Document 7 - Bill in connection with the adoption of the Act on the Office for the Prevention of Corruption

[1/9] The bill introduces significant changes in the area of corruption prevention, conflict of interest and transparency of public offices. The changes include: 1) Extension of criminal liability for corrupt conduct related to public procurement, management of state property and damage to the EU’s financial interests. 2) Changes to the Act on Political Parties, including a reduction in the donation limit from CZK 50,000 to CZK 5,000 and the obligation to prove the source of donations above a certain value. (3) Introduction of a cap on direct payments in agriculture at EUR 100,000 per year for linked applicants. 4) The obligation of public officials to declare their financial situation, including funds over CZK 100,000. 5) Prohibition of media ownership by public officials and sanctions for breach of this obligation. 6) Changes in the Criminal Code, including an increase in penalty rates for corruption offences. Practical impacts include increased administrative obligations for political parties, public officials and agricultural entities. Companies and individuals must ensure transparency of financial flows and compliance with the new rules, otherwise there is a risk of fines of up to CZK 250,000 or 3% of the value of assets. Changes are permanent and require immediate implementation.

[2/9] This part of the document introduces several significant changes in Czech legislation. It includes tougher penalties for corruption and economic crimes, such as increasing the maximum prison sentences from 10 to 12 years for selected crimes. New obligations for public officials are also being introduced, including the reporting of funds and investment funds over CZK 100,000. In the area of public procurement, a rule of invalidity of a small-scale contract is introduced if the contractor fulfils the grounds for exclusion and the possibility of excluding participants with a high risk of conflict of interest. The rules for the management of university hospitals are also changing, introducing a six-year term of office for directors and the obligation of selection procedures. In the area of the Tax Code, access to information for the Office for the Prevention of Corruption and Conflict of Interest is expanded. The law also transfers the whistleblower protection agenda from the Ministry of Justice to the new Office and removes obstacles to receiving anonymous reports. In the area of political party financing, the thresholds for disclosing donations are being lowered from CZK 50,000 to CZK 5,000 and the obligation to prove the actual source of donations is being introduced. The law comes into force on January 1, 2027, which provides sufficient time to implement the changes. Practical impacts include increased administrative obligations for public officials and political parties, stricter rules on public procurement, and greater transparency in lobbying and policy financing. Companies and individuals will have to adapt their procedures to the new rules, for example on disclosure of information and compliance with new limits and obligations.

[3/9] The proposed legislation brings fundamental changes in the areas of conflict of interest prevention, political party financing, public procurement and transparency. Key changes include moving the rules of conflict of interest to the Public Procurement Act, introducing a new Office for the Prevention of Corruption and Conflict of Interest, tightening the reporting obligations of public officials, regulating lobbying and clarifying the rules for the financing of political parties. Practical impacts include increased administrative costs for IT integration, training and methodological adjustments, but also long-term savings due to centralization of agendas and higher integrity of public procurement. Political parties will have to keep transparent accounts for all income and expenses, and donations with unclear origins or non-EU origin will be banned. Public officials will be obliged to report funds in bank accounts and the value of investment portfolios, regardless of their value. The law also tightens the rules for media ownership by public officials and introduces sanctions for violations of these rules. Most of the measures are planned to take effect from 1 January 2027, allowing for gradual preparation and budgetary provisioning. Companies and public institutions will have to adapt their internal processes to the new rules, which includes training, revising guidelines and setting up control mechanisms. One-time IT integration and training costs will be offset by long-term savings through centralization and increased transparency. The law also introduces new sanctions for violations of the rules, the amount of which will be determined according to the value of the assets of the persons concerned.

[4/9] This part of the document focuses on changes in the Conflict of Interest Act and related legislation. The main changes include: 1) The obligation for public officials to report income and property benefits will be clarified to avoid confusion and duplication. Officials will have to report the entire amount received from the sale of property. (2) The administrative burden associated with the submission of entry and exit notifications shall be reduced if the official moves between functions without interruption. 3) Making the asset declarations of top politicians available to the public without the need to submit an application, while in the case of lower officials, viewing will only be possible upon request. 4) Introduction of stricter sanctions for repeated breaches of the reporting obligation, including an increase in fines and the introduction of a longer limitation period (6 years). 5) Changes to the Criminal Code prohibiting the imposition of only financial penalties for serious economic and corruption offences, and the introduction of stricter conditions for conditional release for these offences. 6) New rules for the confidentiality of the tax administrator, which will allow the publication of information that should have been compulsorily disclosed under other laws. Practical impacts include increased demands on the accuracy and completeness of asset declarations of public officials, a reduction in the administrative burden when moving between offices, greater transparency for top politicians and stricter penalties for violations of the law. Public officials must ensure that their reports are complete and timely to avoid higher fines and potential criminal penalties. Companies and citizens can expect greater access to information about the financial situation of top politicians.

