Works of art are just as vulnerable to fraudulent abuse by politicians as municipal tram tickets, supercritical boilers and spent nuclear fuel dumps.



Does Martin Roman's younger brother Patrick collect posters as well as municipal rubbish?

Last week, I revealed that Ivan Lendl had secretly sold his collection of original Alfonse Mucha posters. This is the claim of the painter’s grandson, John Mucha, who said publicly on March 21 on the bne news server that "the question is not whether the collection has been sold. I can state categorically that it has. The question is who now owns it, and whether the new owner is reputable.”

A week later, no one has refuted Mucha’s assertion: not Ivan Lendl, nor Richard Fuxa, who manages the collection today on behalf of the owner, nor Jack Rennert, the New York art dealer who procured the posters for Lendl over a period of some twenty years. When asked directly who owns the Lendl Mucha collection ten days ago, Rennert evaded the question, stating only that it is now "under the direction of the Fuxa Foundation in Prague".

Does it actually matter that Ivan Lendl no longer owns the poster collection that bears his name and is now being used to sell Mucha-related merchandise, much of it marked with Lendl’s own signature? No one disputes that Lendl may sell his artworks to whomsoever he pleases. But if he sold the collection before last year’s exhibition, entitled ‘Ivan Lendl:Alfons Mucha’, then all the journalists who wrote about the collection as if it still belonged to him, and the tens of thousands of visitors to last year’s exhibition who thought it did, have been misled. But never mind the journalists, whose job it is to ask the difficult questions. And as for the exhibition goers, they got to see the posters, and they are real.

Who won?

Unlike the grass laid on the floor of the exhibition hall.The title of the exhibition and the exhibition’s artificial grass conjure up a tennis match, in which case we may reasonably ask, who won and did he win fairly? That depends on who now owns the collection.

If you were the mayor of the city that hosted the exhibition, or a shareholder in a company that sponsored it, you might have good reason to feel cheated today. If Lendl did not own the collection, then you were merely misled. But if the new owner turns out to be a business partner of a politician sitting on the Prague City Council, or a manager at one of the sponsoring firms, then you might easily have been defrauded as well.

The City of Prague owns the building in which the exhibition took place. The main sponsors of the exhibition were CEZ, the state-owned monopoly power generator, and Prazske sluzby, the firm that collects the city’s rubbish. A majority of Prazske sluzby is owned by the city.

Would the exhibition have been so popular with the public, would it have received so much, and such glowing press coverage from both local and international journalists, and would the city’s politicians and the management of two publicly-owned companies have been so generous in their support of the exhibition, if they had known at the time that the posters were owned, not by a world class tennis champion of Czech origin, but by an unknown investor sheltering behind a shell company registered in somewhere like the British Virgin Islands?

In the case of the journalists and the general public, the answer is most likely ‘No’. But in the case of the City of Prague, CEZ and Prazske sluzby, it is the very anonymity of the owner that likely explains the enthusiasm of the city and the generosity of the sponsors. All three are currently embroiled in police investigations into suspected related party transactions with firms with hidden owners.

Unclear ownership has never been a problem for Czech politicians and the managers they appoint to lead firms like CEZ and Prazske sluzby. Indeed, it has been a key attraction. For the past ten years, both CEZ and Prazske sluzby have been led by the brothers Roman. Martin finally gave up his position in CEZ in October 2013 (he was appointed on April Fools’ Day 2004 and in the opinion of many has been making fools of Czech taxpayers ever since). Martin's younger brother, Patrick, remains chairman of the board of Prazske sluzby. He was appointed in July 2005. Prazske sluzby is itself part owned by an unknown investor. One fifth of the company is held by a Cypriot shell company 100% of which is owned by another shell company in London. Prazske sluzby is paid over $50m a year by the city, so it matters.

Spectacular returns

As long as the identity of the owner of the poster collection remains hidden, the possibility that the exhibition was used to suck money out of the City of Prague and two publicly-owned companies cannot be ruled out.

