US embassy cable - 05PRAGUE1608

C O N F I D E N T I A L SECTION 01 OF 02 PRAGUE 001608 
 
SIPDIS 
 
PARIS ALSO FOR USOECD 
STATE FOR EB/IFD, L/EB, EUR/ERA, EUR/NCE 
STATE PASS EX-IM FOR OGC/SONFIELD AND POLICY/FIRESTONE 
TREASURY FOR TRADE FINANCE 
COMMERCE FOR 6731 LENZ 
JUSTICE FOR MENDELSOHN 
 
E.O. 12958: DECL: 11/09/2015 
TAGS: ECIN, ECON, EFIN, EZ, EINV 
SUBJECT: CZECH RESPONSES TO OECD SECGEN SELECTION, ACTION 
STATEMENT ON BRIBERY AND EXPORT CREDITS, AND CONVENTION ON 
COMBATING BRIBERY 
 
REF: A. STATE 204906 
     B. STATE 205372 
     C. BROWN-REIDER OCTOBER 28 E-MAIL 
 
Classified By: ECON OFFICER KAREN REIDER FOR REASONS 1.4 (B) (D) 
 
1.  (C) SUMMARY:  Econoff met November 10 with Czech Ministry 
of Foreign Affairs Department of Multilateral Economic 
Relations Deputy Director Pavel Klima to deliver reftel A and 
B demarches.  Klima said that during the July 21 Polish state 
visit, the Prime Minister signaled GOCR support former Polish 
PM Belka as OECD Secretary General, against the MFA's advice 
not to commit prematurely.  Klima said the GOCR would support 
the U.S. proposal to strengthen the existing Action Statement 
on Bribery and Export Credits in the OECD's Working Party on 
Export Credits and Credit Guarantees, although there may be 
some suggested amendments, none of which should compromise 
the strength of the Statement.  On the recent postponement of 
the peer-review visit by experts from the OECD Convention on 
Combating Bribery, Klima said the embarrassing public fallout 
from the cancellation would serve as a blessing in disguise 
by elevating the issue to appropriate high levels and 
providing needed pressure to pass necessary legislation to 
comply with recommendations from a previous visit by the same 
group as well as ensure a successful follow-on visit.  END 
SUMMARY. 
 
--------------------- 
OECD SECGEN SELECTION 
--------------------- 
2. (C) Klima (please protect) admitted the GOCR had already 
boxed itself in a corner by signaling its support for the 
former Polish PM Belka during the July 21, 2005 Polish state 
visit.  Despite the MFA's advice not/not to commit 
prematurely to one candidate, Prime Minister Paroubek had 
clearly indicated to his Polish counterpart that the GOCR 
would support him for OECD Secretary General.  Klima said the 
Mexican Ambassador demarched the MFA Director General of 
External Economic Relations Tomas Husak after the first round 
of voting, and Jose Angel Gurria himself visited the Czech 
Republic in early October to lobby for his candidacy.  Mr. 
Gurria had four meetings below the PM-level, including one 
with Deputy Prime Minister for Economic Affairs Martin Jahn. 
Klima said while the GOCR would be perfectly happy with 
Gurria as the next OECD Secretary General, it would be 
difficult for the GOCR to walk away at this point from its 
commitment to the Polish candidate.  He said the Poles were 
counting on solidarity among the Visegrad-4 (Poland, Hungary, 
Czech Republic and Slovakia) and if anyone backed out, it 
would be too noticeable. 
 
------- ----------- ------------ ----------- ------ 
OECD ACTION STATEMENT ON BRIBERY AND EXPORT CREDITS 
------- ----------- ------------ ------------ ----- 
3.  (C) Klima said the GOCR would support the U.S. proposal 
to strengthen the existing Action Statement on Bribery and 
Export Credits at the November 14 OECD Export Credit Group 
(ECG) meeting.  He added that the GOCR might suggest some 
amendments, but they would not "undermine" the U.S. proposal. 
 Klima also noted that the GOCR was in the process of 
reviewing the U.S. proposal to see if it contradicted 
domestic Czech legislation in any way.  In response to 
econoff's inquired about how and which language might 
contradict domestic legislation, Klima said while the GOCR 
has no problem with language about applicants and exporters 
declaring they will not and have not engaged in bribery, if 
ECAs discovered derogatory information after credit has 
already been extended, it could pose difficulties for the 
GOCR.  The GOCR has two Export Credit Agencies (ECAs) -- 
Export Guarantee and Insurance Corporation (EGAP) and the 
Czech Export Bank (CEB).  The GOCR is sending two 
representatives from Prague to the Working Party meeting on 
November 14 -- EGAP Managing Director Pavel Parizek and 
Ministry of Finance Head of the Department of International 
Organizations Zdenek Lukes. 
 
 
-----------  ---------- ----------- ------------ 
OECD CONVENTION ON COMBATING BRIBERY OF FOREIGN PUBLIC 
OFFICIALS 
-----------  ---------- ----------- ------------ 
 
4.  (C) Klima lamented the GOCR's decision to postpone the 
scheduled visit by OECD experts to conduct a peer-review of 
the GOCR's implementation of the Convention on Combating 
Bribery -- just one day before the date of scheduled travel. 
He stressed this was not/not the fault of Mr. Harbata, the 
OECD's point of contact at the Ministry of Justice, and noted 
Mr. Harbata did not have enough support from within the 
Ministry.  Klima said Mr. Harbata's only fault was not crying 
out for help louder and earlier, when faced with the fact 
that three positions directly above his chain of command were 
vacant and he was faced with handling the visit all by 
himself.  Klima also said the GOCR was considering 
compensating the OECD for costs incurred due to the last 
minute cancellation of the visit. 
 
5.  (C) On a side note, Klima said he personally resented the 
tone of the letter from Dr. Mark Pieth (reftel C), noting 
that the GOCR had up to now had an excellent track record of 
cooperation with the OECD.  He noted this was the first 
offense after years of untarnished cooperation, so the 
self-righteous tone of the letter was over the top.  At the 
same time, Klima said the public embarrassment resulting from 
the canceled visit would serve as a blessing in disguise -- 
not only to ensure a successful rescheduled visit, but also 
in passing necessary legislation for the GOCR to adhere to 
the one recommendation (on an otherwise positive review) by 
an earlier OECD peer-review visit.  This recommendation was 
for the GOCR to amend the existing penal code so that 
companies would be held responsible for bribery of public 
officials, since the current version only holds individuals 
accountable.  Klima said that a two-year effort to amend the 
penal code to adopt the OECD recommendation ended when 
Parliament, at the last minute, decided such an amendment was 
not/not necessary.  However, Klima believed the OECD visit 
cancellation fallout might be just what the GOCR needs to 
push the amendment through Parliament. 
CABANISS