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On Prague’s exclusive Pařížská Street sits a nondescript brown door.
Lodged between a designer clothing shop and a luxury luggage store, it is the gateway into a discreet sixth-floor office from where one of the Czech Republic’s richest people runs his empire.
There is nothing overly ostentatious about the entrance, but inside, the office screams wealth: papers relating to the billionaire’s latest deals are mingled among numerous pieces of impressionist art, some of which is simply sitting on the floor.
This is the world of Daniel Křetínský, the multibillionaire Czech tycoon bidding to buy the UK’s Royal Mail, who is perhaps best known for what he owns, rather than the work he does.
His collection of recognisable assets include stakes in big supermarkets such as Sainsbury’s in the UK and France’s Casino; trophy media brands including France’s Elle magazine; and holdings in two top-flight European football clubs, West Ham United and Sparta Prague.
There is the obligatory luxury property portfolio, too: a Paris mansion and a £65m house in London, once reportedly rented to the pop star Justin Bieber.
Yet those possessions are prizes from his unfashionable investments in the energy sector, where Křetínský has chased profits – rather than green credentials – by acquiring discounted fossil-fuel businesses as their previous owners race towards net zero.
In a rare public speech in 2015, Křetínský said: “We want to make money in industries that are dying because we think they’ll die much more slowly than the general consensus says.” His approach has prompted environmentalists to call him a “fossil hyena”.
Yet while the spotlight has fallen on Křetínský, as he vies to take over the UK’s venerable and vulnerable postal service, much less attention has been paid to the quiet business partners with whom his fortunes are inextricably tied – and their involvement in controversial property deals stretching from the Czech Republic to the Turks and Caicos Islands.
“He is a clean skin,” says one close observer, suggesting that behind the vanilla billionaire leading the bid to acquire a 500-year-old British institution are partners with less sterile business styles. “That is not to say that he doesn’t have autonomy and I imagine that he is a very smart individual.”
Křetínský’s connections
Křetínský – the son of a computing professor and a senior judge – studied political science and law at Masaryk University in Brno, before beginning his rise as a lawyer at an investment company called J&T Finance Group.
The company was founded in Slovakia in 1993 – the year the country became independent after the 1989 Velvet Revolution that led to the end of communism and the former Czechoslovakia. It was the creation of “former schoolmates Patrik Tkáč and Ivan Jakabovič”, according to a 2008 article in the Slovak Spectator, which added: “From the beginning, they had relatively easy access to capital and contacts, as Tkáč ’s father Jozef was head of the IRB state bank”.
In the only book ever written on Křetínský, Mister K, the writer Jérôme Lefilliâtre records: “[Patrik] Tkáč works on intuition, on emotion, on impulse, but it’s not perfect when you need to get into the details of operations. Křetínský, as a lawyer, has this. That’s why he became so important at J&T.”
That precise eye led to his rise to become a J&T equity partner – which in turn placed him at the centre of a 2009 deal when the firm spun off its energy and industrial assets into a new company called EPH. EPH owns a series of coal plants and gas assets – including a pipeline sending Russian gas to central and eastern Europe plus a UK company that was fined £23.63m last year after the regulator Ofgem concluded it had gamed the energy market. It has more than 25,000 employees across Europe.
J&T retained a 40% stake in the spin-off, while another 40% stake was taken by a Czech investment firm called PPF Group and Petr Kellner, who was the Czech Republic’s richest man until his death in a helicopter accident in March 2021. Křetínský, who managed the new standalone business and held a 20% share, is the long-term partner of Anna Kellnerová, Kellner’s daughter.
More than a decade later, Křetínský is the inscrutable figurehead for a sprawling €50bn (£43bn) empire. His EP Group is the main shareholder in EPH – part of an empire based around seven holding companies that own stakes in energy, logistics, sports, media and retailing businesses, according to an organisational chart supplied to the Guardian by the billionaire’s advisers.
The chart further sets out how – with the exception of the group that owns shares in West Ham and Sparta Prague – all the holding companies are at least 44% owned by “J&T related investors inc P Tkac”. That structure will be mirrored if Křetínský eventually acquires the Royal Mail’s parent, International Distribution Services (IDS).
It seems odd, then, that all the Royal Mail focus has centred on a man so enigmatic he is dubbed the “Czech Sphinx”. This looks doubly strange as, if Křetínský is the epitome of smooth, Tkáč and J&T seemingly possess slightly rougher edges.
Paradise islands
The territory of the Turks and Caicos Islands lies in the Atlantic Ocean, about 200 miles off the east coast of Cuba, and is one of 14 UK overseas territories.
It consists of 40 islands and cays, covering about 190 sq miles, including the tiny Salt Cay in the south-east. It was there that an apparently parochial luxury hotel and golf course development project led to the UK government imposing rule from London in 2009 – on the back of corruption allegations against the former premier Michael Misick.
One of the allegations against Misick involved claims he helped a Slovak billionaire gain privileged access to buy and then develop crown land. The businessman, Mario Hoffmann, was a close associate of Tkáč and J&T who personally introduced Misick to J&T’s bank, J&T Banka. The bank then supplied the premier with millions of dollars in personal loans.
Misick has always denied any wrongdoing and is expected to have the chance to clear his name in a long-awaited trial – which might provoke some unease in Prague and Bratislava considering Tkáč’s and Křetínský’s ties to the group at the time.
