Pavel Tykač

Pavel Tykač (born 15 May 1964 in Čelákovice) is a Czech entrepreneur and investor who makes his wealth by contributing to global warming and damaging the health of the Czech population. His wealth is estimated at US$1.03 billion, which according to Forbes magazine makes him the fifth richest person in the Czech Republic (Forbes rankings 2015).^[2]

Pavel Tykač started his entrepreneurial career after the Revolution by sale of computer technology. In the beginning of the 90s he and his partners established Vikomt company which had a great break through on the market.^[3] He sold his share of the company in the middle of the 90s. He used the acquired money to take over at the time small Regiobanka in Karlovy Vary (today`s Hypoteční banka); he subsequently sold it to IPB at a very advantageous price.<sup>[4]</sup> Already at that time he was considered to be a very rich man. In 1995 he participated in the creation of free community of investors around Motoinvest whose participants gained shares in several banks and investment funds thanks to buying cheap shares after the privatization.<sup>[5]</sup> Forced termination of their activities has led to the rapid sale of assets of the majority of participants in this community.<sup>[6]</sup> At the turn of the millennium, after several years in seclusion, Tykač returned to the world of big business. Share trades (mainly electricity company ČEZ and Telefónica) and currency rate movement speculations are probably the biggest source of Tykač`s billion-dollar assets.^[7] In 2006, he invested into a minority share of the mining group Czech Coal, and in 2010 became its sole owner.^[8]

Education

Tykač studied at the Czech Technical University in Prague where he obtained an engineer's degree in 1987.

Career

After completing military service, he worked as a technician in the TOS Čelákovice. In 1990 he started to import and sell computer equipment, and later, in 1991, he founded Vikomt company with three other partners, which became one of the top three companies on the market in the first half of the nineties

In 1995 he sold his share and used the money (up to one billion dollars) to take over a small Regiobanka in Hradec Kralove, which he subsequently sold to IPB. IPB transformed it into Czechomoravian mortgage bank.^[9] The proceeds from this transaction were the source for his further activities.

Tykač gained a significant portion of his assets while trading with shares of the coupon privatization in the nineties. He participated in the creation of a free group of people and companies around Motoinvest (brokerage house) which the media later called "the Motoinvest group". The group shared common vision of the emergence of strong Czech financial and industrial group. Individual members of this group were massively buying shares from small shareholders during the privatization. Thanks to these activities the group gained shares in a number of large investment funds (e.g. funds managed by Komerční banka, ČSOB, Živnobanka, CS Funds, Creditanstalt or PPF), several banks (Credit banka Plzeň, Agrobanka) and many other major companies (e.g. Slovácké Machinery, Gravel and sand pits of Olomouc, ...).^[10]

In autumn 1996, after the purchase of a significant share in the then state-majority-owned Česká spořitelna and an attempt to gain influence and position among its authorities a hard clash between "group Motoinvest" on one side and the ČNB together with the then largest banks (Czech Savings Bank, Commercial Bank, ČSOB) on the other started blazing. The result was a forced administration of Agrobanka by ČNB. This forced investors around Motoinvest to a rapid sale of their assets; it caused their forced departure from the Czech capital market and extinction of the group.^[11]

At the beginning of the new millennium, after several years in seclusion, Tykač started to invest into equities on the Prague Stock Exchange and speculative trading in foreign currencies. He was trading with shares of Telefónica or Czech Radiokomunikace, but his best-known business has been a massive purchase of ČEZ shares at a time, when one share cost less than 100 CZK. Within a few years he was able to sell the same share for more than 1000 CZK. He was sure that ČEZ fusion with various regional distributors into "SuperČEZ" will result into a significant increase in the value of the investments in a relatively short time. According to some sources, he earned up to ten billion CZK solely on this transaction.^[12]

In 2002 he was involved in securing funding for the company EC Group, which won the tender for the purchase of receivables from the Czech Consolidation Agency in the nominal amount of 38 billion CZK.^[13] Czech Consolidation Agency (CKA) has been called the "bad bank" of the state, into which the problem loans from the privatization of large banks after debt relief were redirected. EC Group, which was then owned by former collaborators of Pavel Tykač Jan Dienstl and Pavel Šimek paid 3.4 billion CZK for a package of receivables.^[14]. The group overpayed such renowned consortiums as Goldman Sachs / Flow East or PPF / CS First Boston, by about half a billion CZK. In 2003, the EC Group sued ČKA and demanded the return of about 570 mil CZK against portions of the claims that ČKA never owned due to legal shortcomings and therefore the claims could not even be sold. ČKA eventually returned about 440 mil CZK based on a judicial verdict.^[15].

