Who will feed ex-Czech PM Jiří Paroubek’s new party?

Political/business circles are abuzz with rumors Prague lobbyists are funding the National Socialists-21st Century Left

foto: © ČESKÁ POZICE, Richard Cortés, iPhoneČeská pozice

Who is financing the left-wing party through which former Prime Minister Jiří Paroubek is looking to stage his political comeback? Where will the ex-chairman of the main opposition Social Democrats (ČSSD) raise the estimated Kč 100 million his new party, the National Socialists – 21st Century Left, will need for its campaign to enter the lower house of Parliament (Chamber of Deputies)? Thus far, no one has tracked down the sponsors, but the trail is getting hotter. 

Speculation about some secret benefactor for Paroubek’s new party was lively before “Left 21” (or Lev 21 [which in English translates as Lion 21], as it’s known in Czech for short) was even established. Without naming its sources, the news server parliamentarylisty.cz wrote that billionaire Agrofert founder Andrej Babiš and an alleged “godfather” of the center-right Civic Democrats (ODS) in Ústí nad Labem, Patrik Oulický, were holding the purse strings.

Babiš immediately denied it — adding that those propagating the rumor were crazy (and he is registering his own civic initiative, ANO2011). Although Oulický declined to comment, it’s unlikely that such an ODS éminence grise would funnel money to a new rival on the opposite side of the Czech political spectrum.

Tomáš Hrdlička: I have no stake in Natland

Now rumors are spreading that entrepreneurs Roman Janoušek and Tomáš Hrdlička will sponsor Paroubek’s Left 21. The reason is simple, according to this theory: The two Prague lobbyists’ have lost control over their alleged political lovechild Public Affairs (VV) and rather than trying to tame that beast decided to create a new Frankenstein’s monster.“It is, of course, total nonsense,” Hrdlička told Czech Position, adding that the stories were getting more absurd with time. “It was also said that I created Public Affairs to take votes away from Paroubek’s ČSSD.” ‘It is, of course, total nonsense. It was also said that I created Public Affairs to take votes away from Paroubek’s ČSSD.’

Both businessmen have in recent years been associated with the powerful and opaque Natland Group, which has grown exponentially through some interesting acquisitions. This May, Natland gained control of the developer Prominecon (originally known as Navatyp) and the following month bought a minority stake in Prague’s municipal trash company Pražský služby, held through the Cyprus-based Soranus Limited. Most recently — and in its most high-profile and largest known acquisition — Natland took control of Eden Sports Investments, the owner of E Side Property, which in turn owns the Eden football stadium in Prague 10 where the Slavia Prague club plays.

Janoušek and in particular Hrdlička are said to be connected to Natland because of their association with the ownership of Navatyp and Soranus Limited, and of course Eden stadium, because it is located in Prague 10, where Hrdlička is a strong player and has other ventures. Natland previously denied that either men owned stakes in the group; Czech Position put the question of ownership directly to Hrdlička.

“It sounds beautiful. I would love to own such a major financial group like Natland that’s worth billions of dollars; unfortunately, I do not. But be sure to ask your wife if she didn’t buy it for me for Christmas. Seriously, though, do you think that Natland are such fools as to pay from their own sources? The FAÚ [the Finance Ministry’s watchdog combating financial crime and money laundering] never sleeps. It would immediately hold a press conference,” he said. Janoušek declined to comment.

Natland denies link to politics

There was no evidence of a link between Natland and Paroubek’s Left 21 until Sept. 1, when the ex-prime minister’s close associate Jaroslav Andres, a businessman from Ústí nad Labem, rented a building in Prague 5 (Smichov) through his firm Sequest — and offered space in the building to house Left 21’s headquarters (Czech Position were the first media to report on the deal).

The building at Radlická no. 58 itself is nothing exceptional. However, the price at which it was sold back in 2006 to the developer Subterra by Prague 5 — whose mayor at the time, Milan Jančík (Civic Democrats, ODS), could face corruption charges over a number of allegedly dodgy deals — was suspiciously cheap, mainly due to the value of the land beneath it.

The plot thickens: Last June, Subterra sold the building to Eukaryota, which is owned by the Cyprus-registered Natland Private Equity Limited (which until March was called First CEE Private Equity Partners Limited)  — which since October 2010 has been majority owned by Natland Group Limited and two other offshore companies in the Seychelles, Proprium I Limited and Proprium II Limited. (Details of the full ownership structure are at the end of this article.)

Natland spokesman Rostislav Starý told Czech Position that Natland Group bought the Radlická no. 58 building via Eukaryota as an initial investment for a real estate fund, rented it out under market conditions to Sequest and was unaware at the time that Paroubek’s Left 21would come to be headquartered there.

“The transaction took place under normal market conditions and the property (i.e. the building) is being leased in its entirety under market conditions. We offered it for rent publically, and in August 2010 we signed a contract with Sequest, which had an interest in the rental property as a whole with an option to sublease to other entities,” Starý said.