A hearing could consider a $6m loan received by Misick from J&T Banka in 2007, which was given “on advantageous terms from the overseas backers (J&T) of a development project on Salt Cay”, according to Robin Auld’s subsequent 2009 commission of inquiry report into the scandal.
The report continued: “The collateral on the loan was the 50% share in the Salt Cay Golf Club Ltd agreed by Mr Mario Hoffmann [with] a company controlled by the Hon Michael Misick’s brother, Chal Misick, following the grant of development permission promoted by the Hon Michael Misick himself.”
Auld went on to suggest that the transaction was part of “a pattern” of a “relative or close friend receiving a large unearned stake in a development company”.
It is not clear if Misick repaid J&T’s $6m. But consider what might have happened if the premier had defaulted. In that scenario, J&T and Hoffmann could have taken ownership of a company that had suddenly become valuable after the actions of the Turks and Caicos premier. Simultaneously, that same premier would have been left with $6m in the bank.
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J&T claimed it never intended to own the golf company – and had seen nothing wrong with the transactions. “Given the [politically exposed person] status of Mr Misick, the credit line had been scrutinised from that perspective and no wrongdoings had been identified at that time,” it said.
In his report, Auld disagreed.
In recommending a criminal investigation, the judge wrote: “I find that there is information of possibly corrupt and/or otherwise seriously dishonest involvement, including misfeasance in public office, of the Hon Michael Misick in relation to the government’s transactions with Mario Hoffmann.”
He said this included “potential abuse of his public office by seeking and accepting a loan of $6m from J&T Banka when that bank, on its own account, was in negotiation with the government over funding and participation in the development of Salt Cay”.
J&T denied to the Guardian it had been directly negotiating with the Turks and Caicos government about the funding, but there was very little effort to distance itself from the detail in Auld’s report when the scandal broke.
Hoffmann’s close association with the bank continued for years and when he parted company with J&T in 2015, Tkáč announced: “I respect Mario Hoffmann both professionally and personally. After several years of good cooperation, we have thus agreed on the division and settlement of joint activities in J&T. We will cooperate with each other on the Alzheimer’s disease research project.”
Hoffmann and Misick did not respond to efforts to contact them.
Defendant in New York lawsuit
While J&T’s ties to Hoffmann raise questions about the bank’s judgment in the 2000s, there is a second legal claim involving more recent allegations concerning the Royal Mail bidder’s dealings, which could attract the UK government’s attention as it assesses the takeover’s national security considerations.
J&T was a named defendant in a case filed in New York during 2019 alleging that another Czech billionaire, Radovan Vítek – plus his Frankfurt-listed company CPI Property Group (CPI PG) – “perpetrated a massive scheme to defraud his business partners”, including an investment business, Investhold.
The scheme – in which Vitek allegedly stripped out the partnership’s “most valuable assets … for his own personal enrichment” – was made possible by “J&T Banka … and its affiliates”, the court papers alleged, with the bank financing “nearly every one of Vitek’s fraudulent schemes, and was a willing participant in Vitek’s crimes”.
Tkáč is described in the complaint as being one of Vitek’s “close friends”, and a judge ruled New York was the incorrect jurisdiction to hear the claim, leaving similar cases to run in Cyprus and Luxembourg.
A spokesperson for Vitek and CPI PG said the New York claim was “based on false allegations” and filed with the “purpose of inflicting maximum reputational damage to CPI PG”. The spokesperson added Vitek and the company believed all the claims were “completely baseless”.
Muddy Waters highlights Czech deal
Meanwhile, a report published in January by Muddy Waters Research, a US investment firm that conducts investigations on public companies, raised additional questions by highlighting J&T’s involvement in a multimillion-euro CPI property transaction in the Czech Republic.
The report named J&T as a Vitek “proxy” after, in 2014, he appeared to acquire from CPI two property companies that owned plots of Prague land. Three years later, Vitek sold the undeveloped land back to CPI at a considerable profit.
The Muddy Waters report stated: “The [2014] consideration was €14.2m. In 2017, Vitek completed the roundtrip, selling the [holding companies] back to CPI PG for €50.9m. Vitek’s profit on the roundtrip was €30.9m, even though neither parcel of land had undergone any development.”
A spokesperson for Vitek and CPI PG denied that the “roundtrip” had been devised to reward Vitek with more than €30m and said: “The assets had improved in the intervening years due to obtaining building permits for about 1,000 apartments. Since the acquisition in 2017, CPI PG has made a significant profit on the properties and expects to monetise further profits.”
A spokesperson for J&T added: “We would like to emphasise that the [Turks and Caicos and CPI PG] cases you are referring to involve accusations of wrongdoing of clients with whom we had banking relationships not wrongdoing carried out by our group.”
Křetínský’s spokesperson said: “EP Group has recently received clearances from the relevant authorities in France, Germany and the UK to own or invest in nationally important businesses. This includes a review in 2022 under the UK’s National Security and Investment Act, which found no reason why EP Group, through its Vesa Equity Investment vehicle, should not be allowed to increase its stake in IDS to more than 25%.
“In addition, EP Group issues publicly traded bonds which requires international banks and investors to conduct annual ‘know your customer’ (KYC) checks on EP Group and J&T Capital Partners. These banks and investors have always been comfortable with the parties, the shareholding structure and the ultimate beneficial owners.”
If it has not already, the UK government may want to ask these due diligence questions about the Křetínský-Tkáč-J&T bid for Royal Mail, all over again.
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