CZECH RESPONSES TO OECD SECGEN SELECTION, ACTION

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 �A;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