Ceska Pozice

Offshore firm Cokeville, linked to ongoing DPP probe, also got commission on Škoda Power sale

Caribbean offshore under police investigation over Prague transport ticket deal made millions for ‘consulting’ Škoda Power

Brian Kenety 2.2.2012

Ex-Škoda Holding top manager and later ČEZ chief Martin Roman (left) has admitted having had ties to offshore trusts in the Virgin Islands and Cayman Islands connected to the former Škoda Plzeň, which was sold to its managers; Prague lobbyist Ivo Rittig (center) has been linked to British Virgin Islands-registered firm Cokeville Assets Inc., which made tens of millions in ‘consulting’ fees on a contract signed by ex-DPP chief Martin Dvořák (right) — and power plant equipment maker Škoda Power. The daily MF Dnes has uncovered documents linking Cokeville to these deals now being investigated by the police. foto: © ČTK, DPP, Czech PositionČeská pozice

Cokeville Assets Inc. — the offshore firm that made tens of millions for having brokered a contract between the Prague transport company (DPP) and a domestic printer to produce metro, tram and bus tickets, in an alleged “kickback” scheme — also earned a sizable commission for advising on the sale of Czech engineering giant Škoda Plzeň’s manufacturing unit, the daily Mladá fronta Dnes (MfD) reported Wednesday.

According to the newspaper, Cokeville, a British Virgin Islands-registered firm that has been linked to the powerful lobbyist and “Prague godfather” Ivo Rittig, known as the gray eminence of the Civic Democrats’ (ODS) Prague chapter, signed a contract in mid-2009 according to which it would provisionally be paid a commission of Kč 130 million following the sale of Škoda Power, a power plant equipment maker that was part of Škoda Plzeň (which was privatized in 2002 and has since been renamed Škoda Holding).

MfD said it has obtained a document in which, based on that contract for “consulting and advising” services, Cokeville requested a payment of Kč 15 million. The Prague law firm Šachta & Partners, which represents Rittig and has done transactions for Cokeville, confirmed the existence of the contract, but the responsible partner in the firm — who has also arranged loans for the former DPP chief’s mother that have drawn the attention of anti-corruption police — declined to elaborate. “We will not comment on private transactions,” lawyer David Michal told the daily. Prague law firm Šachta & Partners, which represents Rittig and has done transactions for Cokeville, confirmed the existence of the contract.

As to why Škoda Power should pay consulting fees to an opaque Caribbean offshore — Cokeville is registered at a P.O. box — when searching for a buyer “remains a mystery,” MfD said; at the time, the Czech company was already in talks with the South Korean firm Doosan Heavy Industries & Construction, which two months later bought the unit for Kč 11.5 billion.

Doosan’s motivation is clear. The company said at the time it aimed to grow its turbine genset revenues as it set its sights on the global turbine market and becoming one of the industry’s top-tier suppliers. The Škoda Power deal also allowed Doosan to enter the retrofit and other profitable power plant services markets, enabling the South Korean company to better compete in the entire power generation value chain.

The Škoda/ ČEZ connection

As Czech Position reported earlier, it emerged last autumn that Swiss detectives had discovered that following its purchase of the Czech engineering giant Škoda Plzeň, the controversial company Appian Group also transferred a staggering amount in “consultation fees” (Kč 150 million, or 40 percent of the eventual sale price) to a firm registered in the Virgin Islands called Ashby Commercial — which in turn sent it on to companies linked to reputed Czech mobsters František Mrázek and Tomáš Pitr, as well as to a Slovak consulting and financial services firm that was advising the government on the Škoda Plzeň sale.

Ashby Commercial received the Kč 150 million in February 2003; shortly afterwards, roughly Kč 100 million was wired to the Liechtenstein-based group Anstalt Antinari, Kč 30 million to the Virgin Islands-based company Darios Management and the remaining Kč 20 million to the company Unipro Development, about which the investigators apparently have no further information.

The Swiss investigation reveals that Anstalt Antinari sent on the Kč 100 million it received to the Czech firm Marila Invest, controlled by the reputed organized crime bosses Mrázek (who was killed by a sniper in Prague in 2006) and Pitr, who fled the Czech Republic in 2007 for Switzerland, where he awaits extradition to serve a six-year prison sentence for fraud. Appian Group has not explained why it saw fit to pay such a high “consultation fee” although its representative, Mark Čmejla, told the Czech state news agency ČTK that talk of corruption was unfounded speculation. The sale of Škoda Power to Doosan was exceptionally profitable — but not for the Czech state; the question is whether Martin Roman was among the beneficiaries.

Meanwhile, one of the Czech Republic’s most prominent businessmen, Martin Roman — Škoda Holding’s general manager before being named CEO of the Czech state-controlled electricity producer ČEZ, a position he held until last autumn — has admitted having had ties to offshore trusts in the Virgin Islands and Cayman Islands connected to Škoda Holding (the former Škoda Plzeň).

The engineering firm received major contracts from ČEZ during Roman’s time at the helm, but he insists that he severed ties to the offshore holdings after leaving the company. Roman acknowledged the existence of the trusts shortly after resigning as ČEZ chief executive in early October. He remains on its supervisory board.

‘Circle complete’ back to Cokeville

The sale of Škoda Power to Doosan was exceptionally profitable — but not for the Czech state. While the sale price for Škoda Plzeň was approximately Kč 800 million, its power plant turbine maker later fetched Kč 11.5 billion. The majority owners of the holding were managers from the team that centered around Martin Roman. MfD said it has received an official letter confirming that the acquisition of a majority stake by the managers had been agreed from the start.

In the letter, written by Swiss lawyer Daniel Bloch on behalf of a Czech colleague, Josef Brož, he tries to convince the Swiss Public Prosecutor’s Office to conceal the identity of Brož, the Škoda managers and Roman, during their investigation of the 1999 privatization of Czech coal miner Mostecká uhelná společnost (MUS).

“The applicant [Brož] received a commission in 2002 to create a structure of companies and trusts through which his clients could later acquire a majority stake in the Škoda group,” the letter says in part, as cited by MFD, which reported that the managers in Roman’s team got 66 percent of the company, with the remainder going to Appian Group. ‘What is not entirely clear is the role of Martin Roman.’

“What is not entirely clear is the role of Martin Roman. He has reiterated that he never directly or indirectly owned part of Škoda,” the daily said. “According to documents, he was originally eligible for the largest stake, but that was then transferred to his lawyer, Josef Brož. And here the circle is complete. It was Brož, who according to the agreement with the yet unknown company Cokeville, connected to political and business lobbyists, was to pay a total of Kč 130 million for providing unspecified consulting advice.”

Appian Group became the owner of MUS, when the Swiss company Investenergy, acting on its behalf, brought the state’s remaining stake in the coal miner. As of December 2010, MUS — now called Czech Coal — is fully owned by Czech billionaire Pavel Tykač through the privately-owned investment company Indoverse. 

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