Vienna The Czech billionaire Radovan Vitek is notorious for his brutal business methods – this is also known in the Swiss resort of Crans-Montana. When he became the main shareholder of the CMA mountain railway company for 65 million euros in 2015 and acquired a real estate company, the locals believed they had hit the jackpot. As a rich uncle, he was supposed to help modernize the infrastructure, which was a bit outdated.
But over the years he has fallen out with the locals more and more. One event in particular caused a stir: When the CMA and the authorities got into a dispute in April 2018 because of allegedly outstanding bills, the 52-year-old investor had the cable car operations stopped without further ado.
But that’s just a local farce compared to the allegations made by former business partners in the Czech Republic, Switzerland and the United States: he is said to have duped them in setting up his real estate company CPIPG with shell companies. Since 2015, they have been taking legal action against Vitek in the USA, Luxembourg and Cyprus.
Now they have recently achieved success. A Cypriot court is ordering banks that do business with Vitek to freeze 13 billion kroner (534 million euros) of its assets. The end of April was the deadline for Vitek’s lawyers to put forward their arguments. By the summer, judges will decide whether the money will remain frozen until the end of the court hearing.
One of the plaintiffs is Czech-Swiss dual citizen Jiri Divis. He was still a player on the Czechoslovak national basketball team during the Cold War. When they played a game in the West in 1979, he dropped out and settled in Switzerland.
There are hardly any photos of Vitek
Vitek leads a shadowy existence, so there are hardly any photos of him. Discretion is typical of the Czech Republic’s very wealthy businessmen, who became wealthy as a result of privatization in the 1990s.
Vitek, who skis as fast as he does business, lives in Crans-Montana in a large but architecturally conservative chalet. More representative is his Rydinghurst estate in England, which he bought from Ringo Starr, the former Beatles drummer.
Vitek is probably the largest property owner in Central Europe. CPIPG owns properties in the Czech Republic, Germany, Poland and other countries worth 20.9 billion euros, with Germany accounting for almost five billion euros. Around half of these are offices. Vitek holds an 86.7 percent stake in the Frankfurt-listed company.
His opponents claim that Vitek got so rich, partly through unfair methods. This not only brought him a lawsuit from Divis and his business partner Marek Cmejla, but also from the American hedge fund Kingstown.
The business relationship between Divis and Cmejla on the one hand and Vitek on the other hand dates back to the 2008 financial crisis. As rough as Vitek acts in conflicts, his instinct for business is just as fine. He likes to invest against the trend, and so he also used the turbulence of that time to increase his real estate holdings.
But he needed money for this, which is why he forged an alliance with Divis and Cmejla. At the time, they were employed by Skoda Transportation, a rail vehicle manufacturer in Pilsen. According to the lawsuit, the partners agreed to share profits and losses from future real estate deals.
In 2016, however, the partners parted ways and the payment was to be made. But apparently the shares of the two investors had been so diluted in the years before that they had become almost worthless. In a 55-page report, the CSSF, the Luxembourg Financial Market Authority, meticulously worked through what is supposed to have happened at that time.
Front companies in Cyprus
Vitek became a major figure in the real estate business when it took over the Luxembourg company OPG. He allegedly brought this under his control between 2012 and 2016 with tricks.
According to the report, Vitek used Cypriot front companies (SPV, “special purpose vehicles”) with which it had no official business relationship. They bought shares in OPG and later sold them to a holding Viteks.
There were three transactions. According to the CSSF, these took place at exactly the same time and at the same price. The supervisor concludes that Vitek and the owners of the SPV had agreed on their course of action. So it was a covert operation to gain control of OPG.
In doing so, the investors violated reporting thresholds and the regulation that also applies in Luxembourg, according to which an investor must make a takeover bid for all shareholders if he has more than 33.3 percent of the votes in a company. Vitek therefore had to pay a fine of 1.5 million euros in Luxembourg.
According to the CSSF, Vitek also secretly took over real estate from OPG at favorable prices. He received support from the founder and CEO of the company. Part of the operation was run through a front company officially owned by Vitek’s mother. “Asset stripping” is what financiers call the procedure used by investors when the “prime pieces” are cut out of a company, so to speak.
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Originally, the hedge fund Kingstown as well as Divis and Cmejla had sued in New York; However, the judges declared that they were not responsible because there was no connection to the USA. The investors also turned to a Luxembourg court, where at least Kingstown’s lawsuit is still pending. Finally, Divis and Cmejla filed a civil lawsuit in Cyprus.
Vitek considers himself innocent
Vitek’s company CPIPG says the allegations are old and have been dismissed by the New York court. “We are confident that the ridiculous and unfounded claims will fail again,” writes Martin Matula, CPIPG’s in-house counsel.
At the same time, the company counterattacks, trying to discredit Divis and Cmejla. They were convicted in Switzerland of fraud and money laundering.
Those responsible at CPIPG are thus addressing events relating to the privatization of a Czech mining company. In the end, the Federal Criminal Court even dealt with the case. The defendants have now filed an appeal for revision.
No other deal brought him so much trouble and so little money as Crans-Montana, Vitek is said to have complained. However, the difficulties in Cyprus put the problems in Crans-Montana into perspective. There he has been trying for some time to sell the holdings.
The municipality of Crans-Montana is urging Vitek to finally raise more money or sell its stake to a committed investor. Because it’s urgent. In 2027, the Ski World Championships will take place in Crans-Montana. Then the place and the sports infrastructure should shine in new splendor.
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