Autor fotografie: CSG, Public domain|Popisek: Tatra Force 6x6
Following the last hearing in the case of Quatro R.I.S.K. before the criminal chamber of the Regional Court in Olomouc, we asked the lawyer of the accused party, JUDr. Radek Ondruš, for an interview. The criminal proceedings shed light on the unequal treatment of companies trading in military material. For Tatra Trucks, the company that initiated the criminal proceedings years ago, the consequences could be extremely serious.
In the course of the trial, serious information was given concerning Tatra Export's foreign trade permit for military material. It is only now that the prosecutor has reacted to this information by filing a complaint with the licensing authority about the company's actions. The prosecutor had changed over the course of many years of litigation and this information was new to him?
The public prosecutor claims that he only learned this information in court now. Yet, the prosecutor has been on this case from the beginning and this information must have been known to him when he first read the file. In court, he was just repeating what had been in the criminal file for a long time. Normally, the public prosecutor would have analysed the case not only from a criminal point of view, but also from a non-criminal point of view, i.e. in relation to the other state authorities, from the moment he became aware of them from the file and not from the defence lawyer.
In general, there are more problematic areas, not only in relation to the Licensing Administration of the Ministry of Industry and Trade, but especially in relation to the NSA, which the prosecutor must have noticed. The NSA should have long ago revoked the security clearances not only of Tatra Export's executives but also of the company itself, or at least suspended their validity. This should be done uncompromisingly, if the NSA respects the basic principle of administrative proceedings, namely the obligation to proceed in the same way in similar cases. There are or have been a number of court proceedings in similar cases.
As far as I am aware, a trial of this type took place years ago. There was a managing director who had his security clearance revoked by the NSA, arguing that his decisions were influenced by the owner and that the managing director did not have the autonomy of will to make decisions. This has been repeated in several other cases over time. In the recent and ongoing litigation, this very case is already being argued before the courts, i.e. what we are witnessing in the case of Quatro R.I.S.K. It is precisely in the case of this company that the disgrace of the competent authorities towards the Tatra companies is quite the opposite, i.e. they do not act, although in other cases they do just the opposite.
One of the key points in the ongoing criminal proceedings against Quatro RISK is the classification of military material and the discrepancy between legal and technical, factual interpretation. What do you see as the weaknesses of the current situation?
The judge has already taken the view in advance that the brake valves in question are military material. He refused to accept the Supreme Court case law that I presented to him, which evaluates the issue as technical and not legal. According to the Supreme Court, he should therefore have relied on expert evidence.
The real weakness of the whole case was exposed by the prosecutor himself. On the one hand, he repeatedly stated, even before the court, that he had reported the foreign deals with hundreds of military vehicles negotiated by Tatra Trucks as a suspected offence to the MIT Licensing Authority; on the other hand, he complained before the court against the decision by which the court had referred the export of brake valves by my client to the same authority as an offence. In his complaint, the public prosecutor did not even wait to see how the court would justify its decision in a written decision. I really do not understand this schizophrenic procedure. Perhaps I could understand it if the prosecutor had waited to see how the court would justify its decision, but this is truly incomprehensible.
If the prosecutor claims that the export of brake valves is a criminal offence and indicts my client, then what kind of conduct must it be when Tatra Trucks, without a foreign trade permit for military material, arranges military deals not only for spare parts and servicing but even for the export of entire military vehicles. That is why I stated during the trial that if I were in the prosecutor's position, not today after the last trial, but already during the criminal proceedings, searches and searches of non-residential premises at Tatra would have been carried out. I would have gone through all the deals with military material, and I would have uncompromisingly started prosecuting those who arranged and carried out these deals in fact, without having a permit and licence to do so.
Even the simple negotiation of foreign deals with military material is an activity that can only be carried out by those who have a licence to do so, i.e. Tatra Export, solely in its own name, with its own resources and on its own responsibility, and this activity cannot be delegated in any way to someone who does not have such a licence. That is why the State has ordered such stringent security checks on the executives of companies carrying out this activity and has introduced a rather elaborate authorisation system to ensure that trade in military material is carried out by those who have the clearance to do so. I could then authorise by mandate agreement anyone, even a company controlled by the Russian Federation, to do such military business.
