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 solely 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 probably finest identified for what he owns, relatively than the work he does.
His assortment of recognisable property embody stakes in huge supermarkets akin 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 income – relatively than inexperienced credentials – by buying discounted fossil-fuel companies as their earlier homeowners race in the direction of web zero.
In a uncommon public speech in 2015, Křetínský mentioned: “We need to generate profits in industries which might be dying as a result of we expect they’ll die way more slowly than the overall consensus says.” His method 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 choose – studied political science and legislation at Masaryk College in Brno, earlier than starting his rise as a lawyer at an funding firm referred to as J&T Finance Group.
The corporate was based in Slovakia in 1993 – the yr the nation grew to become unbiased 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 response to a 2008 article within the Slovak Spectator, which added: “From the start, they’d comparatively quick access 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 Okay, the author Jérôme Lefilliâtre information: “[Patrik] Tkáč works on instinct, on emotion, on impulse, but it surely’s not good when you want to get into the main points of operations. Křetínský, as a lawyer, has this. That’s why he grew to become so essential at J&T.”
That exact eye led to his rise to change into a J&T fairness associate – 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 referred to as EPH. EPH owns a sequence of coal vegetation and fuel property – together with a pipeline sending Russian fuel to central and japanese 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 referred to 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 associate 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 principle 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 response to an organisational chart provided to the Guardian by the billionaire’s advisers.
The chart additional units out how – except for 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 will probably be mirrored if Křetínský ultimately acquires the Royal Mail’s dad or mum, Worldwide Distribution Providers (IDS).
It appears odd, then, that each 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 in every of 14 UK abroad territories.
It consists of 40 islands and cays, overlaying about 190 sq miles, together with the tiny Salt Cay within the south-east. It was there that an apparently parochial luxurious resort and golf course improvement venture led to the UK authorities imposing rule from London in 2009 – on the again of corruption allegations towards the previous premier Michael Misick.
One of many allegations towards 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 provided the premier with thousands and thousands of {dollars} in private loans.
Misick has all the time denied any wrongdoing and is anticipated to have the possibility to clear his title 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 take into account 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 venture on Salt Cay”, in response to 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 buddy receiving a massive unearned stake in a improvement firm”.
It isn’t clear if Misick repaid J&T’s $6m. However take into account what might need occurred if the premier had defaulted. In that situation, J&T and Hoffmann might have taken possession of an organization that had instantly change into precious 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 supposed to personal the golf firm – and had seen nothing incorrect 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 legal investigation, the choose 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 venture.”
Hoffmann and Misick didn’t reply to efforts to contact them.
Defendant in New York lawsuit
Whereas J&T’s ties to Hoffmann elevate questions in regards to the financial institution’s judgment within the 2000s, there’s a second authorized declare involving more moderen allegations in regards to the Royal Mail bidder’s dealings, which might entice the UK authorities’s consideration because it assesses the takeover’s nationwide safety concerns.
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 worthy property … for his personal private enrichment” – was made attainable by “J&T Banka … and its associates”, the courtroom papers alleged, with the financial institution financing “almost each one in every of Vitek’s fraudulent schemes, and was a keen participant in Vitek’s crimes”.
Tkáč is described within the grievance as being one in every of Vitek’s “shut buddies”, and a choose dominated New York was the inaccurate jurisdiction to listen to the declare, leaving related instances 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 “goal of inflicting most reputational injury 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 printed 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 bought the undeveloped land again to CPI at a substantial revenue.
The Muddy Waters report said: “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, although 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 residences. Because the acquisition in 2017, CPI PG has made a big revenue on the properties and expects to monetise additional income.”
A spokesperson for J&T added: “We wish to emphasise that the [Turks and Caicos and CPI PG] instances you might be 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 just lately obtained clearances from the related authorities in France, Germany and the UK to personal or put money into nationally essential companies. This features a assessment in 2022 beneath the UK’s Nationwide Safety and Funding Act, which discovered no cause why EP Group, by 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 comfy with the events, the shareholding construction and the final word useful homeowners.”
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, another time.