[5/9] This part of the document contains several significant changes in Czech laws that relate to various areas: 1) The amendment to the Conflict of Interest Act transfers competences from the Ministry of Justice to the new Office for the Prevention of Corruption and Conflict of Interest, which increases the effectiveness of the control of public officials. 2) The amendment to the Health Services Act introduces mandatory selection procedures for the positions of directors of university hospitals with a six-year term of office, which is intended to increase transparency and reduce corruption risks. 3) Amendments to the Public Procurement Act clarify the rules for the exclusion of suppliers due to conflicts of interest and simplify administrative processes. 4) The amendment to the Act on the Regulation of Lobbying returns the concept of the lobbying footprint to the recording of only successful lobbying, thereby reducing the administrative burden and increasing the quality of information. 5) The Whistleblower Protection Act newly allows anonymous reporting, which is intended to strengthen trust in whistleblowing systems. 6) The Act on Election Administration and the Act on Election Campaigns regulate the terminology in connection with the new Office for the Prevention of Corruption. Practical impacts include the need to adapt the processes and IT systems of the entities concerned by 2027. Companies and institutions must comply with the new rules, for example by adapting the register of beneficial owners or adjusting public procurement procedures. The new obligations may increase administrative costs, but at the same time contribute to greater transparency and efficiency of public administration.

[6/9] This section of the document regulates the rules for the appointment of members of the Office for the Supervision of the Economy of Political Parties and Movements, their duties, powers and processes related to their activities. Members of the Office are appointed by the President of the Republic on the basis of proposals from the Senate, and they must meet specific requirements such as integrity, citizenship of the Czech Republic, university education and must not have been politically active in the last two years. The Office is obliged to supervise the management of political parties and movements, to publish annual financial reports and to check their completeness. Parties and movements must submit annual financial reports by April 1 each year, and failure to comply with this obligation may lead to fines of up to CZK 2,000,000. In addition, the rules for capping financial support (BISS) for agricultural entities at EUR 100,000 per year are laid down, with strict rules against circumvention of this limit. The Fund has the power to recover amounts unduly paid. The document also regulates the rules for maintaining banking secrecy, its exceptions and banks’ obligations towards state authorities. Practical implications include the obligation of political parties and movements to comply with the new requirements for transparency of financing, the obligation of agricultural operators to comply with the limits of financial support, and the obligation of banks to provide information to state authorities under specific conditions.

[7/9] This section of the legal document focuses on the obligations of public officials, their limitations and sanctions for violations of the law. Key changes include the obligation for public officials to report assets, income, liabilities and activities within precise deadlines. Public officials may not be radio or television broadcasters, publishers of periodicals or partners of legal entities in these areas. If they fail to comply with this obligation, they face sanctions, including fines of up to CZK 500,000 or 3% of the value of the legal entity’s assets. It is also prohibited to provide subsidies or investment incentives to legal entities where a public official owns a share of more than 25%. The law also regulates the conditions for consulting the register of notifications, which records information on public officials. Offences are dealt with by the relevant authorities, with fines for breaching obligations ranging from CZK 1,000 to CZK 500,000. Public officials are obliged to terminate incompatible activities within 60 days of starting to perform their duties. The law also lays down rules for conditional release from prison, including the minimum part of the sentence that the convict must serve.

[8/9] This part of the document focuses on the conditional release of convicts from prison, the penalty rates for various crimes, the duty of confidentiality in tax administration, the organization of university hospitals, the competence of the Military Police and the rules for public procurement. Key changes include: 1) Conditional release is possible after serving a certain part of the sentence, which varies according to the severity of the crime (e.g. half of the sentence for common crimes, two-thirds for murders and other serious crimes). 2) Stricter penalties for subsidy fraud, fraud and money laundering, including an increase in the upper limit of penalties. 3) New confidentiality obligations for officials in tax administration, with exceptions for sharing information with selected institutions (e.g. courts, health insurance companies). 4) Introduction of rules for the selection and term of office of directors of university hospitals (term of office 5 years, max. 2 consecutive periods). 5) Extension of the Military Police’s competence to protect military facilities, material and persons. (6) Stricter rules for the exclusion of tenderers, including on grounds such as conflict of interest or distortion of competition. Practical impacts include longer sentence periods for serious crimes, increased penalties for financial fraud, greater transparency in tax administration and public procurement, and tighter control over the management of university hospitals. Companies and individuals must ensure that the new rules are complied with, especially when awarding public contracts and managing taxes, in order to avoid sanctions. Changes to the rules for parole may affect convicts and their families. Changes are permanent unless otherwise stated.

[9/9] This section focuses on whistleblower protection, lobbying regulation, election governance, and transparency of political advertising. The Whistleblower Protection Act introduces an obligation for companies and institutions to create an internal reporting system that will enable the filing of reports on unlawful conduct. Whistleblowers are protected from retaliation, such as termination of employment or a reduction in wages. Obliged entities must ensure the confidentiality of the notifications and assess their justification. Violations of obligations are punishable by fines of up to CZK 1,000,000. The Lobbying Regulation Act introduces a register of lobbyists and lobbyists, while lobbyists must meet the conditions of integrity and legal capacity. Violations of lobbying rules are punishable by fines of up to CZK 1,000,000 or 3% of the value of the assets of a legal entity. The Election Administration Act regulates the registration of candidate lists, access to information on electoral parties and the retention of data for 10 years. The Political Advertising Transparency Act lays down rules for the financing of election campaigns and the supervision of their compliance. Companies and institutions must implement new systems, provide employee training and comply with new obligations. Violations of obligations may lead to financial penalties or a ban on activity.