So here we are talking about the level of criminal proceedings. How far back can one go in such cases?
The statute of limitations for the most serious forms of the crime of illicit foreign trade in military materiel can range up to 15 years, depending on the circumstances, as the most severe rate for this crime is between 3 and 10 years. If this is a continuing offence, i.e. a continuation of such illicit trafficking, the prosecutor should examine everything that has happened in the last 15 years after the suspect has definitively stopped this criminal activity.
If the responsible institutions now approach the matter responsibly and properly, what consequences could this have for Tatra?
If it is indeed proven that Tatra Trucks is effectively negotiating deals with military material without a permit and exporting it abroad through a front company, with all documentation of these deals being held by Tatra Trucks, the NSA should immediately stop the validity of the clearances of the executives of these front companies and the Licensing Administration should suspend their permits for these deals. Both bodies should then immediately submit the findings to the public prosecutor's office, which should immediately resolve everything through specialised police departments, especially the NCOZ (National Organized Crime Agency of the Police of the Czech Republic).
What is interesting about the whole matter is that the first criminal proceedings against my client's company for the export of brake valves started somewhere in the Kopřivnice district department with which Tatra started cooperating in the fight against commercial competition. Then everything went through the district prosecutor's office in Nový Jíčín to the regional criminal police in Ostrava. In my experience, this is the first and only case of this type that I know of where the case was not investigated by the NCOZ but by the regional criminal police. This is already very suspicious.
What consequences could this have for Tatra Trucks? If the law enforcement authorities in this case follow the same strict procedure as in my client's case, it would mean the immediate arrest of Tatra Trucks' executives and responsible persons, their prosecution, and a retrospective investigation of all military material trades in which Tatra Trucks was involved to see whether it had negotiated these trades itself without authorisation. How the European Commission and its bodies controlling trade in military material would behave in such a case is a separate question that I cannot answer. At the very least, it would pose a serious security risk to the Czech Republic.
This is potentially a nuclear time bomb for Tatra Trucks.
Yes. And it's not just that. In general, we are talking about all military material that is traded in this way. That is to say, deals that are effectively negotiated and executed by companies that are not authorised to do so, and which instead formally set up shell companies with zero assets and minimal or even no employees, whose statutory officers are so unimportant and insignificant that they can obtain security clearances without too much trouble. In the case of Tatra Export, which acted in the proceedings in question, these were two ordinary employees of Tatra Trucks who perhaps did not even know what they were signing.
The whole system only works because it is tolerated by state power in the case of large companies. It only prosecutes and penalises cases where small companies, such as my client, are involved. Both the Licensing Administration and the NSA must have known from the beginning that Tatra Export is a front and does not actually carry out its own activities. Even a cursory glance at the Commercial Register and its annexes is enough to see that. How can a company with no employees actually carry out billion-dollar deals? If this has escaped the state authorities in charge of the issue, then something is wrong. In standard democracies, the heads of those responsible would have already rolled.
Can or should the NSA intervene in these matters proactively, on its own initiative, or is it waiting for an initiative?
Certainly, the NSA should proactively enter into these matters itself. The NSA is responsible for the security competence of the managing directors of companies dealing in military material, i.e. for ensuring that there are no security risks or negative circumstances in their cases. The NSA finds these out for itself, but also based on information from intelligence services and other state bodies, in this case the prosecutor's office or the Licensing Administration. The NSA should not wait for a complaint if the information is known to it from its official activities. I assume that the NSA was familiar with Tatra Export's business register in the security clearance proceedings and must have been aware that it had no employees. So how could they have carried out the declared business.
Would you say that the system is set up correctly, but in some cases it has been practically circumvented so far?
