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On Prague’s unique Pařížská Road sits a nondescript brown door.
Lodged between a designer clothes store and a luxurious baggage retailer, it’s the gateway right into a discreet sixth-floor workplace from the place one of many Czech Republic’s richest individuals runs his empire.
There’s nothing overly ostentatious in regards to the entrance, however inside, the workplace screams wealth: papers regarding the billionaire’s newest offers are mingled amongst quite a few items of impressionist artwork, a few of which is just sitting on the ground.
That is the world of Daniel Křetínský, the multibillionaire Czech tycoon bidding to purchase the UK’s Royal Mail, who is maybe finest recognized for what he owns, moderately than the work he does.
His assortment of recognisable property embody stakes in large supermarkets equivalent to Sainsbury’s within the UK and France’s On line casino; trophy media manufacturers together with France’s Elle journal; and holdings in two top-flight European soccer golf equipment, West Ham United and Sparta Prague.
There’s the compulsory luxurious property portfolio, too: a Paris mansion and a £65m home in London, as soon as reportedly rented to the pop star Justin Bieber.
But these possessions are prizes from his retro investments within the power sector, the place Křetínský has chased earnings – moderately than inexperienced credentials – by buying discounted fossil-fuel companies as their earlier house owners race in the direction of web zero.
In a uncommon public speech in 2015, Křetínský mentioned: “We need to generate profits in industries which can be dying as a result of we expect they’ll die rather more slowly than the overall consensus says.” His strategy has prompted environmentalists to name him a “fossil hyena”.
But whereas the highlight has fallen on Křetínský, as he vies to take over the UK’s venerable and weak postal service, a lot much less consideration has been paid to the quiet enterprise companions with whom his fortunes are inextricably tied – and their involvement in controversial property offers stretching from the Czech Republic to the Turks and Caicos Islands.
“He’s a clear pores and skin,” says one shut observer, suggesting that behind the vanilla billionaire main the bid to accumulate a 500-year-old British establishment are companions with much less sterile enterprise kinds. “That’s not to say that he doesn’t have autonomy and I think about that he’s a really good particular person.”
Křetínský’s connections
Křetínský – the son of a computing professor and a senior decide – studied political science and regulation at Masaryk College in Brno, earlier than starting his rise as a lawyer at an funding firm known as J&T Finance Group.
The corporate was based in Slovakia in 1993 – the yr the nation grew to become impartial after the 1989 Velvet Revolution that led to the top of communism and the previous Czechoslovakia. It was the creation of “former schoolmates Patrik Tkáč and Ivan Jakabovič”, in line with a 2008 article in the Slovak Spectator, which added: “From the start, that they had comparatively easy accessibility to capital and contacts, as Tkáč ’s father Jozef was head of the IRB state financial institution”.
In the one ebook ever written on Křetínský, Mister Ok, the author Jérôme Lefilliâtre data: “[Patrik] Tkáč works on instinct, on emotion, on impulse, but it surely’s not good when it’s essential to get into the small print of operations. Křetínský, as a lawyer, has this. That’s why he grew to become so necessary at J&T.”
That exact eye led to his rise to develop into a J&T fairness companion – which in flip positioned him on the centre of a 2009 deal when the agency spun off its power and industrial property into a brand new firm known as EPH. EPH owns a collection of coal crops and fuel property – together with a pipeline sending Russian fuel to central and jap Europe plus a UK firm that was fined £23.63m final yr after the regulator Ofgem concluded it had gamed the power market. It has greater than 25,000 workers throughout Europe.
J&T retained a 40% stake within the spin-off, whereas one other 40% stake was taken by a Czech funding agency known as PPF Group and Petr Kellner, who was the Czech Republic’s richest man till his demise in a helicopter accident in March 2021. Křetínský, who managed the brand new standalone enterprise and held a 20% share, is the long-term companion of Anna Kellnerová, Kellner’s daughter.
