Autor fotografie: Lukáš Wagenknecht, Fb profil senátora / Public domain|Popisek: Lukáš Wagenknecht
From the report on the so-called Czech Ammunition Initiative, prepared by Senator Lukáš Wagenknecht of the „Pirates“ government political party, intended for the Senate's Standing Commision on Oversight of Public Funds: "...within the Czech Ammunition Initiative, without any form of competition, the price of the delivery of 100,000 pieces of ammunition was unjustifiably increased by CZK 1.48 billion, in percentage terms by 22.4%."
180,000 pieces of overpriced ammunition financed by Germany
The report for the Senate's Standing Commission on Oversight of Public Funds on the Czech Ammunition Initiative is primarily a list of the identified misconduct and risks surrounding the initiative, and in this respect it gives credence to previous critics of the low transparency in the entire process. "Within its framework, a sub-project for the supply of ammunition financed by Germany was implemented. It includes the delivery of 180,000 pieces of ammunition, which should be delivered to Ukraine by the end of this year. The delivery consists of 100,000 pieces of stockpile ammunition and 80,000 pieces of new ammunition. According to the AMOS (Intergovernmental Defence Cooperation Agency) director, the contract with Germany was signed very quickly and the fast pace corresponded with the urgency Ukraine attaches to the supply of artillery ammunition. The first deliveries of Czech Ammunition Initiative ammunition in the order of tens of thousands of pieces were delivered to Ukraine in June," the senator writes in his introduction.
The Senator summarises the most important findings: "The impact of the Czech Republic's (AMOS and MoD) brokering of ammunition under the Czech Ammunition Initiative without any form of competition resulted in an unjustified increase in the price of the delivery of 100,000 pieces of ammunition by CZK 1.48 billion, or 22.4% in percentage terms. For the second part of the delivery of 80,000 pieces of new ammunition, there is a risk of a possible overestimation of the price of CZK 504.6 million. When assessing the financial volume of the individual findings, the financial impact of the findings points to a clear conclusion of a systemic failure of the Czech Ammunition Initiative in terms of the cost-effectiveness and efficiency of munitions supplies to Ukraine."
Insufficient control mechanisms and wasteful purchase of ammunition
The senator blames the Ammunition Initiative primarily on inadequate control mechanisms, adding that the Czech Republic has no decision-making powers in the process and is only a facilitator: "The Federal Republic of Germany knowingly and deliberately finances the supply of Turkish munitions to Ukraine on the basis of offers brokered by the Czech Republic, which is a control mechanism for verifying the efficiency and cost-effectiveness of purchases under the Czech Ammunition Initiative. Such a control mechanism implies three possible conclusions in the event of uneconomic munitions purchases."
In the first place, the Senator mentions "the incompetence of the authorities of the Federal Republic of Germany in assessing the price of ammunition supplies to Ukraine", his second conclusion is "the reliance on the cost-effectiveness of the offers submitted by the Czech Republic, respectively AMOS and the Ministry of Defence", and the third is "the deliberate purchase of overpriced ammunition by the Federal Republic of Germany, respectively by a commercial company controlled by it, which is illegal both in the Czech Republic and in Germany." The inter-ministerial commission, which, according to the Czech MoD, is supposed to ensure a certain transparency, has gathered only once so far: at its constitutive meeting. The next meeting is in September, and "It is not expected that the subject of this commission or working group will be to verify the cost-effectiveness of individual munitions initiative deliveries," the report said.
The wasteful process reduces the potential volume of munitions delivered
"The ammunition initiative is crucial and critical to military success in Ukraine, particularly because artillery fire prevents the need for close-range combat and can reduce casualties in Ukraine. Due to the wasteful process of ammunition procurement, the potential volume of ammunition that could be used by the Ukrainian Army in combat is realistically reduced by at least 22,371 shells," the Senator concludes the passage dedicated to the most important findings. He also appreciates the efforts and contribution of the Czech administration in raising awareness and importance of assistance to Ukraine, including limiting competition from individual donor states, which without coordination would create pressure on ammunition prices. He identifies the ammunition initiative as key, but adds that "Public trust is, however, conditional on sufficient assurance of transparency of processes related to the supply of ammunition paid for by foreign partners and the Czech budget."
The report is based, in important parts, on information from a whistleblower who is an employee of the Czech administration, "who informed the reporter about a procedure where a possible offer of ammunition for Ukraine was rejected by AMOS representatives and he was referred to one of the suppliers of the Czech Ammunition Initiative. Due to the sensitivity of the information and the previous experience with the Czech authorities' procedure in protecting whistleblowers, the reporter will not publish the name of the whistleblower." Inquiries from international media were another reason for checking possible ineffectiveness.
The aim is to examine the cost-effectiveness of the purchase of 180,000 rounds of ammunition paid for by Germany
The senator rejects the argument that the ammunition purchase is financed by representatives of foreign donors and therefore does not concern the Czech public funds: it is "not reasonable to pay Czech officials to implement processes within their job description that lead to possible significant financial losses for foreign partners and ultimately for Ukraine." It aims to examine the cost-effectiveness and efficiency of the Czech Ammunition Initiative's partial purchase of 180,000 Ks of 155 M107 ammunition paid for by Germany and to assess the transparency of the cost-effectiveness and efficiency of the supplier selection process and its impact on the system of ammunition procurement through the Czech Ammunition Initiative.
The UK has been transparent in a similar initiative
Senator Wagenknecht also mentions in his report, among others, a similar activity implemented by the UK and Estonia. In the case of the UK, it is the procurement of priority military equipment, and a number of countries have already contributed more than £925 million (CZK 27.2 billion) to the fund. Information for the public and potential suppliers is publicly available on the Ministry of Defence website. After the completion of each sub-tender, information on the volume of supplies tendered is subsequently published."
Yet even UK packages have already included purchases of artillery ammunition: "On 11 July 2024, a major ammunition package worth £300 million was announced. This package will provide up to 120,000 rounds of 152mm artillery ammunition. The ammunition will be newly manufactured by a European supplier, supporting new industrial capacity that will provide Ukraine with high priority ammunition."
Unjustified increase in the price of ammunition supplies
At the commission meeting held on Tuesday, Senator Wagenknecht wanted to propose adopting "a resolution that takes into account the need to set up a transparent, efficient and cost-effective use of public funds in the Czech Ammunition Initiative." At the same time, he wanted to recommend "the immediate renegotiation of unfavourable price conditions through the Ministry of Defence, or the AMOS agency, so that the deliveries are made at market prices, or that an appropriate quantity of ammunition is delivered at the agreed price, increased by the value of the current price overvaluation."
He also wanted to recommend examining other purchases made under the Ammunition Initiative "to confirm or refute that purchases of ammunition at above-market prices are not a systemic approach but a partial failure within one particular delivery," and to set up preventive mechanisms "to prevent the submission of overpriced ammunition deliveries under the Czech Ammunition Initiative."
The Senate Commission on Oversight of Public Funds refused to discuss the topic however, saying that the senators did not have enough time to study the subject and the documents.