Fifth International: A Case Study of the Miloš Zeman Enigma. Investigation by Yuri Felshtinsky. Part 2 G

Part 2: Zeman and Czechoslovak Group

Jaroslav Strnad

In November 2017, Zeman arrived for a meeting with Putin in Sochi as part of the delegation of Czech businessmen, which included Jaroslav Strnad, who came away from this trip with a contract for the construction and management of an aircraft repair hangar in the Russian region of Ulyanovsk. Born in 1972, Strnad worked during the Soviet era at the well-known Czech firm Transportu, a transportation equipment manufacturer, in the city of Chrudim in Eastern Czech Republic.

Like many others in the 1990s, he started his own business. As an engineer, he came up with an idea “that he could effectively sell moribund military equipment.” He bought scrap, such as rails, from the military units that were being liduidated and began to buy written-off army equipment, from machine guns up to vehicles, armored carriers and tanks; in other words, he would buy everything he could find and was able to resell. Some items were disassembled for spare parts and sold abroad; non-functional items were sold to amateur collectors; the remaining items went to scrap metal. In 1995, he set up his own company – Excalibur Army – which was engaged in the sales of military materials surplus.

This is one version of events. According to information from newspaper Hospodářské noviny, Strnad got into the arms business through his future father-in-law, Zdeněk Nechvatal, who was the former deputy head of the technical material command of the Czech Ministry of Defense. After Nechvatal retired, he got involved in the family business and was formally identified as a manager or a shareholder in the companies comprising the Czechoslovak Group (CSG) holding.

Jaroslav Strnad. Photo by Jaroslav Strnad / twitter.com

“The rapid ascent of the empire of Strnad is inexplicable for managers in the arms business,” wrote Czech magazine Euro. Questions about Strnad include whether he, someone without university education, could be viewed as a leader from the viewpoint of other stakeholders. A Czech military industry analyst commented under the conditions of anonymity as follows:

“I find it difficult to believe how Jaroslav Strnad, a former skilled laborer who got his start in the business in 1995 by selling surplus army material purchased from the Czech army and later from other former Warsaw Pact armies, was able to muster the necessary skills to resurrect the Czech and Slovak military industrial complex with no formal education and business or economic background. We are talking about developing a complex strategy to rebuild a vertically organized military industrial complex on the basis of companies in both countries that start with foundries and metal factories and go all the way to companies capable of manufacturing, servicing, maintaining and selling the finished product - complex defense systems. …Apart from defense companies, Strnad also targeted companies in the civilian machine tool sector, as well such as companies linked to producing finished products, or key components for the rolling stock sector.”

After the Czech Republic jointed NATO in March 1999, a law came into effect permitting private firms to import not only spare parts but also arms from liquidated army warehouses – artillery, tanks, vehicles and grenades. “You buy one warhead for CZK50 and immediately sell it abroad for CZK150 or more,” Strnad recalled. “You can also dismantle an explosive device, sell the shell for training purposes (as blanks), the explosive substance can be placed in refurbished (processed) shells and sell them at the same price as new warheads, for four, five, sometimes seven hundred thousand. I am giving you these figures as a guide; I am not telling you the price for which I am really selling them.” 

One can only imagine the tricks Strnad had up his sleeve to get the army contracts. As Euro wrote, “during his stint as an entrepreneur, Jaroslav Strnad several times ended up attracting the attention of police and intelligence, mostly due to his transactions with army. A few of those who offered him lucrative contracts with defense [organizations] later ended up working in his arms ‘empire’ – according to the information of weekly Euro, obtained from several security sector sources. Due to the sensitive nature of the topic and a possible threat to their professional activity, they did not wish to disclose their names.”

The sale of warheads and written-off army equipment made Strand one of the best known and most successful traders of military materials in Central Europe. His firm (then called Excalibur Army) by the beginning of new millennium became the largest buyer of written-down arms and munitions from the Czech army and their main exporter abroad. Nonetheless, it still involved relatively small volumes: the largest, according to Strnad, were valued in the tens of millions of Czech korun. By comparison with the other Czech arms dealers, such as Omnipol, Aero or Pamco, Excalibur Army was still a dwarf with barely one-tenth of Omnipol’s turnover.

Vladimir Yakunin

In 2003, on the Greek island of Rhodes, a Czech businessman named Zdeněk Zbytek, a colonel and a tank battalion commander during the Soviet times, who was famous for his offer to the Czechoslovak government to use the tanks to quell the student demonstrations that morphed into the November 1989 Velvet Revolution, introduced Miloš Zeman to his close associate, an influential Kremlin official named Vladimir Yakunin (who would serve as the president of Russian Railways OJSC starting in June 2005).

There is a lot to say about Yakunin. In a few words, he was a KGB officer who graduated the Red Banner Institute of the KGB (now the Foreign Intelligence Academy), served in the First Main Directorate of the KGB in foreign intelligence, and overall served in the intelligence for a total of 22 years.

Yakunin himself wrote about the fact that he has been a high-ranking Soviet and Russian intelligence office in his book The Treacherous Path published in English in the UK by Biteback Publishing in October 2017. It was Yakunin who became the architect of the modern Russian policy in several countries of the former “Eastern Europe block”, including Czech Republic and Slovakia, having re-established political connections at the hightest level, up to the presidents of the Czech Republic (Klaus and Zeman), based on his activities in the “Russian railroad sector” and numerous partnerships with Czechoslovak businessmen and businesses.

One of the means for establishing these relationships was an institute called Dialogue of Civilizations Research Institute (DOC), which was founded by Yakunin in 2016 in Berlin - with offices in Vienna and Moscow, and a EUR25 million five-year budget. DOC had been previously run as an organization called the “Rhodes Forum” since 2003 and held annual conferences on the Greek island of Rhodes. 

Yakunin only invited to Rhodes “his” politicians or those whom he intended to make “his.” It is not surprising that among those were first Václav Klaus, who was a member of the supervisory board of DOC, and then President Zeman. According to Efim Fishtein, for each visit to Rhodes, Zeman received an honorarium of US$250,000, which was paid through Yakunin’s Berlin institute.

