RDP Group (Research-Development-Production)

In 1993 the Czech Skoda Plzen Engineering Plant initiated an important industrial group for armaments production. An appropriate proposal by Director General Lubomir Soudek was approved with an overwhelming majority on the occasion of the first general assembly of the partially privatized concern by the stockholders. Soudek, who was elected to the position of chairman of the board of directors on the same occasion, was the largest minority stockholder of the concern with a participation of 20 percent of the shares which he held through his Nero Investment Corporation.

In June 1993, a consortium was established under the name of RDP Group (Research-Development-Production) to be participated in by three dozen Czech firms. The announcement of the new consortium to build and sell heavy conventional armaments came three years after Czechoslovak leaders tried to shed the country's long-standing reputation as one of the world's least discriminating arms dealers. Twelve enterprises were said to have already firmly pledged their collaboration, including the Avia Vehicle Plant in Prague, and the Liberec Automobile Works, the Jablonec Vehicle Plant, as well as the Zbrojovka Plant at Vsetin. The Plzen-based engineering concern, which is not to be confused with the independently operating Volkswagen daughter corporation of Skoda, would take over the management of the consortium.

The birth of thecorporation was welcomed by both the Ministry of Industry and the Ministry of Defense. "The association of arsenals is a terribly important partner for the entire strategy involving the rearming of the Army," proclaimed Miroslav Kalousek, deputy tö Minister Baudys. A similar reaction came from the press spokesman from the Ministry of Industry, Lubos Beniak: "Armaments products are goods like any other. In trading them, it is necessary only to adhere to government policy and to live up to international obligations. The minister believes that the corporation has a future." Despite the verbal optimism from the highest places,however, the RDP Group did not immediately conclude any preliminary commercial contracts, and its negotiations with the Army also terminated up a blind alley.

The director general of the RDP Group is Eng. Jan Vlcek, the former head of X Trade, the trading corporation of the Ministry of Defense, which Antonin Baudys eliminated as of 30 June 1993. "X Trade was supposed to assure us of commercial services, but a check on management for 1992 clearly demonstrated that we do not need that company," says Deputy Minister Kalousek. "Last year, it sold six parcels of real estateowned by the ministry and brokered one purchase of military equipment." According to Kalousek, Jan Vlcek will clearly utilize his experiences based on doing business for the Ministry for Defense in the new corporation. "He knows how things work and has made a number ofcontacts. But I do not think he could somehow misusethe information he acquired at the ministry."

The first task for the new group was to be the modernization of the T-72 tank, formerly of Soviet design, as well as the general restructuring of Czech armaments to NATO standards in view of the most rapidly possible amalgamation with this defense alliance. Toward this end, conversations are said to be already under way with the French SOFMA Armaments Concern which maintains close contacts with the Daimler-Benz Concern. The project was said to be receiving management support from the Americans.

The principal customer for the planned production was said to be the Czech Army, which numbered about 65,000 men, although the consortium was also thinking of exporting to the West and to other noncrisis areas. Meanwhile, the Slovak Government announced that it hoped to complete the conversion of its economically dominant yet wholly unprofitable armaments industry by the end of 1994.

The decision at Plzen, which was expressly welcomed by the government in Prague, meant a substantial reorientation of the Czech armaments industry, as well as a reorientation of industrial policy. It could be substantially attributed to Vladimir Dlouhy, minister of industry and trade. In recent weeks, the minister had already indicated the abandonment of strict export prohibitions applicable to weapons, hastily imposed after the 1989 fall of the Communists. It was also the minister who had surprisingly appointed Soudek with the overall direction of the Plzen concern last November; the 46- year-old manager had already been director of the concern between February 1990 and 1991 and had had moderate reorganization success.

Although Dlouhy had then been favoring cooperation with Siemens in the area of transport and energy, when this cooperation collapsed he saw to it that voluminous government and bank credits were made available to save Skoda Plzen. Skoda Plzen was said to be financially reorganized, and yet there were no appropriate detailed figures available. With the number of workers down to 20,800, following a reduction of virtually 8,000 jobs since September 1992, a 9.5-billion-koruna [Kcs] turnover was achieved in 1992 (Kcsl8 = 1 German mark). During 1993, an increase to Kcsl2.5 billion was anticipated.

