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Legal disputes plague KKCG

Multibillion-dollar company takes protective measures

By Markéta Hulpachová
Staff Writer, The Prague Post
July 11th, 2007 issue

The multinational oil and heavy industry conglomerate KKCG, owned by Czech tycoon Karel Komárek, is caught in a plethora of legal disputes.
The 50 billion Kč ($2.4 billion) corporation is currently suing six of its former strategic partners for more than 15 billion Kč, and three of these cases are being investigated by police.
According to Komárek, the lawsuits filed by KKCG are a necessary protective measure against individuals wishing to capitalize on KKCG’s successes for their own gain.  
“As your activities grow, so does your circle of friends and business partners, and so do your competitors and enemies,” Komárek told the daily newspaper Mladá fronta Dnes (MfD).
KKCG critics call Komárek’s business strategies unfair.
“When we bought a part of a company from [Komárek], we let him double-cross us,” an anonymous owner of a prominent Czech business told MfD. “We didn’t fight it because his [metal manufacturing company] ŽDB is one of our biggest clients.”
KKCG’s most recent dispute is with Jan Světlík, who, through his stake in the company Vítkovice Holding, controls Moravian heavy machinery parts producer Vítkovice Steel. On July 9, Světlík announced his plans to report Atlantik FT — a brokerage owned by KKCG — to market regulator Czech National Bank (ČNB) for the suspicious transaction of Vítkovice stock.
Four years ago, Světlík hired Atlantik to buy back the shares of Vítkovice stockholders for Vítkovice Holding, but Atlantik allocated only 2 percent of the shares. Earlier this month, however, KKCG announced it attained 10.2 percent of Vítkovice. At a general meeting, Komárek said he wanted to price Vítkovice stock 18 times higher than the company’s board of directors. By announcing his intentions to report Atlantik to the ČNB, Světlík was reacting to Komárek’s earlier announcement that he plans to sue Světlík for pricing Vítkovice stock below their actual value and disadvantaging the company’s minority shareholders.  
Separately, on June 22, Atlantik filed an administrative suit against ČNB, who then June 1 fined Atlantik 4 million Kč for a breach of client regulations resulting from the 2005 abrupt decline in the share prices of petrochemical company Unipetrol. By filing the suit, “Atlantik FT is protecting the young Czech market from one-sided decisions by the regulator ČNB,” said Atlantik FT spokeswoman Dagmar Adamcová.
Komárek is also at odds with his former business partner David Beran over the ownership of ŽDB and wheel sets producer Bonatrans. Last month, a Czech arbitration court ordered KKCG Industry, a company owned by the KKCG group, to pay Beran one-third of his claim for the buyout of the two companies.

Markéta Hulpachová can be reached at mhulpachova@praguepost.com


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