Vladimir Yakunin and Vladimir Putin. Photo by navalny.com

Yakunin, who is on a list of people subject to U.S. government sanctions over Ukraine, told Reuters during a visit to Geneva in March 2015 that Zeman was «actually [his] rather close friend».

During Zeman’s retirement period of 2003-2012 when he lost a presidential bid in 2003, withdrawing to a remote village until 2012, the Czech public neglected Zeman and forgot about him. In contrast, the Russians were far from having forgotten him. Specifically starting in 2003, Yakunin started inviting him to the Dialogue of Civilizations Forum. Zeman has since become friendly with Yakunin, meeting with him regularly and even attending his forum several times while president. Despite Zeman’s position as a head of the state, Yakunin’s organization covered various expenses in connection with his trips.

Anne Applebaum summarized 2015 forum in her article “Russia’s new kind of friends” published on 16 October 2015:

The forum... continued, as in the past, to gather people willing to endorse Russian views of the world. There was Václav Klaus, the former Czech president, who called Putin’s Syrian adventure a ‘logical step.’ There was John Laughland, political director of a Russian-backed think tank, the Institute for Democracy and Cooperation, who argued that the European Union was conceived by the CIA, as part of a U.S. plot to subjugate Europe...

Klaus, who is not an idiot, doesn’t hide his financial links to Moscow. The forum does not hide its links to Russia, either. Instead, they both seek openly to legitimize the anti-NATO, anti-European, anti-Western views of the Russian elite... Andrej Babiš, the Czech finance minister [now prime minister], and Miloš Zeman, the Czech president — once a regular at the forum — frequently echo or repeat Russian slogans, as occasionally does the [then] Slovak Prime Minister, Robert Fico. In August and early September of 2014, all three argued against Western sanctions on Russia, using similar language. Zeman called them “ineffective,” Babiš called them “nonsense” and Fico called them “pointless.” Later, they shifted their rhetoric, and began to point to the refugee crisis and radical Islam as the “real” threats to Europe. “The refugee crisis threatens the Czech republic more than Russia,” said Babiš in September. “Islamist terrorism is a greater threat to Europe than Russia,” said Zeman in May.

Like Hungarian Prime Minister Viktor Orbán, all of these men have domestic political reasons for offering verbal support to Putin: They want to ride the anti-European Union, anti-“establishment” wave that has washed across all of Europe, and to capitalize on economic discontent. Since the E.U. began, politicians have long found it useful to blame “Brussels” for problems that they cannot fix. But there may be other motives, too. Zeman’s close adviser ran the office of Lukoil, the Russian oil company. Babiš, who is also one of the Czech Republic’s richest men, owns companies that consume a good deal of Russian gas.

But I shouldn’t unfairly single out Central Europeans, for there are many other Europeans who support Russian foreign policy with similarly mixed motives. Former Italian Prime Minister Silvio Berlusconi maintains both a political and a financial relationship with Putin. So does Gerhard Schroeder, the former chancellor of Germany. These men aren’t idiots either — but neither are they secret agents, spies or traitors. At the same time, they are working steadily, in their own ways, to undermine Western security and support the spread of Russian authoritarianism in Eastern Europe as well as the Middle East. So what do we call them? We need a new vocabulary for a new era.

The 2016 forum, which was the first one formally held by Yakunin’s Institute, gathered around 300 participants, including Zeman (for whom this was the ninth visit to this forum and who was the only head of state at the forum), former president of the Czech Republic Klaus, then Slovak Prime Minister Robert Fico and Hungarian Prime Minister Victor Orbán. (Zeman did not attend the next forum in 2017 for health reasons).

The organizers of the forum covered the travel expenses for the Czech president, his wife and four employees. During the conference, Zeman called for lifting sanctions against Russia and referred to the situation in Ukraine as “a simple case of flu.” Very few people knew about Zeman’s travel plans to Rhodes in advance. The Department of International Relations of the Presidential Administration, as well as Director of Protocol were not informed. Most of the presidential office workers thought the journey was just “a trip to visit an old friend.”

The issues of mass migration were at the center of discussion at the forum, along with Islamic terrorism and social inequality in the world. An idea was also voiced at the forum that the goal of the Institute is to «challenge the dominance of “Anglo-Saxon” analytical centers.» 

The world media’s coverage of the Rhodes conference was laced with cynical humor because Yakunin’s criteria for selecting participants were well-known. According to The Financial Times, in both the sessions and public materials of the forum, views and positions loyal to Russia were regularly expressed, and a significant portion of the participants shared the view that the US and the European Union were responsible for the multiple world crises linked to international terrorism, mass migration to Europe and Islamic terrorism. The news site Dotyk.cz wrote that “Putin’s fan club” traveled to the Mediterranean island. IHNed.cz commentator Petr Honzejk suggested Zeman and Klaus were playing into the hands of the Russian propaganda. Radko Hokovský, the head of think tank called European Values, wrote:

“This is a conference organized by a close associate of Mr. Putin, Mr. Yakunin, who is cooperating on various projects, which promote the Kremlin disinformation campaigns throughout Europe. Conferences like this are actually the platforms to spread the Kremlin’s interpretation of what is happening in Eastern Europe. In addition, this is contradictory to what is a commonly understood to be Czech government’s interpretation of events.”

When at the age of 93 Shimon Peres died, politicians from all around the world came to honor his legacy. Zeman was one of the few politica leaders who was missing. He went to Rhodes for the Dialogue of Civilizations conference hosted by Yakunin. When asked about his absence at the funeral, he said: “I thought a lot about going to the funeral. However, I am used to fulfilling my promises. Since I promised the organizers that I would come to Rhodes, I had to come. I like Shimon Peres very much. If I did not have this commitment, I would have come to the funeral.”

When Zeman first officially announced his participation in Rhodes, he explained it by wanting to discuss the migration crisis with the Slovak Prime Minister and with the Hungarian President. But Fico and Orbán both went to the funeral instead.