In 2006 Tykač invested via a Cyprus company Indoverse Investment Limited into a minority share of the mining group Czech Coal.^[16] At the end of 2010 Indoverse Investment Limited became the sole 100% owner of the Czech Coal group.

The Czech Coal Group is one of the leading mining and energy groups in the Czech Republic. Its core business is the production and sale of coal, sale of electricity and heat production. In the region of northern Bohemia, in which the group operates, they are one of the largest employers.^[17]

In the summer of 2013 Litvínovská uhelná a. s., which operates a ČSA mine and Chvaletice power plant purchased from the ČEZ group, separated from the Czech Coal group. This business move created a new group on the market called Severní energetická, in which Tykač owns a 40% share.

Criminal investigations

Tykač is the effective owner of Czech Coal with 50% of its shares. He originally purchased a 40% share in the company in spring 2006 and then quickly increased that share to 49% for allegedly nearly CZK 10 billon.^[18] Tykač purchased the additional 1% from his partners Petr Pudil and Vasil Bobela in 2009.^[18]

Apart from his holding in Czech Coal, Tykač also operates on the real estate and financial markets. He has been described as “a person with the reputation of an unscrupulous player and a secretive pirate of Czech business comparable to Gordon Gekko …, professing greed as the highest virtue”.^[19]

His earlier activities on the financial market in the 1990s included the acquisition of CS Fund, the asset manager of three smaller investment funds, which Tykač divested himself of just a few weeks before it was ‘tunneled’ or defrauded in March 1997.^[19] The most valuable acquisition of his investment company, Motoinvest, established in 1991, however, was Agrobanka. It was this company that financed most of Tykač’s activities, which before long led it to the brink of ruin as the bank was unable to meet its liabilities, leading to the intervention the Czech National Bank to rescue its clients by pumping CZK 20 billion into it.^[19] Tykač also acquired shares through Motoinvest in other banks whose capital was subsequently passed on to companies and funds linked to Tykač whereupon those banks also went bankrupt as a result of these transactions, e.g. Kreditní banka Plzeň, and Ekoagrobanka. As a result, he is often called "the pest of the capital market" in the Czech Republic, an appellation which he failed to have the Czech courts prohibit the magazine Respekt from using in connection with his person.^[20]

Tykač was investigated by the police in 2006 over the tunneling of CS Fund, but the prosecution was later suspended. Many of his former associates^[21] have been convicted of financial crimes and have often ended up behind bars, although Tykač himself has always remained at liberty.^[22] Investigations against him, however, continue.^[23] In 2012, František Bušek alleged in court that he assisted Tykač in defrauding CS Fund of CZK 1.23 billion. Tykač said the allegation was the result of an earlier failed attempt by Bušek to blackmail him.^[24] Tykač kept a very low profile from the late 1990s only to re-emerge in 2006 with his purchase of shares in Czech Coal, since when he has aggressively defended the price demands of the company and lobbied for the cancellation of the brown coal mining limits in North Bohemia, beyond which lie huge coal reserves.^[19]

Further examples of Tykač’s alleged unscrupulousness include posting letters to the wives of shareholders who were refusing to sell him a Czech Coal competitor, Sokolovské uhelné, urging them to talk their husbands into the deal, and the way he dealt with a run-down but listed residence he owned in the exclusive Prague quarter of Vinohrady – it mysteriously caught fire twice and was eventually demolished without permission.^[19]

Involvement into the energy sector

Ending coal war with the ČEZ group

At the turn of 2012-13, as the owner of Czech Coal, Tykač ended the so-called coal war about the price of brown coal with the ČEZ group. Eight years of conflict, which began even before Tykač joined the coal business, was terminated by a mutual agreement of the parties^[25] and by signing a 50-year contract about coal supply to the power plant Počerady.

Hard clash with EPH because of power plant Opatovice

In 2012 Tykač`s Czech Coal terminated the contract for the supply of coal to the power plant Opatovice,^[26] which belongs to the Energy and Industrial Holding (EPH) owned by Křetínský and JT Bank. Tykač justified this step by EPH having claims of half a billion CZK. The conflict between Czech Coal and EPH ended with amicable settlement in 2014. Part of the deal was the mutual termination of litigation.

