Bribe demands in decline in Czech construction - heads of comps


20.05.2014 12:29

Prague - Acts of bribery are on the decline in Czech construction, and last year their amount was at its lowest since 2007, according to a survey conducted by CEEC Research among directors of building companies.


Úplatek, korupce, bankovky, obálka s penězi - ilustrační foto. CTK Horázný Josef, Fotobanka ČTK

The number of firms willing to violate internal regulations to get a public construction works contract has increased, though, said the analysis worked out in cooperation with consulting company KPMG.

Mostly large firms come across corrupt practices.

A total of 14 percent of builders said they met with a bribe request in a tender process, while last year it was 19 percent and four years ago 41 percent of respondents.

The share of firms with no such experience has risen to 71 percent from 60 percent last year. In a survey conducted four year ago there were two-fifths of negative answers.

Three-quarters of small and mid-sized builders and 58 percent of large firms said they were not asked for a bribe last year.

The result may, however, be distorted by the fact that around one-fifth of builders refuse to answer the question.

A total of 52 percent of builders said they are willing to breach internal regulations to get a public contract against less than a half of firms last year.

Eighty percent of large firms are willing to do so due to tough competition on the market.

"Some directors say that if they did not run a risk they would hardly have a chance to get a contract," said CEEC Research head Jiri Vacek.

Due to competition in the sector 38 percent of firms said they are ready to offer prices with a zero or negative margin, a drop of 3 percentage points from last year.

Among large building companies, such practice was backed by 50 percent of respondents.

Nearly one-third of builders said their margins decreased in annual terms, and only 10 percent said they went up.

Builders´ average net margin for a standard contract is at least 7 percent, according to the analysis.

Large firms have 3 percent, while small and mid-sized firms 8 percent.

Up to 97 percent of builders´ directors said that personal contacts are the best way of how to get a contract. Tenders are seen as the least effective way, the survey found.

"The price is usually the only criterion to pick a winner in a tender, mainly in the public sector," said Vacek.

Firms, however, often use dumping prices to win a tender due to lack of contracts, he added.

The Local Development Ministry is preparing a new public procurement bill aimed to enable the contracting entities to lay emphasis on quality, environmental benefits, social aspects and innovations as well. The new legislation might take effect as of 2016.

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