Here is a description of the October 2016 forum by the Russian media:

“President of the Czech Republic Miloš Zeman traditionally participates in the Dialogue of Civilizations conference,” which is held on Rhodes and is linked with the name of Vladimir Yakunin. This year, Zeman preferred not to cancel his trip to the Greek island and not to attend the funeral of Simon Perez that was happening at the same time.” Martin Fendrych commented on the portal Aktuálně.cz regarding the reasons for this “disgraceful” decision by the Czech president. According to Fendrych, “Zeman preferred the company of former KGB to the company of the worldwide politicians since he has been, and remains, a ‘star’ at the Dialogue of Civilizations conference because other world leaders prefer to steer clear of this creation of the Russian oligarch Vladimir Yakunin, whose name is on the list of those subject to the US sanctions.”

In a radio commentary for the station Český rozhlas (30.09), Alexander Mitrofanov noted that even having become the chief orator at the Rhodes conference, Zeman blundered because he spoke terrible Russian. Moreover, the content of his speech, according to Mitrofanov, also leaves a lot to be desired. In his broken Russian, Zeman spoke about the aggression of the Islamic State but forgot to mention Russian aggression in Ukraine, the participation of Russians in the murder of peaceful civilians in Syria and role of Russia in the catastrophe of MH-17. Still, of course, the commentator concludes, that to discuss these topics at an essentially Russian conference is not comme il faut since Zeman would like to remain Yakunin’s main guest in the future.

On the website Lidovky.cz., Zbyněk Petráček posted his commentary about what could not be heard at the Rhodes conference: «If Zeman had gone to the Peres funeral, he would have probably discovered that Israel fears the alliance of Russia-Iran-Hezbollah-Assad’s Syria and the expansion of Russian influence among Shi’a controlled countries. Therefore, sympathizing with Putin, Miloš Zeman, one way or another sides with the forces representing a threat to Israel, one of the most important partners of Czech Republic». But none of this was discussed at the Dialogue of Civilizations conference, as this conference is created only for the propaganda of the values of Putin’s Russia.

On the website Parlamentní listy, the former Czech President Klaus shared his own positive impressions about participating in the conference. “Many would be surprised but on Rhodes neither Russia nor her policy was the main theme of discussions. Moreover, the Russian voice did not dominate and was only one of many. Any one of the participants could freely express their point of view and give their own evaluation of the world events. Thus, participating in the Rhodes Forum was very worthwhile since it provided many opportunities to see things from a different perspective.”

Klaus was misleading his readers: there was no “different perspective” at the forum in Rhodes. There was only the “perspective” of the Russian secret services, which was orchestrated by the talented and experienced Yakunin. It is very difficult to untangle this web of jumbled, invisible and undetected by the participants themselves, purely informal and possibly clandestine discussions and deals. But starting from the end, it is possible to identify a few things.

The case of a Bulgarian businessman who was a weapons manufacturer and who was poisoned by GRU in 2015 in Sofia indicates that Russia pays close attention to the Eastern/Central European weapon manufacturers and is ready to take extreme measures in cases when it cannot put their business under Russian control. The fact that CSG has no difficulties with Russian orders and Russian business connections over all these years is the best indication that Yakunin managed to have relations with CSG to a degree that is desired by the Kremlin.

Pavel Hubáček

Since Zeman became president, another businessman and local millionaire, Pavel Hubáček from Olomouc, has achieved success, in part through his ownership of Banka Creditas, which he acquired in 2015. A branch of the bank was located in the same building as the Czechoslovak Group (CSG) at Florenc in the center of Prague.

The bank was granted a license to conduct business in 2015. Banka Creditas was granted a license from the Czech National Bank in 2015, probably due to the fact that the head of the Czech National Bank, which issued the license to Creditas, was Jiří Rusnok, one of Miloš Zeman’s people. Creditas owner Pavel Hubáček had a biography very similar to Strnad’s. Like Strnad, Hubáček sold decommissioned weapons in the 1990s. In the new millennium, he gave up weapons and started buying up and collecting debt.

Hubáček’s bank was directly associated with First Czech-Russian Bank. This bank allegedly had connection to the Kremlin, which provided a US$10 million loan to the French National Front. Shortly afterwards, the bank conveniently went bankrupt, obscuring any written trace linking the French National Front with the Kremlin.

Kristofer Harrison described this linkage in his article “Putin is Poisoning Prague” published in Foreign Policy on March 18, 2018,  and reprinted in several other periodicals.

It is worth noting that this article in Foreign Policy caused a huge controversy and required a legal intervention by an attorney who was hired by CSG. The CSG officially and categorically denied the allegations that “it had been financed by First Czech-Russian Bank or by the Russian capital of some other origin.”

Although in addition to the American author, the theory of the Russian “sponsorship” was shared by the prominent Czech journalist, Jaroslav Spurný, who investigated the history of the CSG: “Creditas is personally linked to First Czech-Russian Bank, an entity that recently went bankrupt and that was believed by the media to have been an instrument of the Russian secret services for investment in the West. For example, it funded the French nationalist Marine Le Pen.” 

It seems that this article by Spurný was the source of information for the American author.

Here is what Jaroslav Spurný had to say in response to my follow-up questions in June 2019: “I would also like to add ... that I gave my article of last year ... to Jaroslav Strnad to read... He confirmed the information in it, although he wasn’t particularly happy [about what the article said] ... Nevertheless, the article was cited in the coming months in certain countries, for example in the United States, and Mr. Strnad began expressing his displeasure... He is trying to sow doubt in these countries about everything that was written in the article...”

Spurný was most likely referring to the denials raised by the well-known U.S. lawyer, Lanny Davis, who was hired by CSG in March 2018 to defend its interests. Until recently Davis also represented Ukrainian oligarch Dmytro Firtash, whom U.S. law enforcement agencies have been unsuccessfully trying to extradite to the U.S. for several years. Two publications that were released almost simultaneously in Armenia and Ukraine indicate that Davis was suggested to Strnad by Yakunin, who was his client. 

The same two publications pointed out that Davis had also represented Semion Mogilevich, a well-known organized crime boss and an agent of the Russian special services, whom many countries, including the United States, have also sought to extradite but have not had any luck so far. 

Davis, who is best known in the U.S. as an attorney representing President Bill Clinton in the Monica Lewinsky affair, was retained after the publication of Kristofer Harrison’s article and managed to get a number of publications about CSG removed from the Internet due to the lack of credibility of the allegations against the CSG.

