Friday, April 11, 2008

Polish Bribery exposed in Tesco affair

While hints and complaints of corruption regularly make the rounds in Prague business circles, rarely have such charges surfaced as prominently as they did in a recent case involving British retailer Tesco.

Prague 1 Municipal Court recently convicted one of Tesco’s former executives, Daniela Cepkova, on attempted fraud charges after she sought a bribe worth 60,000 euros (1.5 million Kc/$93,000) from a Polish businessman. She was sentenced to one year of probation. Last April, Cepkova told Wlodzimier Malinowski that Tesco would stock his textile and clothing products in return for the bribe. Cepkova had no authority to deliver on such a promise and pretended to hold her bosses’ position, according to court documents.

Tesco’s management caught wind of Cepkova’s suspicious activities and called in police, said Jana Matouakova, corporate affairs manager for Tesco Stores Czech Republic.

At the time, the police told Matouakova that this was only the second time they had opened a corruption inquiry concerning a private business; most corruption investigations involve public institutions.

The police soon caught Cepkova and her accomplice, Valary Koffi Obla, red-handed as Malinowski handed her the bribe in an envelope at the Jalta Hotel on Wenceslas square. Cepkova’s conviction, which can still be appealed, turned out not to be on charges of corruption, however. The presiding judge, Libor Vavra, found her guilty of attempted fraud instead.

“She was only trying to point to something wrong that she thought was going on in the company, the way they do in bad movies,” V?vra said at the court hearing March 31.

In a follow-up interview, Vavra told The Prague Post that if Cepkov? was trying to point out endemic problems at Tesco, she went about it the wrong way.

“She could have told police or the state prosecutor of her suspicions instead of acting on her own initiative,” he said, adding that “her motive may have been to undermine her bosses’ authority, with whom she did not get along well, while also enriching herself.”

It can be difficult for private companies to prevent such bribery. For example, the energy utility giant CEZ has a tender process that requires two groups of experts to evaluate the technical and economic aspects of any bid independently, said spokeswoman Eva Novakova.

Setting up two evaluation committees, one looking at the technical and the other at the financial aspects of a bid, can be a first step toward a comprehensive fraud risk management regime, said Sirshar Qureshi, director of PricewaterhouseCoopers’ forensic services department.Corruption is still a problem in Central Europe, Qureshi said. A recent survey by his company found that 18 percent of polled companies in Central and Eastern Europe admitted to either soliciting or offering a bribe.

“What is even more serious is that 30 percent of companies had been asked to pay a bribe and 45 percent of companies felt that they had lost an opportunity to a competitor whom they believed may have paid a bribe,” he added.