
sulting assignments at government ministries
then, Meciar simply distributed state assets to
corruption in
are particularly popular sources of personal
his friends and political supporters with reck-
Central Europe
riches for government officials, their families,
less abandon. For instance, a steelmaking giant
have become
and their friends, many of whom use their ill-
in Eastern Slovakia (VSZ) was "sold" to one of
gotten wealth to buy expensive houses and
Meciar's cronies, Alexander Rezes. Prior to the
smaller but more
cars. The combination of ostentatious spend-
sale, Rezes received a heavily discounted loan
sophisticated and
ing that far exceeds the salaries of the officials
from Meciar's government--a loan he used to
in question, freedom of the press, and increas-
buy the company. Rezes then dutifully chan-
more widespread.
ingly sophisticated investigative journalists
neled some of the profit back to Meciar, who
used much of it for political campaigning.37
who expose such scandals can be explosive.
Take Ludovit Kanik, who was minister of
Today, individual acts of corruption in
employment in the market-friendly govern-
Central Europe have become smaller but more
ment of Mikulas Dzurinda (200206). Among
sophisticated and more widespread. They
Kanik's many duties was the streamlining of
tend to coalesce around government procure-
ment.38 Government officials go through the
the Slovak welfare state. In 2005, however, he
resigned after a newspaper reported that his
motions of competitive bidding but then
brother and business partner was about to
select winners based on criteria other than
benefit from a large state subsidy.40 Or take
quality and price. Often, they do so in order to
benefit domestic producers or firms owned by
Pavol Rusko, Dzurinda's minister of econom-
friends and families.
ics (200305) and leader of a small liberal
Consider the following example. In 2006,
party called ANO. Rusko issued personal
the Czech Parliament decided to buy 220 lap-
promissory notes worth $3.4 million. He said
top computers. Four companies competed for
that he had paid them off, but refused to
a contract that was, in the end, awarded to a
explain how he managed to do so, considering
Czech firm called Autocont. Dell, a U.S. com-
that his monthly salary amounted to $3,250.
He resigned.41
pany, offered the best deal. Dell met all the
technical specifications and offered to pay the
Similarly, the Social Democrat prime min-
highest late-delivery fee. The company also
ister of the Czech Republic, Stanislav Gross
offered the lowest price of $160,000. In con-
(200405), resigned after being unable to
trast, Autocont's price tag was more than twice
explain how he came to possess a luxury apart-
as high. What made the difference between the
ment the price of which was clearly far in
excess of his official income.42 Another social-
losing and winning bids? On the Dell laptops,
wireless connection to the Internet was to be
ist prime minister, Milos Zeman (19982002),
activated with a button, Autocont's with a
fired his minister of finance when the police
lever. The public official in charge of the deal
began investigating the latter's shady financial
argued that pulling the lever was more difficult
dealings. Ivo Svoboda, it turned out, borrowed
than pressing the button, which would prevent
$273,000 on behalf of a company called
the MPs from accidentally accessing the
Liberta, then used the loan to repay the debt of
Internet and inadvertently disseminating sen-
his own firm, Omnia. Svoboda was charged
with fraud and sentenced to five years in jail.43
sitive information. The bids were evaluated on
a point scale that was suspiciously skewed in
Peter Medgyessy, the socialist prime minis-
favor of Autocont. For example, the higher pro-
ter of Hungary (200204), came under investi-
cessing speed of Dell's computers was worth 1
gation for corruption as well. The prosecutor
point, whereas Autocont's lever was worth 15
alleged that Medgyessy pressured the Buda-
points.39
pest city government to agree to the 1998 sale
of the Gresham Palace, one of the city's land-
Sometimes, government officials award
marks, to a property developer called Gresco.
contracts to companies that offer financial or
Even though Medgyessy's consulting firm
nonmonetary "kickbacks." Subsidies, highway
9