The Prague Post
http://www.aaaradiotaxi.cz/index.php?xSET=lang&xLANG=2
December 1st, 2008
Endowment Fund     Business Listings ONLINE      Reservations      Classifieds    Subscriptions
Prague accommodation

Home » Archives » Business

'Secret restitution' ruled invalid

Future decisions could return land worth billions to state

August 8th, 2007 issue

By Viktor Velek

Staff Writer

A recent Supreme Court ruling could have far-reaching implications for a slate of pending cases, all stemming from a covert land restitution process in 2005 that saw valuable tracts of state-owned land sold to speculators at what the government says was a deep discount.
The court has ordered that 17 hectares (42 acres) of land surrounding the romantic ruins of Landštejn Castle in southeast Bohemia be returned to the state. The ruling is the first step in a legal process that will likely restore land worth billions of crowns to the country, all of which was allocated by the Land Fund to private hands during the infamous three-week “special restitution regime” of 2005.
“The transfer isn’t valid because the Land Fund didn’t make the land offer public,” said Petr Knötig, the Supreme Court’s spokesman, summarizing the verdict, which was given June 11. “Only a narrow circle of people knew about the offer. It breached the rules of land allotments and it was against good morals.”
The Land Fund is responsible for allotting substitute estates to people whose agricultural land was confiscated by the communist regime. For example, if one’s nationalized farming land was developed during the communist era, its owner or heir could ask the fund for substitute agricultural land.
Normally, the plots available were announced and then distributed in public procedures. But in 2005, the Land Fund established a special system that allowed claimants in legal disputes with the fund to acquire any plot in its possession with no public notice.
This drastic change in procedure was motivated by the approaching deadline for the settlement of restitution demands, set for the end of 2005. It was later ruled invalid by the Constitutional Court.
The idea was to speed up restitution, said Michal Bureš, spokesman for the Land Fund. But only a chosen few knew of the program.
New leadership at the fund has since led the charge for the land’s return.
“We see this as a groundbreaking decision,” said Bureš, who expects the Supreme Court’s other pending cases to follow suit, making 2005’s restitution speculation null and void.
“These people profited a lot by these transactions, as they picked agricultural lots that could be easily turned into valuable developments,” he said.
Knötig expects rulings in the five other related appeals to follow this year.
“I suppose that in [these] cases the Supreme Court will pronounce the same verdict,” he said.
Land grab
During the special restitution process, 25 well-connected people and companies acquired estates totaling about 640 hectares for just 47 million Kč ($2.3 million) in attractive locations in Prague and other parts of the country.

That was a gross miscalculation, the Land Fund says, and these plots are actually worth billions of crowns in total. Any development on the plots would cause their value to skyrocket, Bureš said.

The land around Landštejn Castle was acquired by a company headed by Gabriel Večeřa, a businessman with contacts to then Agriculture Minister Petr Zgarba (Social Democrats) and one of his deputies. Večeřa was unavailable to comment on the court’s ruling.
Večeřa also acquired plots in Prague 10. Applicants to the special regime were by far most interested in parcels in Prague or its vicinity, while locations frequented by tourists, like Landštejn, were also eagerly targeted.
In one such case, another speculator, Richard Kirnig, secured land in the Krkonoše Mountains in north Bohemia, where his business rivals operate downhill-skiing courses, the local newspaper Krkonošské noviny reported. Kirnig later sold the estates to his own firm for a price about 170 times higher than their acquisition value.
In fact, there were only two proper restitution claimants among the cases settled during the corrupted system; the majority were real estate speculators, the daily newspaper Hospodářské noviny reported. The speculators had previously purchased restitution rights from proper claimants.
After the secret system was discovered, it was quickly abolished. A number of the fund’s leading managers were sacked or resigned and the affair accelerated Zgarba’s downfall. Court cases involving some people from the fund connected with the covert system are still under way.
After the scandal, the Land Fund sought to renounce the validity of all the contracts made under the special regime. The Supreme Court’s decision overrules the regional court in České Budějovice, south Bohemia, which had approved the transfer.
Viktor Velek can be reached at vvelek@praguepost.com


Other articles in Business (8/08/2007):

Browse the Current Issue

If you enjoyed this article, why don't you subscribe to the print version!
We accept secure online transactions provided by PayPal and Moneybookers

Be the first to add a comment!


Full Name: *
City: *
E-mail: **
This comment can be published in the print version of The Prague Post
Enter the text on the right:
 visual captcha
Comment: *
* Required field. In order to be approved for display, comments must have a first and last name and a city.
** E-mails are required and will only be used for internal purposes.

Most visited in Business Listings

Hotel booking
The Prague Post Online contains a selection of articles that have been printed in
The Prague Post, a weekly newspaper published in the Czech Republic.
To subscribe to the print paper, click here.
Unauthorized reproduction is strictly prohibited.