It was not clear how armaments development and production, which the RDP Group wanted to sell in the future, was to be financed. According to a member of the RDP Group board of directors, Jiri Sima (Skoda Diesel), each enterprise would finance its own research and development. Sima's colleague on the board, Eng. Lubomir Pospisil (Police Engineering Plant), believed that the companies would come together in the case of necessary expenditures and that they will be assisted by the Army. Some members voiced fear. "The state cannot finance joint projects involving enterprises that are making a profit only; precise rules must be stipulated," said Eng. Jan Snegon, who was secretary to the director general of the Zdas Company in Zdar, one of the small RDP firms that was showing a profit (in 1992, some 160 million korunas). The Ministry of Defense was not thinking of investing inarmaments enterprises. At best, it was willing to provide grants to cover interest payments on loans the enterprises make with banks, but, as M. Kalousek said, it was "only an idea that was never discussed."

By 1994, over forty arms-producing firms were working within the RDP Group to develop a wide range of products for both military and civilian markets. RDP partners are working on 27 projects for the arms market. The group concentrated its attention on mainly one product: the T-72 Soviet tank. The RDP Group wanted to equip those tanks, which are used by both the Czech Army and by many armies abroad, with new transmissions, new engines, and new optics. LIAZ [Liberec Automobile Works] Jablonec wanted to replace the unsuitable V3S Army cargo truck in the Czech Army with its products; Zdas in Zdar was supposed to deliver presses for the production of shell cases; and the Police Engineering Plant was to provide the ammunition.

Iran showed interest in buying an upgraded version of the Soviet-designed T-72 tank that a consortium of Czech companies, the RDP Group, has undertaken to produce. But in April 1994, the Czech Foreign Ministry bowed to Washington's wishes and blocked the deal. When the Czech Defense Ministry announced tenders for modernizing its T-72 main battle tanks on 15 August 1995, both Skoda and the RDP Group were nowhere to be found on the list, although the winners included a mix of foreign and domestic companies. The tank-modernization program will be carried out by the Military Repair Company VOP-25, based in Novy Jicin.

By 1997, engineering giant Skoda Plzen - one of the largest Czech companies - was still attempting to move back into arms production, presenting a new mobile anti-aircraft unit at the 1997 IDET trade fair in Brno. This system benefited from foreign co-operation, being developed with Tatra Koprivnice, Retia Pardubice and Swiss company Oerlikon-Contraves.

On 30 August 1997 main opposition Czech Social Democratic Party (CSSD) chairman Milos Zeman charged that the Civic Democratic Alliance (ODA) and the intelligence service had thwarted the sale of tanks to Algeria. In 1998 there were charges that the state had been deprived of millions of crowns due a disadvantageous contract between the Interior Ministry and the RDP Group company [umbrella company associating Czech arms manufacturers] according to which the ministry sold it useless material below price. Lidove noviny' reported 03 September that the armament company RDP Group had concluded the contract with former Interior Minister Jan Ruml.

There were no less than four defence industry associations in the Czech Republic - three called the Association of Czech Arms Manufacturers (AOP) and a fourth representing the aviation industry. This confused situation was due to the struggle between the RDP Group and a group centerd around Synthesia Pardubice, engineering giant CKD Praha and former monopoly arms trader Omnipol. On 11 December 1998 Defence Minister Vladimir Vetchy welcomed the decision by three Czech arms associations on single representation of the Czech arms industry abroad, following a meeting between Vetchy and representatives of arms manufacturers. He added that if the arms manufacturers cooperated in the same way in the Czech Republic then Vetchy would not insist on the associations being merged into one single body. This followed an agreement between the Association of Czech Arms Manufacturers (AOP) under Jaroslav Valousek and the RDP Group under Viktoria Hradska.