Ceska Pozice

ČEZ deals being probed by anti-corruption police

Probe likely centers on ČEZ’s ex-chief Martin Roman and contracts with his previous employer, Škoda Holding, Czech media report

ČEZ is claiming a win, but the battle is not over. CEO Martin Roman (pictured) reportedly lobbied EU Commissioner Štefan Füle to influence the outcome. | na serveru Lidovky.cz | aktuální zprávy ČEZ is claiming a win, but the battle is not over. CEO Martin Roman (pictured) reportedly lobbied EU Commissioner Štefan Füle to influence the outcome. | foto: © ČTKČeská pozice
ČEZ is claiming a win, but the battle is not over. CEO Martin Roman (pictured) reportedly lobbied EU Commissioner Štefan Füle to influence the outcome.

The anti-corruption police (ÚOKFK) have been investigating state-controlled power utility ČEZ due to suspicions of criminal abuse of information and fiduciary violations for several months now, the Prague prosecutor’s office has confirmed.

Štěpánka Zenklová, a spokesperson for the Prague City State Attorney’s Office told the state news agency ČTK on Thursday that criminal proceedings were launched in November over several of ČEZ’s procurement orders but declined to elaborate. Thus far, no charges have been filed, she said. 

According to unconfirmed information carried by major Czech dailies on Friday, at the center of the investigation are orders that ČEZ management — including then chief executive Martin Roman — gave over the past decade to engineering firm Škoda Plzeň (which was privatized in 2002 and is now called Škoda Holding).

ČEZ internal audit …

Following media reports in 2011 that Roman (who stepped down as CEO five months ago but remains a ČEZ supervisory board chairman) had maintained links with Škoda Holding after taking up his post at the power company, Finance Minister Miroslav Kalousek (TOP 09) ordered an internal investigation at ČEZ, now led by Roman’s long-time ally, Daniel Beneš.

The news reports, principally by the daily Mladá fronta Dnes, had sparked accusations that Roman was apparently in a clear conflict of interest situation as ČEZ gave Škoda Power billions of crowns worth of contracts for new turbines and ongoing maintenance of power plants. A coalition of Czech NGOs involved in anti-corruption and transparency subsequently called on the government to sack Roman from his remaining ČEZ board post.

The internal probe into relations between ČEZ’s top managers and board members with Škoda Power, a power turbine supplier and maintenance company, as well as with other units of the state enterprise, revealed no irregularities in 39 deals.

“The relations between ČEZ and Škoda Power were set up according to standard and normal formal arrangements, including for example penalization [clauses] in agreements,” ČEZ announced in mid-January. “The audit found no traces of informal relations which could be regarded as improper, unethical or corrupt, in the documented relations with Škoda Power.”

… fails to call off the dogs

“From a political point of view, government ministers were happy to accept the results of ČEZ’s internal audit, which showed no irregularities in orders that the company gave to Škoda,” Bram Buring, a Prague-based analyst with brokerage Wood & Company, said in a note to clients on Friday. ‘That there is an ongoing investigation by the Prague city prosecutor shows there is still a faction among the politicians that wants to go after Roman ...’

“That there is an ongoing investigation by the Prague city prosecutor shows there is still a faction among the politicians that wants to go after Roman — the same faction, in our opinion, that forced Roman to dismiss his former head of M&A,” said Buring, who covers the Prague- and Warsaw-listed title, calling the news neutral for ČEZ itself.

When still CEO, Roman had came under government pressure to sack M&A division head Vladimír Schmalz, a leading member of the centre-right Civic Democrats (ODS) in Prague, but defended him at the cost of weakening his own position, according to earlier media reports. Czech Prime Minister Petr Nečas, the chairman of the center-right party, said that he expected other top managers at the energy company to leave following Roman after branding some of them as little more than mercenaries. Schmalz was later sacked by current ČEZ chief Daniel Beneš.

“PM Nečas has, so far, been able to neutralize this faction of his party, so the investigation may go nowhere, and, with Roman allegedly looking to exit from the supervisory board at the next AGM, the political fallout for the company is therefore likely to be limited,” Buring said.

See related articles: 
Swiss uncover fresh evidence of corruption in Škoda Plzeň sale 
Offshore firm Cokeville, linked to ongoing DPP probe, also got commission on Škoda Power sale 
ČEZ audit clears ex-CEO Martin Roman

Brian Kenety
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