Ex-CEO of bankrupt lottery firm faces lawsuit by former shareholders

15-04-2013

The former CEO of the Czech lottery firm Sazka, Aleš Hušák, is facing a lawsuit by the company’s main shareholder, the Czech Sports Association, over his role in the company’s demise. Sazka’s bankruptcy severely undermined funding for Czech sports and the association is now demanding an apology and one billion crowns from Mr Hušák.

Aleš Hušák, photo: Tomáš AdamecAleš Hušák, photo: Tomáš Adamec In May 2011, the Czech Republic’s biggest betting firm Sazka went down with a crash. After more than fifty years in business, the company was declared bankrupt and sold to new owners a few months later.

Sazka’s demise brought serious problems for its main shareholder, the Czech Sports Association, an umbrella organization for over 70 different sports groups. The association would annually receive around half a billion crowns from Sazka but when the firm went under, the money was gone.

The sports association has now filed a lawsuit against Sazka’s former CEO, Aleš Hušák, demanding one billion crowns in damages. Zdeněk John, a reporter for the news website aktualne.cz had a chance to go through the document.

“The lawsuit claims that Aleš Hušák in some cases provided incomplete information or outright lies to Sazka’s board of directors and its shareholders which meant that some dubious decisions were taken. One of these cases was the decision to build the multi-purpose arena in Prague.”

O2 Arena, photo: Marián VojtekO2 Arena, photo: Marián Vojtek The Sazka Arena, now renamed O2 Arena, eventually ruined the lottery firm. Its construction was originally estimated at 2.5 billion crowns but in actual fact it reached 9 billion which proved too much even for the lottery giant.

“The lawsuit in fact traces the fall of the company which enumerates all the problems the company had: the enormous salaries for Mr Hušák and other managers, some incomprehensible decisions to buy real estate properties, lucrative contracts with consultancy firms and other details of Mr Hušák’s management policies.”

As it turns out, Mr Hušák’s services cost Sazka dearly: his annual salary in the years immediately preceding the bankruptcy reached 50 million crowns, or more than 2.5 million US dollars. He had a host of personal assistants including two drivers and a cook, and the company paid for his vacation and that of his family and his driver. In the seven years he worked as Sazka’s manager, the company paid him over 321 million crowns.

The sports association had in the past considered taking Mr Hušák to court over his salary and other benefits but dropped the idea as they thought they could not prove that his pay cheques were in fact illegal. The former CEO, meanwhile, remains defiant in the face of the accusations.

Photo: Marián VojtekPhoto: Marián Vojtek “Anyone can file a lawsuit but if they do, they also need to provide evidence, to prove that we did those things. This will be an opportunity to go through the whole story step by step; that will also mean that the sports association’s new head, Mr Jansta, will be confronted with his own role in the story.”

The date of the court hearing has not yet been set. But even if the sports associations succeed in getting the one billion crowns they are demanding from Aleš Hušák, it will barely fill the gap left in their budget.

15-04-2013