As far as the CSG’s involvement with the Russian money, Davis wrote the following [as stated in Czech and translated back into English]:

“The sentence regarding CSG trading with První česko-ruská banka [First Czech-Russian Bank] is a factual statement and not an opinion. As you say, you have the right to have your own opinions, but not your own facts. There is nothing behind that statement aside from defamation and bad reputation. This is my first reaction. The CFO of CSG sent me a statement that they never had any relationship with the First Czech-Russian Bank, let alone borrowed money from it.”

Technically, CSG was not the one that received the money from First Czech-Russian Bank; it was Creditas, which was located in the same building as the CSG and became the main financier of Strnad’s group of companies. Davis used this fact to demand a retraction of the Foreign Policy article, which was later amended.

Pavel Hubáček. Photo by unicapital.cz

However, according to Yaroslav Spurný, internal sources from within both companies confirmed transfers of funds for substantial amounts involving Russian financing (which was not known to anyone at the time the article was published in Foreign Policy – not to the author of the article, not to the magazine’s editors, and not even to the CSG’s lawyer Davis).

During a lengthy interview I conducted in Prague on 3 May 2019 with a former Czech intelligence head who asked not to be named, this person confirmed that, according to his sources, the ever-expanding CSG uses borrowed Russian money for expansion and as a result, is in serious debt. “They are in serious debt and they have no money,” he said referring to CSG. “They are in bad financial state and these debts are all owed to the Russians. I do not know how much, but the money is from Russia,” he emphasized.

The Czech publication Euro wrote the following about the CSG’s difficult financial situation (without referencing Russia):

“The group of companies that are part of the Czechoslovak Group (CSG) are in serious debt. They even acknowledged officially that the total debt amounts to almost four billion [Czech] crowns. . . The economic indicators for the last year [2016] are not yet available, but you can get somewhat of an idea about the company’s numerous borrowings from the information that Strnad’s CSG provided last year [2016] to potential buyers of the bonds it issued for CZK 1.5 billion in a so-called “prospectus”. [The prospectus] states that when issuing the bonds, CSG borrowed from a syndicate of Komerční banka/Commerzbank an amount of CZK 800 million. Strnad also mentioned an investment loan from Raiffeisenbank in the amount of CZK 19.5 million. He also acknowledged a revolver loan for a maximum total of CZK 330 million that was provided to Creditas by Sberbank (with a maturity date of 10 November 2019 and an interest rate of 5.5%). The CSG prospectus states that the proceeds from the bond issuance would be used to pay off a part of the debt. The company’s loans (overdraft, loans and borrowings) amounted to more than CZK 3.9 billion by 31 December 2015. In addition, open sources reveal that the company pledged shares in Avia with a fair market value of CZK 320 million to Commerzbank.”

Other Czech sources also mention the debt amount of CZK 4 billion.

Andrej Babiš

Banka Creditas owner Pavel Hubáček not only had ties to Zeman, but also to the Czech Prime Minister Andrej Babiš through his friend Jaroslav Faltýnek, who was Babiš’s right-hand man. Babiš, a business tycoon who made his fortune from exporting and importing fertilizers, and a founder of the anti-establishment political movement ANO (which stood for “Action of Dissatisfied Citizens” and also means “yes” in Czech), won the Czech Republic’s parliamentary elections in October 2017, and Zeman named him prime minister.

The 63-year-old Babiš, who was born to Slovak parents in Bratislava, joined the communist youth movement during his university years and shortly after began working at Chemapol, the chemical company that would later become Petrimex. He joined the communist party and in 1985, he got a chance to go abroad to Morocco on behalf of Petrimex. By 1990, Babiš represented twelve Slovak firms in Rabat (capital of Morocco) and was voted to the board of directors of the Slovak chemical manufacturer.

Nevertheless, despite his successful business career, accusations that he was working as a secret agent for the Czechoslovak secret state security service (StB) began to trickle into Babiš’s life and followed him into his political career.

Most recently, the Nation’s Memory Institute of Slovakia accused Babiš of collaborating with the StB under the code name Bures. Babiš denied the accusations and sued the Institute in 2013. Two years later, a regional court in Bratislava ruled that Babiš had not collaborated with the secret police and cleared him of the accusations. The Slovak Supreme Court, in turn, declined to hear an appeal by the Institute.

Despite these accusations, Babiš’s career kept on flourishing. He was appointed a managing director of Petrimex’s branch in Prague, Agrofert. He eventually became Agrofert’s sole owner with the help of financing from undisclosed foreign sources; where these sources got their money is still unknown. There were also questions about how Babiš had managed to finance Agrofert’s 200 subsidiaries in the agricultural, food and chemical sectors.

Today, Agrofert is among the highest-earning companies in the Czech Republic with revenue of CZK 155.3 billion (EUR 6.06 billion). After entering politics, Babiš resigned as a CEO but remains the sole owner of the company.

It is not entirely clear why Babiš decided to enter politics, but in 2011 he created ANO, which was founded, according to him, to “fight corruption and other maladies in the country’s political system.” Babiš’s anti-establishment speeches resonated enough with discontented Czechs to put his party in the second place during the 2013 legislative election. ANO then entered a coalition government with the Social Democrats and Christian Democrats, and Babiš was appointed a minister of finance.

Andrej Babiš. Photo by ЕРА

Around the same time, Babiš acquired a substantial portion of the Czech media, including Czech media house MAFRA, the daily newspapers Lidové Noviny and Mlada Fronta DNES, Ocko TV and the radio station Radio Impuls. This raised some questions about a conflict of interest for Babiš since the radio stations and newspapers owned by him served the interests of ANO.

It is important to understand that when Babiš, as the leader of ANO, took over as prime minister in the Zeman government, it marked the closing of a circle that included very important people who helped each other advance and prosper. At the company DAKO, the largest sponsor of Zeman and his Party of Civic Rights (SPO), Strnad’s co-owner was Alexej Beljajev, who previously worked at Slovakia’s Petrimex together with Babiš.

Babiš’s ANO party, which had won the election, got to name its representative to serve as a Minister of Defense in the Babiš government, and ANO party member Martin Stropnický became the Minister of Defense. Prior to an ANO representative joining the Ministry of Defense, the army never bought anything from Jaroslav Strnad. But everything changed once Strnad took control of the bankrupt Tatra vehicle manufacturer in Kopřivnice in 2013, got it back on its feet and expanded its arms empire.

