Has Miroslav Kalousek's once Titanic displacement been so reduced that it is now safe for Deloitte Advisory openly to challenge him?

I was surprised to read Luděk Niedermayer’s comments on the CASA scam in Hospodářské noviny last week given the number of contracts from state-owned firms like ČEZ that have been handed out to his employer, Deloitte Advisory, in recent years.

Niedermayer casts doubt on the transparency of the CASA transaction. The government should be able to justify the price paid, he said, but as is often the case in such deals, the price seems to be built on sand. At the top of the Pyramid of Doubt, Niedermayer said, is the way the payment and Omnipol’s commission were structured.

I am sure Niedermayer is right to be doubtful about the value to Czech taxpayers of CASA. But I am less sure why Deloitte’s talking head is taking public shots at Kalousek’s best buddies. Perhaps Niedermayer knows something we do not? Perhaps Kalousek’s once Titanic displacement has been so reduced that it is now safe for such a firm, which wins so much state business, to challenge a politician who has dispensed so much of that business on behalf of the state he has come to personify?

In actual fact, there is hardly a ČEZ acquisition that Deloitte has not worked on since Martin Roman was appointed CEO in 2004, soon after which unhappy event ČEZ embarked upon its mission to become “the leader in power markets in Central and South Eastern Europe”. For a summary of Deloitte's work for ČEZ since 2004, you may read this presentation by a Deloitte energy consultant.

Deloitte has been providing advisory services to players in the Czech energy market interested in acquiring local ČEZ assets. The fact that it has now been hired by ČEZ to advise on the disposal of these very same assets (part of ČEZ's attempt to avert a massive fine by the European Commission) comes as no surprise.

ČEZ shareholders and Czech taxpayers may be reasonably confident that the opportunities for value destruction of the kind that Niedermayer hints at in the CASA matter are absent in the case of ČEZ’s upcoming divestment, not only because of Deloitte's remarkable valuation skills but also because the whole process will be scrutinised by Brussels (click here to read details of this scrutiny) through trustees approved by the Commission itself. As my colleague Jan Ondřich put it in the Financial Times’ beyondbrics blog earlier this week, “the Commission’s proposed contract with ČEZ will essentially give it control of the sales process.”

Actually, it is not clear to me why Deloitte's special skills are needed to help ČEZ dispose of what the Financial Times described as “some old and inefficient power stations with a monopoly fuel supplier.” EPH’s EP Energy is not likely to be acceptable to the Commission, which has stipulated that the buyer must be unrelated, at no risk of collusion with ČEZ, and able to prove fuel supplies. So the risk of another sweet deal between ČEZ and EPH is very small.

In fact, the only realistic bidders are fuel suppliers themselves, which means ČEZ's arch enemies, Czech Coal and Sokolovská uhelná, both of which are in dispute with ČEZ over prices. ČEZ may not get very much for the assets in question but this time the reason will not be for want of trying.