The implications

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The following developments coming out of this experimental solution to privatization dilemmas involving a tremendous number of enterprises nationwide may have been evaluated only much later, particularly given the trajectories of the other CEE countries.

The strategy of privatizing the maximum number of enterprises in the shortest possible amount of time – the key criterion in this experimental model – ignored the cost and the longer- term effect of such privatization practices, which too frequently took the form of mere formal denationalization (switching to ownership by IPFs associated with state-dominated banks) for the particular individual enterprises, and limited other eligible options for single enterprises.

Still, in this particular sense, the argument for decisive, massive, and swift action supported by macro-economic expertise prevailed and became the coat of arms for neo-liberally coined reformers associated with Václav Klaus, the federal (Czechoslovak) Minister of Finance at the time. However, it should not be forgotten that there was another vein of expertise regarding privatization. This 'other way' of privatization undertakings (individual sales of the critical auto, technical and mechanical engineering industries to western strategic partners) was portrayed as a dangerous gradualist one by those who opposed it. It was represented by the expertise and concrete privatization steps of Pithart’s Czech government (particularly Vice-premier Fr.

Vlasák) which were soon cut as Czecho-Slovakia disintegrated following the landslide victories of Mečiar Movement for Democratic Slovakia and Klaus’ newly established Civic Democratic Party.

Reed (1999) showed the legislative alternations of the privatization procedure, which did not contribute to the transparency and openness of the privatization process, but in the end, rather to the opposite, particularly after the CDP-led coalition came to power following the elections in June 1992. Reed further pointed out an extensive range of examples of clashing institutional and individual interests at play.

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Coming to the particular cases, one of the first disruptions on the privatization scene appeared in connection with the privatization of Karlovarsky porcelain. The initial project of the management of the Karlovarsky porcelain has undergone open scrutiny at the Ministry of Industry and was accepted (keeping the company essentially together and just three marginal units were to be distributed separately), but at the Ministry of Privatization which was supposed to agree or not to agree it was decided to sell directly eight most profitable units for a nominal price (Reed 1999:167–170).¹⁰³

Even more exemplar of privatization ‘misdemeanors’ was the case of selling off the state wholesale book company. As Reed (1999: 170 - 174) pointed out, in this case, the crucial role was played by Miroslav Macek, at the time the vice-president of the Civic Democratic Party,¹⁰⁴ who later, after a long-lasting public outcry, resigned from the political posts – but

103 On top of it, those suddenly appearing privatization projects have not been offered for assessment at the Ministry of Industry (Local Committee for Privatization started privatization procedures even before the Ministry of Industry assessed the value of the enterprises, the head of the committee Michal Soukup – later involved in the management and boards of the three companies which attained the profitable enterprises – became the secretary of the minister for privatization). The director of Karlovarsky porcelain who was trying to charge the decision at court was dismissed by the new minister of industry Vladimír Dlouhý in the new Czech government of Václav Klaus. The same fate met the following director as he did not take back the indictment at court. Despite the letter of Igor Němec (the minister of control) to the minister of privatization Jiří Skalický, informing about ongoing investigations, the ownership rights were immediately transferred to new owners. According to Libor Kudláček, the former secretary and advisor of the Minister for privatization, the procedure of privatization as it took place in the case of Karlovarsky Porcelain was to be quite characteristic (Reed 1999, 167 – 170).

104 Miroslav Macek (plus two co-owners of the 'Telegraf Company') managed to get the company’s privatization project selected and accepted by the Ministry of Culture, Ministry of Privatization, The Council of Economic Ministers and Government after Macek with one the co-owners of the original 'Telegraf Company' found the new company 'Telegraf Praha' and ex-post changed the originally approved privatization project, made the Ministry of Privatization to send falsified announcements to authors of the other privatization projects (the official who was in charge of State wholesale book company privatization at the Ministry for Privatization soon left and became the economic director of the Macek’s Telegraf Praha company). The price for the state wholesale book company between approving the project and actual signing the selling contract dropped as the consequence of the above- indicated manipulations from initial 50,7 million to 23 million Kč (the nominal value given by the Ministry of Culture was 182 271 000 Kč, an independent estate agency suggested the market value of 500 million Kč), on the top of it some crucial terms of the contract which were, at the time, nearly the norm for sales at the preferential price (in this case – commitment to continuing the business in the field of book trade for next ten years) have disappeared from the project and contract. Right after concluding the deal with the National Property Fund one of the company’s Prague buildings was sold for 89 million Kč to the Commercial Bank. Though the creditors of the state wholesale book company initiated the measures at the Commercial Court to stop the sale of the assets of the company - the concurs had been delayed till Macek sold numerous assets and finally got rid of the 'leftovers.' company by selling it to new owners who sold the last building belonging to the company. 370 million Kč of the company’s debt remained unpaid (Reed 1999: 170 – 174).

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sometime later after the split-off Freedom Union from Civic Democratic Party in 1997 – came back and reestablished his influence within the Civic Democratic Party.

Even though Reed has intended to highlight the ground and conditions for corruption in the Czech privatization context, he has uncovered much more of an essential phenomenon.

2. 2. Structure of Grey Zones and Grey Phenomena in the Period 1995 – 2004 versus the