Jan Macháček

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Czech Business Weekly

Jansta’s past leads to present questions

02. 05. 2006
Is it the beginning of a huge scandal, more pre-election manipulation, or simply another example of inflated legal fees?

Two weeks ago it was revealed that two legal advisers in charge of putting together a new contract between ČSOB and the state-owned Česká pošta regarding the use of retail bank Poštovní spořitelna were paid unusually large sums of money by ČSOB.

The original contract between IPB (taken over by ČSOB in 2000) and Česká pošta expired last year, and both banks had a strong interest in creating a new one.

The laywer Miroslav Jansta was paid Kč 119 million (€ 4.2 million) for legal advice, while CA IB Corporate Finance (CA IB) was paid over Kč 200 million for acting in a similar capacity. As Jansta is friendly with the ruling Social Democrats (ČSSD) and recent prime ministers, the obvious question raised is whether the exorbitant payment he received was for convincing important ČSSD members to make a contract favorable to ČSOB.

It will take time before this mystery is solved, as current signs point in opposite directions.

The most problematic matter is Jansta’s distant and recent past. He’d built up an impressive career even before communism fell, and in 1989 was one of Parliament’s youngest members from the ranks of the Communist party. He helped ČSSD with its financial troubles when it was an opposition party (1996-97) and Jansta remains a friend of former Prime Minister Stanislav Gross and his successor, Jiří Paroubek.

The key question is: Why did ČSOB contract someone so clearly connected to ČSSD? Why not an unbiased international law firm? The second problem is with the way state-owned Česká pošta went about renewing the ČSOB contract. A transparent public tender would’ve left little room for doubts or suspicion. But there was no tender, the excuse being that the public complaints that typically follow every tender here and the ensuing media frenzy would shatter the trust of Česká pošta’s 2 million small depositors.

The client won’t lodge a complaint, but the Czech Bar Association is also “investigating” Jansta’s contract, as its code of ethics say lawyers shouldn’t charge fees “way out of proportion” to the task. There’s also a potential conflict of interest, as Jansta occasionally does work for the government.

 

The other side

As incriminating as this all may sound, there are grounds for a contrary argument.

Jansta’s law firm prepared the initial contract in 1997 between IPB and Česká pošta and his firm focuses on contractual law, so his know-how made him a natural choice. Also, while Jansta’s reputation might evoke controversy, he was brought into ČSOB negotiations by CA IB, a reputable Austrian-owned financial adviser. Thirdly, Poštovní spořitelná’s renewed contract with ČSOB was approved by the Czech antimonopoly office (ÚOHS) and in Brussels.

What’s more, there’s no evidence another bank was interested in the deal, other than some very vague interest from Živnobanka, who quickly pulled out. And if Jansta’s fee seems exorbitant, note that Poštovní spořitelná is guaranteed Kč 17 billion out of the deal. So, while the deal could have been handled in a manner that would have minimized suspicion, it’s far from certain there was anything corrupt or illegal about it.

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