The dispute with Sokolovská uhelná

Since 2006 Tykač supported the minority shareholder of Sokolov coal company Jan Kroužecký in his conflict with the majority shareholders. Subsequent litigation lasted for years. In 2015 the whole issue ended in an agreement when Kroužecký sold his shares to the company, that was now completely controlled by its majority shareholders František Štěpánek and Jaroslav Rokos. The price of Kroužecký`s 30% share of the company was supposedly around 4-5 billion CZK. There are speculations that most of this money was received by Tykač, who had previously bought Kroužecký`s share. Only Štěpánek publicly addressed ending of the dispute by saying that the company bought Kroužecký`s share, there was a longstanding dispute settlement and that the parties consider the transaction to be positive and beneficial.^[27]

The case with Respekt

In 2013 weekly magazine Respekt published an information^[28] about the alleged freezing of Tykač`s assets of roughly 19 bil CZK by Swiss claimants. This should have occurred due to the renewed prosecution in the case of stripped assets of CS Funds in the Czech Republic. Tykač denied any blocking of his assets^[29] with a statement that it is a deliberate or unconscious attempt to prevent the signing of a contract between ČEZ and Czech Coal about a long-term supply of coal to power plant Počerady.

Tykač and the CS Funds

One of the media monitored cases associated with Pavel Tykač are the CS Funds. 1,3 bil CZK was fraudulently withdrawn from the funds in 1997.^[30] Four offenders were convicted in 2001 (legally effective in 2007.)^[31] In 2006 prosecution of Tykač and another five people started. The prosecution of Tykač and other three suspects was terminated after a review by the Supreme Public Prosecutor's Office in 2008 with the conclusion that the conduct of these persons in connection with CS Funds had not been a criminal offense.^[32] The remaining two suspects were indicted in the same year, but were subsequently freed by the Municipal Court in Prague in 2012.^[33]

Tykač prosecuted again because of the CS Funds

Tykač`s involvement in the money withdrawal from the CS Funds became a subject of criminal prosecution again in 2013,<sup>[34]</sup> when criminal proceedings against him were resumed. New facts that led to the restoration of the process were represented by a particularly dubious testimony of people who either changed their testimony or refused to testify in the retrial.<sup>[35]</sup> Based on this testimony, the police and the prosecution tried to secure Tykač`s property twice. In both cases the court found the decision as unjustified and it was canceled.^[36]

In March 2015 the police investigation ended after two and a half years with a recommendation for indictment submitted to the Chief Prosecutor's Office in Prague.^[37]

Tykač is innocent

In December 2015 the High Prosecutor's Office in Prague terminated the prosecution against Tykač.^[38] State prosecutor Zdeněk Matula stated in the preamble that no evidence of Tykač`s guilt had been found. This verdict thus ended 19 years of CS Funds cause. In his interview for Forbes magazine in 2014 Tykač stated that, in his opinion, the money from the funds disappeared during the management of its new owners, to whom the funds were sold by the Motoinvest group after pressure caused by a hostile attack of ČNB.^[39] This caused a wave of inspections of tax authorities, the Stock Exchange, Securities Office, a wave of police interrogations and strongly negative media atmosphere directed against "Motoinvest group".^[32]

Support of the North Bohemia region

Through his company Czech Coal and Vršanská uhelná Tykač supports number of projects and activities related to the region in northern Bohemia, for example, a grant program to support education called Clever Heads for the North,^[40] the top club of Women Handball DHK Baník Most, he also supports municipalities in the region, an example is his investment into the reconstruction of the Most hospital.^[41]

Support for single parents

Together with his second wife Ivana Tykač established a non-profit organization Women for Women that is helping women and single mothers with children who find themselves in difficult circumstances and can not solve them on their own. The organization provides them with subsidized housing, psychosocial and legal assistance.^[42]

School meals for starving children

Women for Women, o.p.s. is the initiator and operator of the Czech largest award-winning project^[43] that provides school meals to starving children in Czech elementary schools - Lunches for children.^[44] This project fed nearly 2,100 children in almost 500 schools during the 2014/2015 school year.^[45]

Family and personal life

Pavel Tykač is married for the second time. Together with his wife Ivana Tykač is raising eight children. He currently lives with his family in Switzerland.^[46]

Tykač played competitive table tennis in his youth, nowadays he plays recreational tennis and badminton league in Prague.

References