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One of Europe’s largest real estate groups is preparing for the fallout from a complex legal dispute between its billionaire owner and two convicted money launderers who say they privately financed him.
Senior managers at CPIPG, the Frankfurt-listed group led by Czech billionaire Radovan Vítek, are preparing plans to separate €537 million in assets following a freezing order from a Cypriot court.
Earlier this year, the court ruled in favor of the two litigants, Czech investors Marek Čmejla and Jiří Diviš. But legal wrangling has so far prevented it from being enforced.
The investors’ victory increases the chance that the central claims at the heart of the dispute – which has bounced from jurisdiction to jurisdiction in recent years due to technical-legal challenges – could finally be heard.
Čmejla and Diviš have been unsuccessfully pursuing CPIPG and Vítek through the courts for several years, claiming the billionaire developer defrauded them of a huge early investment in his group. Vítek has denied the claims and the cases in the Czech Republic, Luxembourg and the US have all been dismissed.
Vítek, the Swiss-based majority shareholder of CPIPG, built his real estate empire through a series of bold and sometimes aggressive acquisitions, targeting underpriced real estate companies – often using complex financial structures to secure control.
In their application for an asset freeze, as seen by the FT, Čmejla and Diviš alleged that a complex series of corporate shells and trust arrangements had been manipulated to deny them access to properties they legally owned.
Vítek denies that he had any clandestine arrangement with the couple.
At the heart of the investors’ case is the accusation that a “parity partnership” was secretly established with Vítek because both they and the real estate magnate, as convicted money launderers, felt that any publicly known investment had a major impact could have had. an adverse effect on the group’s access to future sources of capital and banking services.
In 2013, Switzerland’s Central Criminal Court found the pair guilty of a “large-scale” criminal scheme to plunder the Czech coal company Mostecká uhelná společnost (MUS), laundering money through a network of more than 100 Swiss bank accounts.
CPIPG and Vítek’s legal advisors argue that the conviction should have a significant impact on the legal dispute.
Although CPIPG executives dispute the allegations, the group has been forced to develop legal contingency plans to comply with a notice expected from the court in Cyprus, people familiar with the matter told the Financial Times.
The group believes it can easily pledge unencumbered liquid assets from its €20 billion portfolio to meet the court order’s demands, the people said, and will not need to pledge any cash.
But the investors’ lawyer, Marek Stubley, has raised doubts over whether “foreclosed” properties legally mortgaged by the CPIPG would comply with the Cypriot court’s asset freezing order. He said his clients expected cash to be kept in segregated bank accounts.
Many major European commercial real estate investors continue to face a liquidity crisis after portfolio values plummeted over the past two years due to rising interest rates.
Executives at CPIPG, which has €4.9 billion in bonds outstanding, say they have ready access to capital and liquidity, and have been fully transparent with creditors about the legal challenge facing the company.
“Plaintiffs have repeatedly attempted, but failed, to ‘forum shop’ these allegations in courts in various jurisdictions,” CPIPG said in a statement.
“The ruling in Cyprus, which CPIPG has appealed, has had no practical impact on the Group or on CPIPG or Vítek bank accounts or assets. CPIPG’s real estate portfolio continues to perform well and we remain focused on executing our strategy.”
The appeal procedure can take up to two years. The Cypriot courts have ruled that Čmejla and Diviš must have filed a full complaint by the first week of December.
The 53-year-old Vítek is a combative figure, who in 2018 in a dispute with the local municipality over the luxury Swiss resort of Crans-Montana, disabled the ski lifts he then owned. The move choked the city of winter sports enthusiasts who were its most valuable source of cash.
Vítek sold its investment in the Crans-Montana ski lift operator last year.
CPIPG is also being targeted by prominent short seller Muddy Waters, who accused Vítek in November 2023 of overvaluing assets and ‘asset stripping’ companies in the group.
An independent review law firm White and Case, which investigated the group’s financial affairs on behalf of the CPIPG board, concluded in September that the allegations were unfounded.