The British-based company that says it has been illegally stripped from ownership of top-flight Slavia football club (SK Slavia - fotbal) will continue its pursuit of outstanding debts — even though this might result in the club being relegated from top-tier Czech football.
ENIC Group is pushing for repayment of Kč 110 million incurred in 1997 when it took control of Slavia, the oldest Czech football club, despite the fact that the step could cause the club to lose its license to play in the Gambrinus league and might even result in its stars playing in the third division, under the Czech-Moravian Football Association’s (ČMFS) financial rules for clubs.
“We are aware of the [license] threat. There is a board of that club and they have been putting off this issue for years now, in spite of the fact that the debt is due,” ENIC director Matthew Collecott told Czech Position “They must come up with a solution. Contrary to what they are saying, they are not acting in the best interest of the club.”
There is no question of ENIC deferring its debt settlement demand, he said, given the fact that ENIC maintains that it was ousted from the board and ownership of the club thanks to a scam by the current administrators and owners.
“It would be a different issue if we had the ownership,” Collecott said. “We acquired the club in 1997. It [the Kč 110 million debt] has been there to this day. Some of it was converted over the years. All of a sudden what has changed is the current management. They need to find a solution and quickly. No one has done anything yet. ”
Into the ‘long grass’
Time is running out for that solution: Czech football authorities need to rule on license applications for playing in the Gambrinus League next season over the next six weeks. ČMFS rules state that a club with overdue debts must present a repayment timetable agreed on by creditors. Such agreement looks unlikely — given the feeling of betrayal experienced by ENIC at its treatment in the Czech Republic — and no solution to the main issue of who owns the club is on the horizon.
While ENIC believes that a British court judgment last month recognizing its debt claim and demand for repayment provides a path for getting its Kč 110 million back once the decision is accepted in the Czech Republic, it sees no progress on the ownership issue. Collecott said he had heard nothing more following that court ruling.
“I do not see any solution on ownership,” Collecott said. “There is no dialogue with the current ownership in the club. They have taken the line that they want to push this into the long grass. If you do not have anyone to deal with, it is difficult to make progress. We are litigating on the ownership question, but it is very time consuming. It will take time; it is not something that we can solve immediately. ” ‘I do not see any solution on ownership. ... We will use every legal means at our disposal to try and solve this problem.’
The ENIC director adds that the group is prepared to step up its legal pressure and launch arbitration against the Czech state for breach of bilateral investment protection agreements, if need be. “We will use every legal means at our disposal to try and solve this problem,” he told Czech Position.
Collecott said that the treatment of ENIC has tarnished the image of the Czech Republic as a reliable place in which to do business with it now appearing to foreign investors that there was no legal basis for guaranteeing their investment.
“The current situation will do nothing for the reputation of the Czech Republic. You have a disaster as a nation regarding what has happened to a legitimate investor in one of your prime industries,” he said. There seemed to be little willingness on the part of Czech authorities to get to grips with the issue, Collecott added.
Although its recent experience has soured ENIC about doing business in the Czech Republic, the ENIC director was guarded about its intentions for Slavia — if and when its ownership of the club is confirmed. “We will have to cross that bridge when we get to it. You need stability to take it [FC Slavia] into the future, ” he said. Rumors are circulating that Czech billionaire Petr Kellner is prepared to take over Slavia through his company PPF.
ENIC, which has a stake in top-flight English club Tottenham Hotspur and has invested in a series of other European clubs, maintains it is the legal owner of FC Slavia and was fraudulently squeezed out of it in 2008. A general meeting of the club in January of that year agreed on a Kč 618 million increase in the registered capital to Kč 1.04 billion, carried out by the company Key Investments, which became the controlling shareholder with ENIC allegedly prevented from taking part in the decisive general meeting. The controversial brokerage is currently facing a police investigation for failing to return investors’ money.
Amazing as it might seem, the cash for the capital increase was based on the maximum insurance that might accrue from the life insurance of the Slavia football players with the use of this so-called nonmonetary benefit agreed to by a Czech judge. In essence, that judge gave the go ahead for a theoretical sum, which might be regarded as virtual money, to underwrite a real life capital increase and ownership coup with far reaching implications, as such a practice could in principle be repeated anywhere in the Czech Republic. ‘We have third-party evidence regarding that ownership. It is very simple.’
ENIC maintains it has a solid case to reassert its ownership of Slavia. “We are preparing a case, ” said Collecott. “We had the share certificate retained in the United Kingdom. We have third-party evidence regarding that ownership. It is very simple. What happened in the case of Slavia is that from somewhere there is a new share certificate, claims that the old share certificate has been destroyed, and that you have absolutely new owners.”
For Slavia though the clocking is ticking down with a ever growing threat that its fans could be following their future in the depths of the Czech third division.
