Highway to Hell

Remember Operation Clean Shovel? Well, a couple of actors from that sorry public relations stunt act appear in the latest production of Slovenia’s Got Corruption Talent. Well, truth be told, this is a star-studded episode which includes almost every player in the country’s construction sector. But just to refresh your memory, here is a short paragraph from the aforementioned post, dealing in the way Slovenia went about building it’s highway system.

(source)

(…)it is more or less a matter of public record that companies, supposedly competing for winning contracts, formed a sort of a trust, fixing their bids and pre-aranging who would win which contract, hiring the remaining companied as subcontractors afterwards. Just that no one was able to prove it, because…. well… the government didn’t really feel like it, mostly due to the a,b,c cited above, plus the fact that some wealth was probably spread the government way as well (I won’t use the word bribe, but feel free to think it). But even if there was no direct bribery involved, the fact remains that people from construction companies would often find themselves in government or para-government posts (such as board of the Slovene Highway Company – DARS) or vice-versa. Nearly everybody is connected to nearly everybody else and in this game nobody tops Ivan Zidar, who is probably the single most-connected person in this coutnry. His connections span from old communist aparatchiks to the highest levels of the Catholic Church (SCT being its main contractor as well).

What everyone suspected now turned out to very much correct. Even more. As the Competition Protection Office went about investigating most of Slovenian construction companies on charges of tender-fixing, it unearthed – would you believe it – a written cartel agreement between most of the country’s construction companies detailing who gets what percentage of the business, who will bid at what price and how tender applications will be handled to achieve desired result. Unsurprisingly more than 70 percent of the entire project, which ran for twelve years and is estimated to have cost around 7 billion euros went to Ivan Zidar’s SCT. You do the math.

It should be said at this point that when initially envisaged, the price tag on Slovene highway project was dramatically underestimated. Some say that it was done intentionally, because the project had to be approved by the parliament and if the MPs knew the real price, they’d kibosh the entire project, development be damned. It should also be said that Slovenia did get it’s highways and that they are pretty good, occasional gravity-prone fire-retardant foam notwithstanding. However, the fact remains that prices were fixed, that the whole public tender procedure is now proven to have been a charade and that there was a ton of money made. Some of the profits were legit, but some weren’t. It’s not suppose to work that way.

Now that the rabbit is out of the hat, so to speak, the question is, what to do. The cynic in me (that is to say, me) thinks it is no coincidence that the document surfaced only now. Not only is the highway network more or less complete (rendering the cartel useless), but also the period of limitation, set to three years seems to have expired, making prosecution of the cartel a virtual impossibility. Funnily enough, the Competition Protection Office can apparently fine members of the cartel up to ten percent of their yearly income. Which might in this case be even a better solution than just sending a couple of rich old men to prison. With the situation in the construction sector being where the sun don’t shine, this could very well mean that at least some of these firms would go bust as a result of the fine.

This would literally be a poetic justice (if you’ll excuse the intended pleonasm) since it would mean that by grabbing whatever monies they could lay their hand on while building the motorways, these companies had built themselves a highway to hell.

None of this goes for Ivan Zidar and SCT, of course. Despite being the main honcho of this particular cartel he will probably skate clean. Or even if he is fined, he will probably be able to swallow it. The fact that he just closed a 300 million euro deal in Libya might even help ease the pain 🙂