Babiš has also been at the center of attention of the public because of the fraud allegations and scandals since the start of his political career. In 2008, he was charged with misappropriation of a EUR 2 million subsidy from the EU for a conference center and a hotel compound called “Capi hnizdo” (“Stork’s Nest”). Forced to resign due to a vote of no confidence in parliament on 17 January 2018, Babiš was re-appointed by Zeman as prime minister despite public protests.

In August 2018, Babiš and ANO deputy chief Jaroslav Faltýnek were stripped of their parliamentary immunity, and in September 2018 parliament consented to their criminal prosecution. However, despite these setbacks and periodic protests by thousands of people, mainly in Prague, demanding his resignation, Babiš’s ANO party continues to be popular with Czech voters. Also, Babiš personally knows how to use Czechs’ political discontent to his advantage and has charisma that other Czech politicians lack, which has been helpful for him to remain politically indestructible over and over again. 

As a member of the government, Babiš repeatedly criticized sanctions against the Kremlin, thus deviating from the government’s official line, and also criticized the Czech Republic’s position in the European Union, siding with the “Euroskeptics.” In June 2011, he became nostalgic during an online interview with iHNed.cz: “During the times of the Council for Mutual Economic Assistance, we could at least get drunk with the Russians and lobby them for something; meanwhile, our current position in the European Union is negligible.”

Martin Nejedlý and Zdeněk Zbytek

Zdenek Zbytek introduced Yakunin to another useful person – Martin Nejedlý, the former managing director of the Czech branch of the Kremlin-linked company Lukoil – Lukoil Aviation Czech. 

Zbytek has always been close to the Kremlin. He graduated from the Military Academy of the General Staff of the Armed Forces. From the late 1990s until the early 2000s, he headed the alumni association of the Academy of the General Staff. In 2002, he created the “Club of Zeman’s Friends.” According to Ondrej Soukup, his office was and is currently located in the same building as the Russian Embassy in Prague, and most of his current Czech companies are located in the buildings owned by the Russian Embassy. He is close with Yakunin; he is a deputy chairman of a Czech entrepreneurs’ council on cooperation with Russia, actively cooperates with Russian businessmen in the Czech Republic and trades with countries of the former USSR, primarily Moldova, where, according to Ondrej Soukup, former Soviet colonels and Generals manage five firms jointly with Zbytek. Among the deals Zbytek helped arrange was the export of electric power and transport equipment to customers, including a regional subsidiary of Gazprom.

In 2009, Zbytek helped found the party that became the driving force behind Zeman’s successful presidential bid in 2013. Zbytek had subsequently become a deputy head of a regional chapter of the party.

Nejedlý prior to his appointment as an adviser to Zeman spent the 1990s in Russia, where, among other activities, he was involved in the sale of Opel cars. Around 1998, he was hired by the Czech company Plynostav Pardubice to work on deals in Russia with state enterprises, including Gazprom. “He had been in Russia for some time before we had met. . . Due to his excellent social skills, he was able to gather valuable information. . . He was a very capable expert, and above all, he spoke perfect Russian,” said František Fišer, who was chief executive of the company that hired Nejedlý as the firm’s Russian representative. After Fišer retired the firm ceased its business operations.

Nejedlý returned to Prague in the early 2000s, and in 2007 he launched Lukoil Aviation Czech which supplied fuel to the Prague airport and several other Czech airports. The business failed, running up almost US$7.5 million in debts, including a US$1.4 million that Nejedlý personally owed to the Czech government over a fuel deal that fell apart. Lukoil liquidated its subsidiary. Nejedlý, who owned 40% of Lukoil Aviation Czech, paid nothing to the government (and Lukoil paid this amount on his behalf later).

Martin Nejedlý. Photo by Martin Nejedlý / Twitter

According to Radio Liberty journalist Yaroslav Shimov (with whom I met in Prague on 9 May 2019), the late Miroslav Šlouf had introduced Nejedlý to Zeman. Šlouf was a Czech communist party official, but after the Velvet Revolution of 1989 he joined up with Zeman and became very close to him. Ondrej Kundra also confirmed that “Nejedlý came in touch with Zeman through Miroslav Šlouf, who, in turn, was Zeman's chief adviser when Zeman was a prime minister.”

In 2009, Nejedlý and Zbytek co-founded and started running a political movement in support of Zeman that became the springboard for Zeman’s presidential bid. Zeman made a political comeback in 2013, winning the presidency in a victory engineered by Nejedlý, the key financial official for his campaign, which was financed in part by the Czech subsidiary of Lukoil. Zeman himself had always denied that Lukoil was among his sponsors. However, per Yaroslav Shimov, it is a generally accepted view in the Czech Republic that Lukoil financed Zeman’s election campaign in 2013.

As soon as Zeman was elected president in 2013, Nejedlý became his official foreign policy adviser, occupying a privileged office in the Prague Castle. However, Nejedlý served as an adviser to Zeman “on a voluntary basis,” as he was suspected by the Czech special services of cooperating with Russian intelligence and therefore could not get the clearance required to formally work for the president. “This is a person who is beholden to Russian financial institutions. He is paying his dues by fulfilling a Russian order,” Yaroslav Shimov said. Another journalist, Ondrej Soukup, claimes that a special department was even created within the Czech special services to deal with the presidential administration, specifically with those who do not have the proper security clearance due to suspicions about their dubious ties.

Since 2015, Nejedlý has changed his modus operandi and began to avoid appearing publicly together with Zeman. Nevertheless, Yakunin was invited to Prague Castle for a high-level conference about the Holocaust in January 2015 and was spotted chatting with Martin Nejedlý there. Also, Nejedlý accompanied the president on foreign trips to the East and has attended numerous meetings between Zeman and Putin, including a meeting on 9 May 2015 in Moscow, where Nejedlý was present as Zeman’s economic adviser even though the Czech Ambassador in Moscow was not even invited to that meeting, according to Ondrej Soukup.