Greater than a decade later, Křetínský is the inscrutable figurehead for a sprawling €50bn (£43bn) empire. His EP Group is the primary shareholder in EPH – a part of an empire based mostly round seven holding corporations that personal stakes in power, logistics, sports activities, media and retailing companies, in line with an organisational chart equipped to the Guardian by the billionaire’s advisers.
The chart additional units out how – except the group that owns shares in West Ham and Sparta Prague – all of the holding corporations are no less than 44% owned by “J&T associated buyers inc P Tkac”. That construction might be mirrored if Křetínský finally acquires the Royal Mail’s mother or father, Worldwide Distribution Providers (IDS).
It appears odd, then, that every one the Royal Mail focus has centred on a person so enigmatic he’s dubbed the “Czech Sphinx”. This appears to be like doubly unusual as, if Křetínský is the epitome of easy, Tkáč and J&T seemingly possess barely rougher edges.
Paradise islands
The territory of the Turks and Caicos Islands lies within the Atlantic Ocean, about 200 miles off the east coast of Cuba, and is one among 14 UK abroad territories.
It consists of 40 islands and cays, masking about 190 sq miles, together with the tiny Salt Cay within the south-east. It was there that an apparently parochial luxurious lodge and golf course improvement challenge led to the UK authorities imposing rule from London in 2009 – on the again of corruption allegations in opposition to the previous premier Michael Misick.
One of many allegations in opposition to Misick concerned claims he helped a Slovak billionaire acquire privileged entry to purchase after which develop crown land. The businessman, Mario Hoffmann, was a detailed affiliate of Tkáč and J&T who personally launched Misick to J&T’s financial institution, J&T Banka. The financial institution then equipped the premier with hundreds of thousands of {dollars} in private loans.
Misick has all the time denied any wrongdoing and is predicted to have the possibility to clear his identify in a long-awaited trial – which could provoke some unease in Prague and Bratislava contemplating Tkáč’s and Křetínský’s ties to the group on the time.
A listening to might contemplate a $6m mortgage obtained by Misick from J&T Banka in 2007, which was given “on advantageous phrases from the abroad backers (J&T) of a improvement challenge on Salt Cay”, in line with Robin Auld’s subsequent 2009 fee of inquiry report into the scandal.
The report continued: “The collateral on the mortgage was the 50% share within the Salt Cay Golf Membership Ltd agreed by Mr Mario Hoffmann [with] a firm managed by the Hon Michael Misick’s brother, Chal Misick, following the grant of improvement permission promoted by the Hon Michael Misick himself.”
Auld went on to recommend that the transaction was a part of “a sample” of a “relative or shut good friend receiving a massive unearned stake in a improvement firm”.
It’s not clear if Misick repaid J&T’s $6m. However contemplate what may need occurred if the premier had defaulted. In that situation, J&T and Hoffmann might have taken possession of an organization that had out of the blue develop into useful after the actions of the Turks and Caicos premier. Concurrently, that very same premier would have been left with $6m within the financial institution.
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J&T claimed it by no means meant to personal the golf firm – and had seen nothing improper with the transactions. “Given the [politically exposed person] standing of Mr Misick, the credit score line had been scrutinised from that perspective and no wrongdoings had been recognized at the moment,” it mentioned.
In his report, Auld disagreed.
In recommending a prison investigation, the decide wrote: “I discover that there’s data of presumably corrupt and/or in any other case significantly dishonest involvement, together with misfeasance in public workplace, of the Hon Michael Misick in relation to the federal government’s transactions with Mario Hoffmann.”
He mentioned this included “potential abuse of his public workplace by searching for and accepting a mortgage of $6m from J&T Banka when that financial institution, by itself account, was in negotiation with the federal government over funding and participation within the improvement of Salt Cay”.
J&T denied to the Guardian it had been instantly negotiating with the Turks and Caicos authorities in regards to the funding, however there was little or no effort to distance itself from the element in Auld’s report when the scandal broke.