There are two US citizens, Ivan Lendl and Jack Rennert, who must know who owns the Lendl Mucha collection today. Both are unwilling to state outright that the collection has been sold. And there are at least five Czech citizens, all statutory representatives of the Richard Fuxa Foundation Fund, who should know as well.

These are Richard Fuxa, a part owner in BigBoard, the outdoor billboard firm that is behind the marketing of the collection; Karel Srp, the former artistic director of the City of Prague Gallery (GHMP); Jan Trestik, the former director of the Central Bohemian Gallery, convicted in 2012 of having attempted illegally and unknowingly to export a Picasso painting; Karel Novacek, the retired world class tennis player who now works in the private banking division of Unicredit Czech Republic; and Marina Votrubova, who runs a part of the private banking division of Unicredit Czech Republic that helps its clients invest in art.

The reason for the involvement of Richard Fuxa, Karel Srp and Jan Trestik in managing an art collection is clear enough. Karel Novacek’s involvement is also understandable given his acquaintance with Ivan Lendl. His acquaintance with various prominent Czech politicians may or may not be relevant. (see this interview with Novacek in Tyden in 2011)

But it is the close involvement in the Lendl Mucha collection of Marina Votrubova, Novacek’s colleague at Unicredit's private banking division, which is of particular interest for it suggests that Unicredit has handled money invested in the collection.

Here is Votrubova promoting Unicredit’s ‘Art Banking’ service last September: “Our clients are mostly collectors and art lovers. Some clients make it clear from the start that they are not interested in what they buy from an artistic point of view, that all they want is an investment, and above all expert advice on what to buy well. There have been signs recently that some people would like to establish an art foundation fund.”

As we have seen, Votrubova is directly involved in managing the art foundation fund set up by Richard Fuxa. She is the so-called ‘revizor’, a one-man supervisory board responsible for ensuring that the foundation’s accounts are in order and that it operates in accordance with the law and its statutes. As such, she is likely to know the name of the company (or more likely, companies) that hold the property on the final owner’s behalf. The final owner might even be a Unicredit Art Banking client.

Not to be trusted

The Fuxa foundation fund was established in early 2013, before the new Civil Code introduced the new legal concept of the trust fund, in January 2014 (see wolftheiss.com for an explanation of how these trusts work). Under the old civil law, the advantage of anonymity afforded by the trust fund was not available. If it had been, the owner of the Lendl Mucha collection could have established a Czech trust fund, and placed the collection under its care, without revealing his identity.

But the Lendl Mucha collection entered the country and went on exhibition in the first half of last year, before the new Civil Code entered into force. This means that any money transfers and contracts the Fuxa foundation might have made until now, as the manager of the collection, are likely to have been made in the name of the owner. We can assume then that there is documentary evidence in Prague which identifies the owner (although most likely only an intermediary ‘owner’ acting on behalf of the beneficial owner).

And this would get us to the point that the police typically reach in all their failed investigations into suspected related party transactions involving the City of Prague, CEZ and Prazske sluzby, namely an intricate maze of shell companies, beautifully organised and as black as pitch. Case dropped.

Lendl Mucha on tour

There is no evidence that the money used to buy the Lendl Mucha collection (if indeed it was sold) was embezzled from publicly-owned entities in the Czech Republic. Nor is there any evidence that the new owner is related to Prague’s municipal politicians and/or to the senior management of CEZ and Prazske sluzby.

However, unless and until we know who actually owns the collection, there will always be the possibility that the collection has been used to defraud publicly-owned institutions in the Czech Republic. Pervasive suspicion is just one of the costs associated with the years of corruption in public life here. Artworks are no less immune to criminal fraud than trams, tram tickets, supercritical boilers, refuse collection and even spent nuclear fuel dumps. Indeed, art is likely to be more vulnerable given that the origin of so much of the money being invested in it remains obscure.

Welcome to Prague, the home of Alfonse Mucha. And welcome to the home of the largest collection of his decorative posters, if indeed this is its home. For now, the only thing we know for certain is that the posters are sitting in a depository of the City of Prague Gallery, waiting. But waiting for what? A permanent home in Prague or for the next stop on a world tour taking in China and Japan?

It all depends on the returns the hidden owner hopes to make on his investment.