Nejedlý had literally isolated Zeman. He controlled the information that the Czech president was receiving and, importantly, lobbied with Rosatom for strategic deals surrounding Czech nuclear power plants. One of the analists explained why the Rosatom deals were important:

“Back in 2012, few expected that a retired ex-prime minister (1998-2002) and a retired leader of the post-communist Social Democratic party (ČSSD) would make a successful political comeback. Yet he did, following a campaign strategy organized by Martin Nejedlý, the recently retired head of Lukoil Aviation Czech, a subsidiary of the Russian oil giant. When Zeman was sworn in as president in March 2013, Nejedlý became one of his closest advisers. He still holds this position despite the lack of the required security clearances...

One tangible threat is looming on the horizon, however: one of the Czech Republic’s aging nuclear power plants, Dukovany, will soon be due for an upgrade and expansion. The plant has been in operation since 1985, with a projected lifespan ending in 2035. Since the Czech government has committed itself to boosting its nuclear energy capabilities to reduce its current dependence on coal, building a new reactor in Dukovany seems like a natural step. Unsurprisingly, Zeman has been actively lobbying on behalf of the Russian energy company Rosatom. For example, Nejedlý conducted secret talks about Dukovany with Rosatom’s CEO, Alexey Likhachev. On his recent visit to the plant, the president stated that he was ‘personally not opposed at all to the application of the same model as the one used in Hungary with its Paks power plant.’

What happened in Hungary, of course, was that Orbán’s government awarded a US$13.7 billion contract to Rosatom without going through a public tender. Financing has been provided largely through loans extended by the Russian banks, and the details of the agreement were deemed classified as a matter of national security. . . Today, Zeman is trying similar heavy-handed strategy to push through Rosatom [into the Czech Republic]. As written by Jakub Janda, a director of the Prague-based think tank European Values, ‘the President’s office is blackmailing the prime minister that if he fails to award the CZK 150-200 billion (US$6.6-8.8 billion) to the Russians, he will lose Zeman’s support, who will then then destroy his coalition by using Communists and certain Social Democrats.’...

To complicate things further, Nejedlý and Rosatom might not be the only agents of foreign powers trying to influence Zeman… The Czech president has long fostered ties with Beijing, culminating in a state visit by President Xi Jinping in 2016 and the appointment of Jie Ťien-Ming, the founder of Chinese investment conglomerate CEFC, as Zeman’s adviser.

...An expansion of the Czech nuclear energy capabilities under the direction of Russian or China would shape the country’s geopolitical options for decades to come... If Dukovany ends up in the hands of Russia or China, recovering the lost Western influence would be an extremely difficult feat.”

It was imperative to split the quasi-state-owned giant ČEZ that united nuclear and coal energy sectors – by nationalizing it, in part, and by privatizing it, in part - in order to implement the Zeman-Nejedlý plan. This controversial plan was supported by ČEZ management, on the one hand, and by Nejedlý, on the other. It was clear that upon the implementation of this project, the more economically viable energy structures would have been privatized in such a way, so as to provide an opportunity to withdraw large amounts of money from these former state-owned structures to the accounts of new private companies. At the same time, this step could lead to the potential subordination of the Czech nuclear energy industry to Russia, as Zeman and Nejedlý sought to do. That is why the Czech government’s decision was to postpone the split and privatization of ČEZ, which became a serious defeat for Zeman and Nejedlý. 

At some point Nejedlý’s position as an adviser and the deputy chairman of Zeman’s party came under threat also because he lost his long legal battle over a hefty government fine and the Czech President warned him to pay up the dept of almost US$1.4 million or lose his post. In October 2016, Lukoil’s Moscow headquarters paid off his fine. 

Martin Nejedlý retained his position.

Alexej Beljajev and Michal Lazar

Starting in 2013, when Zeman became president of the Czech Republic, substantial cash began flowing into Creditas from Russia, according to Jaroslav Spurný. Creditas, in turn, began lending money to Strnad. In 2014, the Dutch-registered Czechoslovak Group (CSG) was founded in its current form. It was modeled as a vertically integrated “defense and civil industrial production” group based in the Czech Republic and with a heavy presence in Slovakia. According to one description, “its portfolio includes the production and sales of military and special-purpose vehicles, off-road trucks, weapons and weapon systems, munitions, machined products for the car, rail and aviation industries and braking systems for rolling stock as well as road transport and logistics services.”

The Slovak component of the CSG was extremely important. Strnad’s biography, which was written for the background check conducted by the Czech secret services as part of the application for a security clearance, stated that he had been a co-owner of several companies with Slovak citizen Alexej Beljajev since around 2000. Beljajev’s Slovak empire was built around the company Optifin Invest (based in Bratislava) which Beljajev co-owned with Michal Lazar. The connection with CSG was through Optifin Invest, which became a major co-investor in CSG. A Czech industry analyst commented:

“It is thought that by 2016, Strnad had joined forces with [Beljajev] for their joint business venture. My guess is that it was the other way around. Beljajev was the one who was coordinating the whole strategy from the beginning since he was instrumental in gaining control of the heavy machinery industry in Slovakia, which included foundries and steel processing facilities in that country since the early 1990s.”

One publication wrote that Beljajev “rose higher than everyone else in the business, and his business extends to the Czech Republic. He is a co-owner of several companies run by the major local arms producer Jaroslav Strnad. According to some sources, Strnad helped his expansion during the time when the Ministry of Defense was led by representative of the ANO movement Martin Stropnický. During the same period, he received several orders worth billions without going through a tender.”

Today Beljajev is among the top ten Slovak entrepreneurs, with property valued at more than CZK5 billion (EUR 200 million)  and is a co-owner of the companies DAKO-CZ, ZŤS Dubnica nad Váhom and Tatravagónka Poprad.

Beljajev’s family life story is well known. His grandfather, Alexej Beljajev, was a Tsarist officer who had fled from the Bolsheviks during the revolution and eventually settled in Czechoslovakia. His son later married a Slovakian woman. In 1956, Alexej Beljajev was born. Beljajev speaks fluent Russian and maintains good personal relationships with Russian business and political figures – in particular, former Russian Railways chief and the Kremlin’s “envoy” Yakunin.

