The Financial Times, perhaps the world’s best business broadsheet, helped build the myth of Martin Roman, once fêted as central Europe’s manager extraordinaire, today ensnared in multiple investigations into deals he made as CEZ's boss.



Mr Roman says 'it would be a sin to our shareholders not to spend it'.

In August 2004, soon after the 35 year old Martin Roman was appointed to run the Czech state-owned power company CEZ, a short and ever so sweet article appeared in the Financial Times entitled ‘CEZ powers into foreign fields’.

In those pre-crisis days, when utilities were spending money like it was going out of style, coverage of the rebirth of a central European power monopoly, led by a disarmingly communicative young Czech with blue eyes and lots of what the FT calls ‘it’ to spend, was bound to be upbeat.

The FT article described Roman’s ambition for CEZ ‘to become the leader in electricity markets in central and southeast Europe’ in a tone so smitten that it might as well have been written by CEZ’s own press department.

The light salmon pink newspaper’s admiration for Martin Roman was not exceptional of course. In fact, it was strikingly unoriginal, representative of the time and place. CEZ was a good business story, indeed it was more or less the only business story for Prague-based correspondents fighting for the attention of their news editors back in London.

Ten years later, and knowing now that Roman’s ability to communicate with the media hid an inability to serve shareholders, re-reading the FT’s early coverage of Roman is a bit like watching a teething baby suck on a soft bread roll: toothless, soggy and pink.

Probing it is not. Here is an excerpt.

"Now is exactly the right time to grow," says Mr Roman. "We are in a fabulous position to succeed. It would be a sin to our shareholders not to participate."

The piece continues in this vein for another dozen or so paragraphs, with not a demur to be found among them. It is quite funny at times, though unintentionally so. Take this bit.

Mr Roman says CEZ has a natural advantage here compared with its western European rivals: there is no language barrier and the power technology, and even mentality, are similar.

That ‘even mentality’ is…well, fabulous. The article laps up the good intentions to which Roman lays claim, such as his intention never to waste 'it'.

Mr Roman says that CEZ is the most profitable electricity company in Europe in terms of returns on sales, generating about €1bn in cash every year.

But this does not mean that CEZ will overpay for its foreign acquisitions. "We will never pay premiums for acquisitions," Mr Roman says.

Are we to take this assertion, that CEZ will not overpay, as the FT's or Roman's? Is it the newspaper's reasoned conclusion based upon analysis and verification from third party sources, not one of whom is revealed in the article? Or is it simply a literary device to join up Mr Roman’s flood of well-crafted quotations into an elegant whole?

In either case, the article presents no evidence to support such a glib assertion nor even a hint that perhaps a state-owned company led by a 35 year old on a spending spree in the Balkans might not be such a strong value proposition after all, precisely because of that shared ‘mentality’ mentioned earlier.

Sadly for CEZ’s shareholders, that is, for the citizens of the Czech Republic, the assertion turned out to be quite mistaken. As we now know, Mr Roman made a habit of paying splendid premiums for his acquisitions, whether these were Saxon coalmines or Silesian photovoltaic plants, and of offering handsome discounts on his divestments as well.

These premiums and these discounts have been so impressive that the organised crime unit of the Czech police are interested in understanding the reason for them. Some scurrilous critics have even gone so far as to suggest that CEZ’s spending spree in the Balkans was little better than money laundering.

The article leaves the last word to Mr Roman (indeed it leaves every word to Mr Roman: no one else is quoted).

Mr Roman admits that such an ambitious acquisitions programme is bound to delay another attempt to fully privatise CEZ, which is still 67 per cent state-owned. "The owner can get more money when the consolidation process is ready, he says, but adds: "With every acquisition we are more and more attractive."

CEZ was never privatised and was never going to be: its hybrid status, as a private company majority-owned by the Czech state, made it an ideal source of funds for the country’s politicians. Its hybrid status also made it a particularly friendly environment for managers, answerable to such politicians, to mismanage the EUR 25 billion spent on refitting CEZ’s generation fleet under Mr Roman’s tenure as chief executive.

CEZ’s foreign acquisitions have been a failure. Even in the good years, they represented less than 10% of the group’s enterprise value. CEZ has now come home, its foreign assets largely abandoned.

If one wanted to sum up Roman’s ten years at the top of CEZ, it would be ‘how to spend it’, a phrase more often associated with the FT’s very own ‘website of worldly pleasures’.

Alas, much too much of Czech taxpayers’ it was spent on worldly pleasures for Roman himself, the man once hailed by the international business press as central Europe’s manager extraordinaire.

No one could ever mistake Roman’s replacement at CEZ for a good manager. Daniel Benes has now started muttering about a new spending spree abroad, in Slovakia and Poland, in order to acquire the operating profit he so badly needs to keep the rich gravy of dividends flowing into the mouths of his political masters.

We shall not have to wait long to discover whether, ten years on, the Financial Times' coverage of CEZ has grown teeth. On 8 October 2014, it will publish its special report on the Czech Republic. I can't wait!