history

lg philips displays in hranice

The largest "greenfield" investment in the Czech Republic at the turn of the millenium was the construction of a factory for two multinationals that are today fused, the "Korean" LG Electronics and the "Dutch" Philips in the company LG. Philips Displays. This company decided to build in Hranice a factory for large-surface television screens. This case became famous due to Markéta Regecová, who refused to provide her land at the city-proposed price of 105 crowns per square metere (although this was the typical price offered, there were also those who were selling land in the future zone for 300 crown per square meter) and requested a little less than 50 crowns per square meter more. The local mayor therefore began insulting her in the media, thus setting off a media shootout and a great grappling regarding the price of the land.

The state's highest representatives, including then-premier Zeman became involved in the case; Zeman chimed in with his nationally famous bon mot: "I want to see more Philipses and fewer Regecovás". The deputy to the head of the national police visited Mrs. Regecová under strange circumstances to convince her to sell the land; allegedly the BIS, the Czech equivalent of the FBI, took an interest in the affair as well; politicians began for the first time publicly debating on the possibility of expropriating land for the purposes of constructing industrial zones, etc. And the city of Hranice in the had to pay Mrs. Regecová, on whose property Philips illegally built, not a few dozen thousand crowns, but rather a full 5.2 million.

The Regecová case, however, almost thoroughly overshouted several errors and problems that related to both the founding of the industrial zone and to the LG Philips plant itself, e.g. the fact that the Supreme Supervision Office, the nation's highest office for review of state financial matters, determined that laws regarding investment advantages and public works were broken, that several million crowns were invested unnecessarily due to low-quality and poor preparation of the project by the Ministry of Industry, CzechInvest, and the city of Hranice, that proceedings are currently ongoing at the Czech Environmental Inspection regarding the storage of low-quality TV screens outside the factory grounds, that the company was recently fined for the umpteenth time for breaking laws related to waste water emissions, and so on. The factory thus is currently feverishly churning out TV screens (it even recently manufactured its millionth) and yet has not yet received its post-completion review-it is still officially in trial operation!

And it is precisely the starting of trial operation, in September of 2001, that lies behind one fundamental problem. That is: the act on prevention of serious accidents states that no facility in which dangerous chemical substances are sited (in the Philips case, this means e.g. toulene, acetone, isopropanol, hydroflouric acid, and nitric acid) may begin being utilized without an already-approved program for prevention of serious accidents. Such a program is essential in order to commence the factory's operation because of the fact that within it, there must be a thorough evaluation of the risks involved in a serious accident and its possible consequences for the factory's surroundings. However, the regional authority has not yet granted approval for Philips's program.

LG Philips Displays thus, for the last two years, has been manufacturing TV screens illegally, with state authorities watching but not taking action. According to the law, Philips was to have presented the prevention program for approval alongside the proposal for the issuing of a land-use decision. It submitted this proposal back in May of 2000. The company presented the program for approval over a year later-after having already begun test operation. Also, it drafted a program poor in quality, and thus had to correct and supplement it at the authority's request several times. And to top things off, Philips lacks the insurance required by law for damages caused as a result of a serious accident; the law requires that Philips acquire such insurance before commencing even test operation of its factory.

Only a program with legally valid approval and the obtaining of the mentioned insurance can serve as confirmation of all risks of serious accidents having been fully and reliably evaluated in the Philips case. Until the program is approved, no-one will truly be able to claim that there is no threat of serious consequences from accidents. In accord with the principle of due caution, one must assume instead the opposite-that such serious risks do exist. The October 2003 leak of almost one hundred liters of lacquer with a high toulene content into the Bečva River only supports this assumption.

In mid-September, 2003, EPS turned to the regional authority with filings calling for the commencement of proceedings that would forbid operation of the Philips plant and apply sanctions for the lack of insurance. Its aim is to force this concern to begin respecting the Czech code of law. The regional office, after a month of silence, finally alibistically responded that "although it essentially identifies with the conclusions contained in the EPS filing, in light of many aspects of the case's circumstances, this is a very complex case." It refused to issue fines, stating that since Philips has been breaking the law for two years, the deadline has passed for national authorities to issue the fine. It has thus suspended the handling of the case.