Jan Macháček

Hledání

Výsledky hledání

Czech Business Weekly

Anatomy of a “mysterious scandal”

01. 10. 2007
Weekly magazine Euro revealed last week that former Czech Prime Minister Stanislav Gross owns 31 percent of shares of energy trading company Moravia Energo.

The price of the shares falls somewhere between Kč 30 million and Kč 300 million. Evaluation is complicated, since this private energy trading company is not publicly traded.

Media headlines, like that of the biggest serious daily Mladá fronta Dnes called the scandal the “mystery of the decade.” Gross is not eager to speak about it or to reveal more details, (he says he is forbidden to disclose the name of a creditor). The truth may be that it may not be such a mystery after all, but since many people in this country would like to see a major scandal involving the Social Democrats (ČSSD)—which has so far not materialized—the hope is that this is the start of something big, revealing all of Gross’ corruption.

The veracity of the story has not been confirmed, but there is one theory that does make sense of the whole business.


Presenting the case

Moravia Energo is a fast growing energy trading company that was founded by Tomáš Chrenek of Třinecké železárny. One of its co-founders is Robert Sýkora, former first deputy of Industry and Trade Minister Miroslav Grégr between 1999 and 2001. Sýkora was supposed to help Chrenek with various deals such as importing coal from Poland. Sýkora knows Gross well—they met when they were both young social democrats.

For those readers who may not know, Třinecké železárny is a major steel producer in North Moravia. There were allegations that the company secretly sponsored the Civic Democrats (ODS) between 1996 and 1997. But ČSSD governments also helped Třinecké železárny, particularly during times of opposition agreement. The steel producer claimed it had been put at a disadvantage because the government had helped other steelworks get rid of debts before privatization. But back to Gross.

As Moravia Energo grew rapidly in recent years, Sýkora and Chrenek began to fight. Chrenek wanted to get rid of Sýkora, to squeeze him out. But Chrenek’s price was low for Sýkora’s stake in the company, somewhere around Kč 30 million.

Sýkora approached his old friend Gross, now a defense lawyer, and made him an offer: if you help me get a better deal from Chrenek, we can split the profit. Gross held greater political clout than Sýkora and certainly had better contacts. Gross therefore served as the “white horse.” Perhaps he was supposed to hold the shares for only a few weeks, until a better deal was made.

When Chrenek found out that his new “business partner” was Stanislav Gross, he informed weekly Euro.

If it’s the case that Gross borrowed money for the lowest price offered by Chrenek, then such a loan constitutes a minimal risk for a bank, which is providing a loan guaranteed by shares. Also, Gross is a lawyer and it is absolutely normal in countries like Austria, Luxembourg or Switzerland for lawyers to hold shares on behalf of someone else.

The question of the value of a 31 percent stake in a company that is not publicly traded is a complicated one. The value cannot simply be calculated by estimating a price for the whole company and then subtracting 31 percent. The value is the price that Chrenek, as majority owner of the company, permits. If he decides that there will be no dividends, there will be no dividends.

If we suppose that Chrenek did offer a price of Kč 30 million, then Gross is there simply to get an improved deal. There is very little risk connected with such an operation.

The advantage of this particular theory is that, unlike most of the other theories emerging about the scandal, it makes a lot of sense.

The theory also helps to explain Gross’ silence on the matter and his reluctance to disclose the name of the creditor. If Gross presents his case openly to the media, he also has to reveal the plan to get a better deal out of Chrenek. And if the strategy is revealed, the whole cause is lost.

A second theory is that Gross was the owner of the stake from the very beginning and it is only the rapid growth of the company that has made his involvement appear suspect.

But is it legitimate for a former prime minister to be involved in such a business scheme? Perhaps the ministerial code of ethics should be made clearer, or at least longer. On the other hand, where should this country look for inspiration for the rules of its political culture?

Gerhard Schröder, former chancellor of Germany (and also a social democrat) jumped into a contract with gas giant Gazprom almost immediately after he left office. Surely Germany, with 50 years of democracy under its belt, should be setting a better example.

Meanwhile Prime Minister Mirek Topolánek is doubtless very happy that no one pays attention to his Volvo case anymore. It may seem like small fry in comparison with the Gross case but it involves the same dubious combination of factors: ministerial arrogance and easy money.

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