Yes. Exactly. The system is set up well. But either for political or clientelistic reasons, it is not being followed in some cases. It focuses mainly on small and insignificant companies, not on large companies. While in the case of small companies, their executives applying for security clearance go to security interviews before the NSA, which sometimes last for many hours, the executives of Tatra Export stated in court that they had not attended any such interviews. Yet the first half hour would have shown that something was wrong. Moreover, the intelligence services are active in a number of companies and regularly monitor their activities. In this case, however, the managing directors also stated in court that the intelligence services had not carried out such monitoring activities against their company or that they had not observed any such activities.
What is certain, however, is that if the prosecution had followed the same procedure in the Tatra Trucks case as in the case of my client, everything would have looked completely different.
In late June, the Committee on Foreign Investment in the United States (CFIUS) confirmed the sale of The Kinetic Group to CSG. Now there is only a bid issue in play, a competition between two bidders, and a shareholder decision. But are the safety issues settled for this committee?
Everything is unfolding in real time. What is decided today may not be tomorrow – any decision can be suspended or revoked. It depends on the level, volume and quality of information that the decision maker has at any given time. I don't have information about the approval processes within the US system, but as far as I know, Americans very strongly emphasize the security risks to their own country, which they prioritize at some points over their own economic interests. I would direct this question more to the American officials.
The licensing administration is also involved in another case involving not only Tatra chassis, but sophisticated weapons systems. This is the possible export of more than 70 DITA self-propelled guns to Azerbaijan, which has been discussed in the media. The Nagorno-Karabakh region, was, however, subject to an OSCE embargo until at least the recent past. Is it currently possible to export military material from the Czech Republic to a country such as Azerbaijan?
All deals with military material allowed in the Czech Republic must be approved by the Foreign Ministry, which monitors various restrictions and embargoes to ensure that these exports are, among other things, in line with the Czech Republic's foreign policy interests. The intelligence services also comment on these deals. The final destination is examined in great detail. It is therefore both a political and a security issue.
It is only recently that so-called anti-re-export clauses have begun to be included in the terms of licences for the export of military equipment. This means that in the licence for a particular trade there is a condition that any further transfer from the country where the export is authorised as the country of final destination can only be re-exported with the consent of the Czech licensing authorities. Without such approval, no further export from that country of final destination can take place. This also applies to the transfer of military material within the EU. In practice, this means that if a company receives a licence to export to Slovakia as the final destination and the buyer wants to export this military material elsewhere, it must have the consent of the Czech licensing authorities. However, if the state of the end user does not respect this, which is possible especially in non-EU states, then there is no legal instrument against it.
The only risk is that in such a case, a specific state or company that does not comply with the conditions will be subject to a so-called denial, i.e. a measure by the Czech side to prevent any licence to export military material to that state or company from the Czech side for at least 3–4 years. The reasons for this are usually not known to the applicant. But even these denials are not binding in practice and the state takes them into account or accepts them only if it is in line with its interests.
A typical example is the restrictions against China, where, with reference to the international restrictions in connection with the Tiananmen Square events in 1989, imports of sporting weapons, i.e. non-military material which is designated as military, are not allowed on the one hand, while imports of other military material are accepted on the other. This is also the case in our criminal case. I am aware of a case in which the customs administration did not allow the import of sporting rifles which it described as military material, while on the other hand the same customs administration described as non-military material the brake valves which are the subject of these criminal proceedings and which the prosecutor and the court described as military material, while in both cases they were imported from China.
This actually brings us back to the Quatro R.I.S.K. case, because it is a related, identical problem.
Yes, and it is very simple. The former commercial deputy of Tatra said this on the record in court as a witness. Action has been taken against the "grey" parts. He clearly said that the aim was to eradicate competition. As I said earlier, this is the only case in my entire career dealing with military material that was not handled by the NCOZ. The first criminal proceedings originated in the Kopřivnice district department, with which Tatra cooperated in the fight against competition.
