State may lose CZK 1.8 billion after collapse of German firm handling oil reserves

22-04-2015

The Czech Republic stands to lose around CZK 1.8 billion after an insolvency administrator rejected all of its claims against Viktoriagruppe, a company that administered some of the country’s strategic oil reserves in Germany but went bankrupt last September. The Czech side is threatening legal action.

Photo: Kristýna MakováPhoto: Kristýna Maková The administrator’s decision was made public on Tuesday by Pavel Hortig, the head of the Office for Government Representation in Property Affairs, which is acting on behalf of the Czech state in the matter.

At stake are tens of millions of litres of Czech-owned diesel – around 15 percent of the country’s oil reserves.

The Czech prime minister, Bohuslav Sobotka, has said his government will take the matter to court if liquidator Mirko Moellen – who has recognised claims from some other creditors – does not reverse his view that the Czech state is not the rightful owner of CZK 1.2 billion worth of diesel that was being held by Viktoriagruppe near Munich in the small town of Krailling.

The Czech Administration of State Material Reserves signed a contract for Viktoriagruppe to store Czech-owned diesel in the Czech Republic in 2004, when Vladimír Špidla was prime minister. Six years later the deal was amended to allow for the storage of some of the oil in Germany.

This situation was brought about despite the fact that Czech state-owned depots had the capacity to handle it, Mladá fronta Dnes reported on Wednesday.

In addition, Viktoriagruppe had a murky share structure, being registered in Germany but owned by two Czech entrepreneurs, the newspaper said.

Mladá fronta Dnes named one of the two as Petr Malý. He was active in a company named Lukoil Czech, it said, leading to speculation from the very start that Viktoriagruppe was linked to the Russian petro-chemical giant.

Indeed, the Czech secret service warned the state against doing business with the firm, the daily said.

From the Czech perspective, Viktoriagruppe is actually in hock to the country to the tune of CZK 1.8 billion – as well as the CZK 1.2 billion worth of diesel, it owes around CZK 300 million in unpaid taxes and customs duties, and the same amount again for invoices, contractual penalties and other expenses.

Prime Minister Sobotka, Finance Minister Andrej Babiš and Industry and Trade Minister Jan Mládek have all criticised previous Czech governments for the decision to locate part of the country’s material reserves beyond the country’s borders.

German administrator Mirko Moellen had made a preliminary rejection of the Czech claims in January this year, saying that during the transport of Czech diesel to Germany it was mixed with diesel belonging to Viktoriagruppe.

Mr. Moellen also said that the contract between Czech Administration of State Material Reserves and the bankrupt company did not meet German legal norms.

22-04-2015