By Jan Lopatka
PRAGUE (Reuters) - The police raids that brought down the Czech Republic's prime minister last month were an off-shoot of another investigation into organized crime which could expose a web of corruption that has spread through this European Union member state.
Prosecutors are not giving details of their probe, but local media, citing what they say are leaked prosecution documents, say it focuses on individuals known here as "godfathers" - fixers who act as the interface between the worlds of politics and business.
"These are people who use all kinds of unsavory networks to get what they want," said Jiri Pehe, a former advisor to ex-Czech leader Vaclav Havel. "They are now under investigation for the first time, finally, and this is a real breakthrough."
Czech prosecutors have said they are conducting a single investigation made up of three strands which they say are related - charges of bribery, the alleged abuse of power by officials, and an element related to organized crime.
Last month police, some in balaclavas and with automatic weapons, raided government offices, banks and private homes.
They charged eight people, some with bribery and some with abuse of power, including an aide to Prime Minister Petr Necas. Necas stepped down, saying that though he was unaware of any wrongdoing, the affair was too much of a distraction.
On Monday, prosecutors asked parliament to lift Necas's immunity so he can be charged with allegedly offering posts in state firms to three members of parliament. The former prime minister, who won respect for tackling corruption when in office, said he would fight the accusations.
None of the people charged so far is accused of any organized-crime related offences. But prosecutor Ivo Istvan told Czech television the three strands were being handled as one investigation because the same individual or individuals featured in more than one of the strands.
Czech newspapers, citing what they say are leaked police documents, say prosecutors, while investigating the organized crime suspects, stumbled on evidence which led them to bring the other charges, not related to organized crime.
Even after the eight people had been charged - sending shockwaves through the Czech political establishment - the prosecutors running the investigation, based far from the capital in the provincial city of Olomouc to ensure impartiality, told reporters they were still working on their investigation and looking into other suspects.
"We have been investigating an organized criminal group," Robert Slachta, chief of the police's anti-organized crime police unit, said at a briefing after the raids, adding that this portion of the broader investigation was still underway.
The investigation is the first time detectives have tried to shine a powerful light into the back-rooms of Czech public life since this country of 10.5 million people shook off Communism in its 1989 Velvet Revolution.
A robust investigation would help reassure foreign investors, who want to put money in emerging Europe because it offers higher returns than established economies, but are often put off by graft. They would also help the Czech public regain trust in the rule of law.
SYSTEM OF GRAFT
Police and prosecutors have declined to give any more details about who they are investigating, citing concerns that any information could tip their hand to their suspects.
Slachta, the senior policeman, said at the same news conference that the investigation was looking at the alleged organized criminals' "clientelistic connections", a term the police use to refer to a system of patronage.
According to official reports, legal documents from other cases, and Vaclav Laska, a former police officer who is now an anti-graft campaigner, the system works like this: the "godfathers" collude with officials to make sure that chosen firms are awarded government contracts.
These are handed out at inflated prices. The profits are shared out between the businessmen, the fixers and the politicians. The cash is laundered out of the country via firms with complex ownership into tax havens, Laska, the former detective, said.
The Czech counter-intelligence agency, BIS, said in its 2011 annual report such a phenomenon undermined citizens' trust in public institutions and therefore "threatens the very democratic foundations of the rule of law."
During the same series of raids last month that led to the arrests of the prime minister's aide and others, police searched, among other places, the homes and offices of two men: Roman Janousek and Ivo Rittig.
Both are businessmen.
Lawyers for the two men, who deny their clients were involved in any unlawful activity, say prosecutors are investigating them as part of the same broader probe under which the eight people have been charged.
The two men have not been detained by police or charged with any offence. Prosecutors have not said what strand of their investigation the two fall under, or why their homes were searched. Both men, through their lawyers, declined to be interviewed by Reuters.
"The reasoning in the search warrant is...they are suspected of crime, mainly in relation to public procurement at Prague city hall," said Vit Siroky, a lawyer for Janousek.
"I believe (my client did nothing wrong) but police do not think so and suspect him of serious crime. They did not collect the evidence they believed they would in the house searches. In my opinion, evidence gathered so far does not justify initiation of a criminal investigation."
Janousek is not known at present to be the owner or director of any company that supplies goods and services to city hall.
In an unrelated case, he is awaiting trial for attempted murder after his Porsche Cayenne sports utility vehicle crashed into a woman in a Prague street last year. His lawyer said Janousek did not see the woman he hit, and denies the charge.
Rittig's lawyer, Karolina Babakova, confirmed her client's premises were searched and that he was a suspect in the broader investigation. She said he "categorically excluded" any illegal activity. He now resides in Monaco, but Babakova said he would be willing to cooperate with police.
Babakova said police working on the broader investigation were looking into a contract under which Rittig's firm supplied a code of ethics for a state forestry firm. Police searched the forestry firm's office as part of last month's raids.
She said the code of ethics contract was in line with the law. A spokesman for the forestry company declined to comment to Reuters, beyond saying the firm was cooperating with police.
Rittig is also involved in a civil suit. There is no evidence of whether this also figures in the prosecutors' investigation, but the suit may contain clues about Rittig's business activities.
In the civil case, Rittig had sued a non-governmental organization (NGO), called Anti-corruption Endowment, for defamation over allegations it made that Rittig had "probably" earned large sums of money by taking a fee from the supply of public transport tickets in Prague. The NGO did not establish definitively that he had siphoned off cash.
Rittig, through his lawyers, says he has no contracts linking him to the public transport tickets, so the implication of the NGO's allegation was that he was earning the money improperly.
The judge last month threw out Rittig's defamation suit. In his ruling, based on the NGO's assertion that Rittig had "probably" earned cash from the tickets, the judge said there was a link between the businessman and the public transport operator.
"A string of individual contracts leading all the way to Ivo Rittig was proven," the judge, Tomas Novosad, said. He reiterated the comments he made in court during a telephone interview with Reuters.
The lawyer for Rittig said her client would appeal the judge's decision on the defamation claim because, she said, the link between her client and the transport operator was not proven. "It was not, and it will be shown in further proceedings," Babakova said.
The public transport company did not respond to emailed questions.
($1 = 20.0948 Czech crowns)
(Additional reporting by Jana Mlcochova and Christian Lowe; Editing by Anna Willard)
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