And as for Tatra Export, you know, I can understand if the business is really run by the managing director, and the owner influences him in some way in terms of the business direction of the company, although it should not be so, and the owner should influence the company at most by changing the statutory officers. But here the Tatra Export representatives did not even know what business the company was actually doing. It was as if they had been brought papers from Tatra Trucks where they worked to sign and shown where to sign. In fact, as both executives admitted in court, they did not even know the structure of the deals they were signing. What surprised me was the casualness with which they admitted this in court. It seems as if everyone didn't care what their testimony might cause. It's as if they're all living in the belief that they're unprosecutable and that they'll get away with it. So far, it looks that way, and the only one who's really gotten away with it is my client.
I recall another case where a managing director lost his security clearance because, among other things, the owner of the company, who was not the statutory body, interfered in specific business cases. In this case, one witness specifically stated in court that in the case of military deals, these were negotiated on behalf of Tatra Export by Tatra Trucks employees, and even in the case of important business partners such as the Chiefs of General Staff, one of the company's owners acted directly and arranged everything "with the weight of his personality". This reminded me of the famous quote from Mario Puzzo's book "The Godfather". The witness commented that he was not aware that this co-owner had any particular position in the company at the time, which the witness, as part of the company's management at the time, should have known.
What further developments do you expect in the Quatro R.I.S.K. case?
It's going to be quiet for a while now. We will be waiting for a few months for the written decision of the court. In any case, I will turn to the High Prosecutor's Office in Olomouc as the superior prosecutor's office to review the procedure of the Regional Prosecutor's Office in Ostrava and either withdraw the complaint filed until the case is referred for misdemeanour or instruct the supervising prosecutor to initiate criminal proceedings in the matter of the Tatra military vehicles.
I really cannot predict further developments. It all depends on how the High Prosecutor's Office will approach the matter. If the matter is referred as an offence to the Licensing Administration, then we will fight to stop the offence proceedings, as brake valves and other spare parts are not military material. If the matter is brought back before the court, we will continue the criminal proceedings and try to prove the innocence of our clients. What the NSA and the licensing authorities will do in the Tatra case I cannot predict or factually influence.
My last question is on a different subject, but one in which you also have a lot of experience. A big topic is the Czech Ammunition Initiative for Ukraine. It is a generally necessary plan, but it is accompanied, and certainly for the most part understandably so, by a number of unanswered questions. One of them concerns the capacity of ammunition depots in the Czech Republic in general. What is the general situation in this area in our country?
The ammunition storage capacity in our territory has long been underestimated, especially by the state. Personally, I assess these capacities as completely inadequate. In the case of Ukraine, we can clearly see the consumption of artillery ammunition in a local war conflict. The production capacity of this ammunition on our territory is severely limited, and the storage capacity even more so. Now the former Soviet ammunition depots have been emptied and are slowly being filled with new NATO ammunition, which is, however, being exported to Ukraine. I cannot assess the stockpiles of our army, but I wonder where sufficient stocks would be stored. The state has disposed of most of its ammunition sites and what is left may be sufficient to run the army in deep peace, not to prepare it for any conflict.
From this point of view, the decision to get rid of the munitions complex in Vrbětice, one of the last large munitions complexes built during the First Republic (1918–1938), which meets virtually every conceivable requirement and represents more than 50 large storage facilities on a sufficient area, strikes me as completely insane. If we do not want to build new warehouses at a cost of tens or hundreds of billions, for example, at Doupov or Libava, then these wrong decisions must be reviewed. If the Czech Republic is to have a sufficient supply of ammunition for its defence or to support its allies, it must have somewhere to store this ammunition. At least that which we are able to produce on our territory for the needs of the army.
Sure, private producers can handle their own storage capacity, but the state should have secure diversified storage facilities for its own ammunition stockpiles, not put all its eggs in one basket. As I see it now, the solution to this situation is being delayed and the responsibility is being passed on to either future political parties or private manufacturers. Even if the Czech Republic entrusts the entire ammunition initiative to private companies, it has to provide its own resources both for its own defence and for the fulfilment of allied commitments in NATO, and this is impossible without sufficient and properly guarded ammunition depots on our territory.