Beljajev has developed close business and personal relations with Yakunin through Tatravagónka Poprad, which Beljajev and Michal Lazar co-owned through their company Optifin Invest.

In the 1980s, he worked at the Czechoslovak state oil company Petrimex, which was under the control of the Czechoslovakian state security service StB. In the 1990s, he worked closely with the emerging oligarch and future Czech Prime Minister Andrej Babiš. “Andrej Babiš and Alexej Beljajev have a lot in common. Both have taken advantage of their privileged opportunities since the time of totalitarianism, and after [the Velvet Revolution in] November [1989], like many of their colleagues, they got into business of one of the communist enclaves organized by the security agents,” one publication wrote, citing to the fact that both Beljajev and Babiš collaborated with the Slovak communist security services: “For the sake of expansion, both of them utilized their clients’ contacts with senior politicians who openly assisted them. There were rumors about predatory ‘hostile’ takeovers of companies with respect to both, sometimes with very suspicious stuff going on behind the scenes. And both can utilize their contacts and past cooperation at any time again.”

Julius Šuman called Beljajev one of “Andrej’s guys” – players on Babiš’s team that pumped money out of Petrimex and subordinated Agrofert at the start of its business operations. As a Czech security official commented under the conditions of anonymity, “following the collapse of Communism, Babiš, Beljajev and other Petrimex officials began to privatize and dismantle the company. In addition, Babiš focused on building his own food conglomerate Agrofert and Beljajev focused on forging his own machine industry conglomerate.”

“Their association goes back to the Cold War, when they worked together in Petrimex, the Czechoslovak foreign trading company tied to the KGB chemicals-for-weapons trades in the Middle East and Africa.” “Beljajev’s contacts with Andrej Babiš date back to that time, when a group of former Petrimex managers, including Babiš and Beljajev, gradually transformed state-owned companies into private businesses and built up today’s empires using mutual credits,” the Czech press wrote.

In 1992, Beljajev acquired the ZŤS Sabinov engineering plant and then became a partner in the foundry in Hronec. In 2000, Beljajev became а partner of the Austrian-Slovak company Express Slovakia – International Transportation, which rented trucks to the state-owned shipping company Cargo. In addition, he participated in the ЕВА Group, which disposed of hazardous waste from the Ministry of Defense and nuclear power plants.

Beljajev’s partner, Michal Lazar, during the Soviet years worked for the state company Omnia, which exported goods to Africa and Asia. He then continued to work for Giro Zentrale Bank, Austria. In 1990, he and his Austrian partners set up their first and most successful IT company, Columbex International. Over time, his initial 10% share increased to total control of Columbex International. Since there was not too much competition in the IT industry in Slovakia in the 1990s Lazar was aided significantly by state contracts which he obtained.

During the same period, Lazar became a CEO of Slovak Railways. The new owners of the company named Columbex State Railways, which was in bad condition, have restructured it and turned it into a successful enterprise that managed to procure significant foreign contracts.

In 2006, along with Beljajev, Lazar bought the Tatravagónka factory in Poprad, which had a government debt to the tune of a billion. As Beljajev said in an interview with Motejlek TV, the company’s creditors offered to hand over Tatravagónka because the company was a billion crowns in debt but refused to discuss the issue with its creditors. The acquisition was allegedly carried out for EUR 20 million by Optifin Invest through a British company Alliot Enterprises Limited, which was backed by Lazar. “There are 83% of Tatravagónka shares in the company account,” Lazar confirmed. 

Michal Lazar. Photo by hlavne.sk

All observers are unanimous in their opinion that this acquisition was “the most important moment in Alexej Beljajev’s business career.” 

During the first Fico government (2006 to 2010), Tatravagónka, together with the Russian company Transkontajner, established a joint venture for the development of a broad-gauge railway. In addition to other contracts in Russia, including a ten-year contract for Russian Railways headed by Yakunin, Tatravagónka has also done well at home in trade with state Slovakian railway companies, led by Lazar himself.

In 2010, Tatravagónka also absorbed the Serbian company Bratstvo and in 2012 it took over 50% of Russia’s enterprise Transmash. Around the same time, Optifin Invest bought Hungary’s MMV, Germany’s ELH Eisenbahnlaufwerke Halle GmbH & Co. and Poland’s Fabryka Wagónow Gniewczyna.

With the help of the former minister of economy Ľudovít Černák, Beljajev bought Trebišovská Vagónka (i.e., the Trebisov railcar plant). Together with Petr Lukeš, Lazar and Beljajev also established other railway companies, such as the Railway Repair Shop and Zvolen Engineering, which were receiving government contracts to service state railways while specializing in the repair of equipment, railcars and state railway tracks. Businessman Vladimir Poor was a partner of Optifin Invest in this instance.

In 2015, Tatravagónka began the acquisition of a 26% stake in an Indian rolling stock manufacturer Jupiter Wagons. Jointly with Beljajev, CSG also moved to take over the bankrupt company Vítkovice Heavy Machinery in the Czech Republic.

As a result, Tatravagónka became a key player in the European railway business. It produced bogies not only for the state-owned Slovak companies – Railway Company Slovakia and Railway Company Cargo Slovakia – but also for major clients in the East. In 2014, the company had revenue of EUR 225.7 million (i.e., almost CZK 61 billion). As of October 2016, Tatravagónka had an average annual production of 2,200 freight cars and 6,500 bogies. The company owned seven specialized production lines and manufactured seven types of freight cars. Each production line had capacity to produce 30 freight cars per month, thus covering 30% of the European market. Tatravagónka employed 2,000-2,200 people and had average annual turnover of EUR 200 million.

The takeover of Tatravagónka was not an easy deal. The company was owned by people associated with the criminal underworld. The body of Vladimír Bachleda, one of the former co-owners of Tatravagónka, a well-known entrepreneur and a government official close to Vladimír Mečiar, was found in a mountain forest near the village of Bystrá in central Slovakia only in 2015, although he had been killed in 1997, on the same day he signed a power of attorney to transfer his shares in Tatravagónka and right before Tatravagónka’s ownership had changed.

A Slovak journalist investigating this matter described what police believe happened to the executive: an organized crime figure Černák together with several of his employees first drugged and tortured Bachleda, forcing him to sign a power of attorney giving Steinhubel and Lazar control over Tatravagónka and then shot him in the head. Later, in August 1999, Steinhubel was also murdered.