Hoffmann’s shut affiliation with the financial institution continued for years and when he parted firm with J&T in 2015, Tkáč introduced: “I respect Mario Hoffmann each professionally and personally. After a number of years of fine cooperation, we’ve thus agreed on the division and settlement of joint actions in J&T. We’ll cooperate with one another on the Alzheimer’s illness analysis challenge.”
Hoffmann and Misick didn’t reply to efforts to contact them.
Defendant in New York lawsuit
Whereas J&T’s ties to Hoffmann increase questions in regards to the financial institution’s judgment within the 2000s, there’s a second authorized declare involving newer allegations regarding the Royal Mail bidder’s dealings, which might appeal to the UK authorities’s consideration because it assesses the takeover’s nationwide safety issues.
J&T was a named defendant in a case filed in New York throughout 2019 alleging that one other Czech billionaire, Radovan Vítek – plus his Frankfurt-listed firm CPI Property Group (CPI PG) – “perpetrated an enormous scheme to defraud his enterprise companions”, together with an funding enterprise, Investhold.
The scheme – through which Vitek allegedly stripped out the partnership’s “most beneficial property … for his personal private enrichment” – was made doable by “J&T Banka … and its associates”, the court docket papers alleged, with the financial institution financing “practically each one among Vitek’s fraudulent schemes, and was a keen participant in Vitek’s crimes”.
Tkáč is described within the criticism as being one among Vitek’s “shut associates”, and a decide dominated New York was the inaccurate jurisdiction to listen to the declare, leaving comparable circumstances to run in Cyprus and Luxembourg.
A spokesperson for Vitek and CPI PG mentioned the New York declare was “based mostly on false allegations” and filed with the “function of inflicting most reputational harm to CPI PG”. The spokesperson added Vitek and the corporate believed all of the claims had been “utterly baseless”.
Muddy Waters highlights Czech deal
In the meantime, a report revealed in January by Muddy Waters Analysis, a US funding agency that conducts investigations on public corporations, raised extra questions by highlighting J&T’s involvement in a multimillion-euro CPI property transaction within the Czech Republic.
The report named J&T as a Vitek “proxy” after, in 2014, he appeared to accumulate from CPI two property corporations that owned plots of Prague land. Three years later, Vitek offered the undeveloped land again to CPI at a substantial revenue.
The Muddy Waters report acknowledged: “The [2014] consideration was €14.2m. In 2017, Vitek accomplished the roundtrip, promoting the [holding companies] again to CPI PG for €50.9m. Vitek’s revenue on the roundtrip was €30.9m, regardless that neither parcel of land had undergone any improvement.”
A spokesperson for Vitek and CPI PG denied that the “roundtrip” had been devised to reward Vitek with greater than €30m and mentioned: “The property had improved within the intervening years as a result of acquiring constructing permits for about 1,000 flats. Because the acquisition in 2017, CPI PG has made a major revenue on the properties and expects to monetise additional earnings.”
A spokesperson for J&T added: “We wish to emphasise that the [Turks and Caicos and CPI PG] circumstances you’re referring to contain accusations of wrongdoing of purchasers with whom we had banking relationships not wrongdoing carried out by our group.”
Křetínský’s spokesperson mentioned: “EP Group has not too long ago obtained clearances from the related authorities in France, Germany and the UK to personal or spend money on nationally necessary companies. This features a assessment in 2022 below the UK’s Nationwide Safety and Funding Act, which discovered no cause why EP Group, via its Vesa Fairness Funding automobile, shouldn’t be allowed to extend its stake in IDS to greater than 25%.
“As well as, EP Group points publicly traded bonds which requires worldwide banks and buyers to conduct annual ‘know your buyer’ (KYC) checks on EP Group and J&T Capital Companions. These banks and buyers have all the time been snug with the events, the shareholding construction and the last word useful house owners.”
If it has not already, the UK authorities might need to ask these due diligence questions in regards to the Křetínský-Tkáč-J&T bid for Royal Mail, yet again.
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