In March 2004, Jiri Kovar, the golfing lawyer and lobbyist from southern Moravia, celebrated his 40th birthday in Prague. According to those there, the guest of honour was the head of state himself, President Vaclav Klaus.



Jiri Kovar in 1992

Ten years on and Jiri Kovar is (once again) under police investigation for his role in the CEEI affair. CEEI is the former Lichtenstein shell company chosen by CEZ in 2007 to build a spent nuclear fuel dump at Temelin. For the full background to recent developments in the case, see the excellent coverage in HN two weeks ago here.

Ironically, it was Kovar himself who rekindled the interest of the public prosecutor in the case. If Kovar had not taken legal action against Martin Peter, his former business partner in CEEI, the police would not have returned to the scene of the 'crime'. Kovar lost his case against Peter. Not only did the Prague presiding judge dismiss the charges against the defendant, but she ventured the opinion that Kovar himself was the de facto owner of CEEI, not Peter, at the time it was awarded the CEZ contract. It is this legal opinion that has prompted the police to reopen the case.

Along the way, the judge asked the Czech competition authority to look into the matter, and a few weeks ago, UOHS imposed a measly fine on CEZ for wrongfully awarding the contract to a firm that should have been disqualified at the outset on the grounds that it had never built anything before, not even a sandcastle, let alone a nuclear fuel dump.

Dana Drabova: "Inexplicable".

And last week, Dana Drabova, who has led the state office for nuclear safety since 1999, made matters still worse for CEZ when she stated in an interview with Jan Zizka of Ceska pozice (see here) that the value of the contract was ‘inexplicable’ and that, in her professional opinion, there was ‘no logical explanation, none whatsoever’ for the price paid by CEZ to CEEI. She pointed out that the dump at Temelin cost more than two equivalent dumps at the Dukovany nuclear power plant.

Drabova's comments are interesting not because of what she says (she merely repeats what everyone knows) but because such a stalwart of the Czech nuclear establishment said it. Why has Drabova spoken out now, six years after the event? Presumably, she wants to hold onto her job and this is her way of letting Andrej Babis know where her loyalties now lie.

Much more interesting than Drabova’s determination to keep her job under the new order being built by Babis is the role played by two prominent business partners of both CEZ and CEEI. GNS is the German manufacturer of spent nuclear fuel casks. Its subsidiary, WTI, designs the facilities in which these casks are placed. WTI licensed its know-how to CEEI in May 2007 and it was the possession of this license that CEZ cited as the main reason for selecting CEEI. The know-how for sale was the project plan for the German spent nuclear fuel dump at Isar in Bavaria. CEZ switched to a Czech design at the last minute, which meant that the German know-how was never actually handed over to CEEI.

PSG Zlin is the Czech construction firm that CEEI subcontracted to build the dump. The CEZ board member responsible for Temelin at the time, Vladimir Hlavinka, has repeatedly defended the selection of CEEI. Earlier this year, he became deputy chairman of PSG. How much of the EUR 60 million allotted to CEEI ended up in PSG’s pockets is not publicly known.

In researching this case, we were told that it was Kovar who got PSG Zlin ‘into CEZ’. The same source insisted that Kovar has remained close to Vaclav Klaus over the years (Kovar ran the cabinet office in 1992, when Klaus was Czech prime minister), and that Klaus even attended his 40th birthday party in March 2004.

In the recent court case between Martin Peter and Jiri Kovar, Peter claimed that Kovar’s good relations with CEZ under Martin Roman is the reason why he went into business with him. Peter apparently did some PR work for GNS. He claims that GNS then asked him who it might use as an intermediary with CEZ. He suggested Kovar, and together they helped GNS win business from CEZ, according to Peter.

Did Roman urge GNS to help CEEI?

Kovar might have been an intermediary between GNS and CEZ, but not because the German firm needed an introduction to CEZ's boss. GNS’s dealings with Martin Roman go back to Roman’s time as chairman of Skoda Plzen in 2001-2004. Already in 2001, GNS had licensed the manufacture of its casks to Skoda Plzen’s Skoda JS (see page 8 of the company's 2010 Annual Report here. When Skoda Plzen was privatised in 2003, and Roman went from managing the company on behalf of the state to managing it on behalf of Appian and himself, the license agreement had to be redrawn up with the new owners (and again in 2004, when Skoda JS was sold by Appian to the Russian state-controlled OMZ).

GNS and Martin Roman were long-established business partners. But if GNS was already in with Roman, why did it need to help an opaque operation fronted by a politically-connected lawyer and a PR consultant? The only explanation is that Martin Roman encouraged GNS to help CEEI, with all involved knowing in advance that the German know-how would never actually be required because CEZ intended to use a local Czech design. It seems that role of the Germans was to lend plausibility to CEZ's selection of the highly implausible CEEI.

Now that the Czech state, through its competition authority, has formally dismissed the professional credentials of CEZ’s choice, the reopened police investigation will need to establish why Roman was so keen to award the Temelin nuclear fuel dump contract to CEEI. We must assume that the answer is because of who owned CEEI. If the Prague judge is correct, one owner of CEEI was Kovar. In which case, why was Roman so keen to award the contract to Kovar?

Ask Vaclav Klaus

Perhaps Vaclav Klaus, Kovar’s old boss and the guest of honour at his 40th birthday bash, has the answer? Apart from the known links between the two men, there is the intriguing possibility that it was Klaus himself who introduced Kovar to Markus Buechel, the man who set up and administered the Lichtenstein shell company that owned CEEI on behalf of its true owners.

Buechel was pro-Russian (until his death last year, Buechel was Russia’s honorary consul to Lichtenstein for years), like Klaus; he was a keen alpine skier like Klaus; and perhaps most significant, he served as his country's prime minister in 1993 like Klaus. Someone might like to check the records of Czech and Lichtenstein prime ministerial meetings for that year.