“At the time the contract was signed, we were not aware of other tenants, but the subletting to tenants is fully in accordance with the lease agreement. Whether the subletter is Jiří Paroubek, the ČSSD or another political party is not our concern.”

However, Czech Position’s information does not support Natland spokesman’s version of events. The Radlická no. 58 property was offered on the market as of March. Of the initial 15 potential renters, five were under consideration, among them Jaroslav Andres. The lease agreement between Eukaryota and Sequest was closed in September and expires in December 2012. The monthly rent for the 619 meters of office space, including services, is €20 per square meter, normal for that district of Prague.

Natland Group categorically rejects any link to a political party. “We do not sponsor any political party or particular policy and do not work with people who are somehow in politics. All of our intentions as regards the property relate purely to increasing its value and the growth of land prices in the Smichov district,” Starý said.

Andres makes a move

After six years of doing business from his base in Ústí nad Labem, Andres decided to establish an office in Prague and began renting from an entity controlled by Natland Group, precisely when his associate Paroubek was founding a new political party that needed a headquarters. According to Andres, the timing is a coincidence.

“Although the headquarters of my company Sequest are in Ústí nad Labem, due to the economic situation in the region I don’t find many of my clients there. My most interesting clients are in Prague, the center of economic activity. So I go to Prague. Logistically, I will always have my company’s seat in Ústí nad Labem, but I decided that I would also rent some properties [here],” Andres told Czech Position.

“About 10 people I cooperate with are based at the building although not all are my employees. We will do some logistics work there, but following economic analysis will sublet the rest of the space,” he said, adding that he had been looking for such a detached building that included parking spaces.‘Once again, I do not know the Natland ownership structure and in my opinion neither is it important.’

Jiří Paroubek, in an earlier interview with Czech Position that touched upon the question of Radlická no. 58 building and connections to the prominent entrepreneur and lobbyist Roman Janoušek, the former ČSSD prime minister said “ČSNS 2005 general secretary Jaroslav Andres, based on resolutions of the party leadership, held a tender to lease a suitable building. This building seemed to be the best of several offers. Besides that, it’s Mr Andres’ sponsorship money that is going into it. … Once again, I do not know the Natland ownership structure and in my opinion neither is it important. According to what I saw of the commercial register, Mr Janoušek does not figure there in connection with Eukaryota.”

Who owns Radlická no. 58?

Czech Position has attempted to unravel the mystery around the original ownership structure of the company that owns the property at Radlická no. 58.

Natland Private Equity Limited has its headquarters in Cyprus. It was registered in May 2010 and by October that year was named First CEE Private Equity Partners Limited. Its director was financier Tomáš Raška, the current boss and co-owner of the Natland Group.

First CEE Private Equity Partners Limited had a very complicated ownership structure — 1,000 shares of which 450 were Class A shares and 550 Class B, which might indicate that the company conducted two separate acquisitions. The share price was minimal (€1); the actual money in such cases is through a shareholder loan, depending on who is investing in it and in what proportion.

A total of 54 Class A shares, or about 5 percent of the company, were owned by Natland Investment Group, based in the Netherlands. The other 95 percent was divided among three groups of companies (all registered in the Seychelles) with the so-called investment vehicle apparently represented by three people.

In the first group were Claris I Ltd., Claris II Ltd., Claris III Ltd. and Claris IV Ltd., each of which owned 36 Class A shares and 50 Class B shares. In the second group and third groups, respectively, — with the same distribution of shares —were Initio I Ltd., Initio II Ltd., Initio III Ltd. and Initio IV Ltd., and Proprium I Ltd., Proprium II Ltd., Proprium III Ltd. and Proprium IV Ltd.

Last June, Proprium III Ltd. transferred all of its Class A shares to the Natland Investment Group, and divided 40 Class B shares equally among the eight companies of the Claris and Initio groupings, with another five shares to Proprium I Ltd., Proprium II Ltd. This suggests that Proprium III Ltd. no longer owned shares in First CEE Private Equity Partners Limited.

In October 2010, the shareholders decided to pay out 510 Class B shares, with 450 Class A shares and 40 Class B shares remaining in the company. Then Natland Investment Group and businesses from the Claris, Initio and Proprium transferred all their Class A shares to Natland Group Limited.

A new shareholder structure emerged, wherein all the Class A shares are held by the Cyprus-registered company National Group Limited and 40 Class B shares each are held by the Seychelles-registered companies Proprium I Ltd. Proprium II Ltd.

However, who is hiding behind the Claris and Initio group of companies and who owns Proprium I Ltd. Proprium II Ltd. is not clear. Also in October 2010, First CEE Private Equity Partners Limited changed its name to Natland Private Equity Limited, with the chief lawyer of the Natland Group, Pavel Pražák, named its director.

See related article: Ex-Czech PM Jiří Paroubek on his new ‘Left 21’ party