Much of the 4 billion euro that CEZ is investing in upgrading its fleet goes through SKODA PRAHA Invest.



Indeed! But do you do those big things well, Mr Johanes?

Aktualne.cz has just released a story (here) which claims that the economic crimes unit of the Czech police are investigating the €400 million ‘supercritical boiler’ contract, awarded by CEZ’s Skoda Praha Invest to a consortium of Alstom Power Stuttgart and Alstom Brno in October 2007.

In mid-February, I drew your attention to the remarkable career of Radek Bencik, the 45 year-old former executive director of Skoda Praha Invest (SPI). Bencik left SPI at the end of September 2007, just days before the Alstom boiler contract was signed. A few months later, in March 2008, Bencik resurfaced as the general director of Alstom Brno’s thermal services division. He is now running Net4Gas.

Bencik responded to the suggestion that the timing of his move was inappropriate by saying that no conflict of interest had occurred because the contract between SPI and Alstom was signed after his departure from SPI and before his move to Alstom Brno.

That such a senior executive (he was also chairman of the board of directors of Skoda Praha, SPI’s direct owner at the time, which itself is wholly-owned by CEZ) should seek to justify the timing of his departure in so legalistic a fashion suggests that he might already be under investigation -a suggestion, I should point out, he strenuously denies and the police refuse to confirm.

When considering the appropriateness or otherwise of the timing of Bencik’s move, it is necessary to take into account the following facts, none of which is disputed either by Bencik or CEZ:

• October 2007 date of contract signature between SPI and Alstom;
• Bencik left SPI (and Skoda Praha) on 25 September 2007, after two years leading both companies;
• Alstom failed to deliver the boiler in 2011 as agreed, and has still not done so today;
• CEZ has received no compensation from Alstom as of March 2013.
• The three gentlemen responsible for exercising a supervisory role over Radek Bencik at the time were Daniel Benes, the chairman of the supervisory board of SPI; Vladimir Johanes, the chairman of the supervisory board of Skoda Praha; and Martin Kocourek, the chairman of the supervisory board of CEZ.


Bencik's bosses - Vladimir Johanes, Martin Roman & Daniel Benes

As an executive director of SPI and managing director of SPI’s owner, Skoda Praha, between 17 January 2006 and 25 September 2007, Bencik was likely to have been involved in negotiating a contract with a value of €400 million concluded a month after his departure.

That he left (just) before the contract was actually signed is, no doubt, critical in a formal legal sense. But it hardly alters the reasonableness of the assumption that he was instrumental in helping to close this particular deal. It almost looks as if Bencik’s departure was timed precisely to avoid having to sign a contract he himself most likely negotiated with a firm which would shortly employ him.

So much for Radek Bencik’s timing: What about Alstom’s? Apparently the contract set the delivery date of the boiler for 2011. We are now March 2013, and it is still not delivered, although, according to CEZ, it is expected sometime this year. CEZ refuses to be drawn on the issue of compensation from Alstom, other than to say that the contract allows for this possibility, and that it is in discussions on the matter. How immensely reassuring!

Given that the delivery deadline was more than two years ago, and taking note of the fact that CEZ has not indicated in any way that it is considering legal action to recover the enormous losses (estimated at some Kč1 billion a year) caused apparently by late delivery of the boiler, we could be forgiven for questioning the competence, not only of Alstom's managers, but of CEZ's as well.

And this brings us onto the issue of supervision. Skoda Praha Invest, in its own words, does ‘BIG THINGS’. In actual fact, this is an understatement. It is the EPC contractor for what it describes as ‘the Czech industrial project of the decade’, the renewal of the CEZ Group’s fleet of power plants at an investment cost of €4 billion.

The single most important value driver in CEZ is the efficiency with which it executes this vast CAPEX, so much of which is invested by SPI on its behalf. So it really does matter that SPI does a good job, and if there are any doubts about its efficiency, that these are swiftly removed.

And this brings us onto Bencik’s supervisors. SPI is now wholly-owned directly by CEZ but, as mentioned above, at the time Bencik was an executive director in the firm, SPI was owned by Skoda Praha (which in turn was wholly-owned by CEZ). Bencik was the managing director of Skoda Praha, so he was directly answerable to himself in the first instance.

The chairman of the supervisory board of SPI at the time was Daniel Benes, now, of course, the CEO of CEZ but then CEZ's chief administration officer responsible for the daily running of the firm, including its procurement, so much of which was made through SPI based upon specifications defined by Skoda Praha.

The chairman of the supervisory board of Skoda Praha at the time was Vladimir Johanes (actually, Johanes has held the position since 2004, when Martin Roman became CEO of CEZ, and he holds it to this day). And the chairman of the supervisory board of CEZ at the time was Martin Kocourek (apparently the disgraced former industry & trade minister is now a lobbyist with Merit Government Relations, a firm rumoured to be part-owned by the CEZ lawyer, Radek Pokorny).


A Pershing 64, described as an “aggressive 64-footer specially created for those who don’t accept compromises”. Vladimir Johanes called his ‘Lenka’.

So if you wish to know who should have been interested in, and presumably troubled by, the timing of Bencik’s departure from SPI and arrival at Alstom, it was these three gentlemen: Daniel Benes, Vladimir Johanes and Martin Kocourek.

And perhaps that is all you need to know.

The appointment of Radek Bencik to such senior positions in the CEZ Group was, of course, no shot in the dark. It is not as if Benes, Johanes and Kocourek hired a head hunter to find them the best candidate. They surely already knew him.

Before joining Skoda Praha Invest, Bencik had spent five years at Skoda JS. In 2004, when Skoda JS was acquired by the Russian state, in the guise of OMZ, Bencik was appointed the firm’s CEO. Readers with a good memory will recall that Skoda JS was part of Skoda Holding, acquired by the Appian Group (Martin Roman and his mates) from the Czech state in 2003 at a price that gave new meaning to the word ‘friendly’. So Skoda Holding ten years ago seems to be the explanation for Bencik’s remarkable success in the Czech energy sector.

Radek Bencik's timing is impeccable!