The Czech police suspected that Lazar, who had direct ties to the corrupt government of Robert Fico, was the head of the Slovak mafia. Evidence of this could be found in a document that the U.S. Embassy in Bratislava sent to Washington. It stated that the Embassy intended to deny Lazar an entry visa to the United States, as he is suspected of “criminal activities.” Here is that document:

“Post [the U.S. Embassy in Slovakia] sometimes encounters visa applicants who are believed to be members of organized crime syndicates. Currently, Post has one open case involving such a figure and wishes to ensure that the provisions of 9 FAM 40.31 N5.3 -- Application of INA 212(a)(3)(A)(ii) for Aliens Engaging in Organized Crime -- apply. However, Post has received classified and other information regarding the applicant that cannot be included in the Non-Immigrant Visa system, and thus, requests response to be sent over the classified cable system.

Michal Lazar (DOB 9 Feb 1957) is a well-connected Slovak who owns roughly two dozen businesses in Slovakia, Hungary and Austria, many of which are tied to the railway industry. Following the collapse of the communist government in 1989, Lazar became the CEO of the Slovak National Railroad. It is believed that during this time, he funneled state money into contracts that favored businesses in which he had a personal investment. During the years that Lazar was an employee of the state, his personal wealth increased greatly. An eventual investigation of the state rail company resulted in no charges being filed against Lazar. Further, Lazar has no official criminal record in Slovakia. However, confidential reports available to Post have revealed that Lazar has admitted to ‘cleaning’ his police record through bribes.

In a recent meeting with the Slovak Organized Crime Unit of the Slovak National Police Headquarters, CONOFFS [consular officers] gained a clear impression that Lazar is associated with organized criminal element in Slovakia. When directly questioned about Lazar, police officials appeared physically uncomfortable, avoided eye contact, and stated that they are not investigating or monitoring him at this time. They subsequently noted that Lazar had a strong personal connection to the Fico government.

Currently, Mr. Lazar has only a P2A1 hit -- placed on him by Post -- for possible crimes of moral turpitude. Based on the classified information obtained by Post, coupled with the indication that the police appear to believe in his criminal activities (but are at present politically unable to pursue him), Post believes that Lazar’s petition for a visa can be rejected per 9 FAM 40.31 N5.3 under INA 212(a)(3)(ii). Post expects to encounter more cases involving suspected organized crime figures in the future.

Slovakia is scheduled to begin participation in the Visa Waiver Program (VWP) starting 17 November 2008. Post would like to make a final determination in the Lazar case before this happens, and requests Department’s opinion regarding its interpretation of 9 FAM 40.31 N5.3 and INA 212(a)(3)(ii) as soon as possible. 

It is widely known that Prime Minister Fico contributed to Lazar’s businesses, while Lazar, in turn, provided financial support to Fico. In that regard, the European Anti-Fraud Office conducted investigation of the Bratislava-based company Columbex International owned by Beljajev and Lazar. The investigation began after Columbex International received a state order for SKK 900 million in 2008 following a suspicious “tender on an announcement board.” 

Information regarding an unusual tender did not end up being published anywhere. An agreement with Columbex International regarding the supply of IT technologies and the servicing of IT systems was concluded by then-minister of agriculture of the Mečiar’s government Zdenka Kramplova. Beljajev then sat on the board of directors of Columbex International, while another one of his companies gave the People’s Party of Mečiar – Movement for a Democratic Slovakia (HZDS) – a “kickback” of SKK 11 million.

Kramplová was forced to resign due to the controversy, and Beljajev’s company found itself under investigation for several years. As a result, Brussels has not paid Slovakia EUR700,000 that Slovakia expected to receive from the EU. In addition, Slovakia now had to pay a fine of EUR11 million.

Yet, despite the fact that Columbex International was still being investigated, it received another contract in 2013 from Ľubomír Jahnátek, the minister of agriculture under the Fico government, for the administration of government IT systems. Jahnátek was a member of the ruling SMER–SD party, which was sponsored by Beljajev and Lazar, as well as by Vladimir Poor.

Earlier, the Fico government granted Agrofert a “secret” record tax holiday amounting to SKK 1.6 billion for its investments in the Duslo Šala chemical plant.

In 2016, Fico, during his second stint as prime minister of Slovakia (2012-2018), granted Beljajev and Lazar a tax incentive of more than EUR 4.3 million for their company Railway Casted Components, which sponsored the SMER-SD, for their plant in the eastern Slovak town of Prakovce, an allowance for more than EUR 3.1 million for creating jobs, and a subsidy amounting to EUR 2.5 million for the purchase of long-term assets. The plant produced railway bogie components for Russian Railways (despite the Russian incursion into Ukraine that had already begun in 2014). The company went bankrupt just ten months after receiving the state funds. It initially stopped paying salaries to its employees, then laid off 334 of the plant’s 372 workers. According to biztweet.eu, despite the bankruptcy and failure to fulfill the subsidy agreement, Beljajev did not return the subsidy, and the government never required him to do so.

Since both CSG representatives and their lawyer Davis officially denied Beljajev’s connections to Russia, Putin and Yakunin, it should be noted that the Czech press repeatedly wrote about this issue and Beljajev himself spoke about it in published interviews. In particular, one respected Czech publication regularly referred to him as a “Russian entrepreneur” and a Russian-Slovak oligarch. The other publication reported that he “speaks excellent Russian and talks about his acquaintance with Vladimir Putin and Slovakian Prime Minister Robert Fico.”

A prominent Czech journalist, Zuzana Kubátová, observed that the successful launch of Tatravagónka did not happen without Moscow’s help: “Beljajev managed to negotiate large contracts for the Russian state railway. In Russia, he and his partner Michal Lazar have good contacts with the Kremlin.”

Beljajev himself acknowledged his connections with top Russian officials. “We have business in Russia. Mr. Yakunin was a president of Russian Railways. Of course, we know each other well. He was the one who asked us to come to Russia,” Beljajev said in an interview with Motejlek TV, thus confirming speculations on this topic.

In the same interview, Beljajev publicly praised Fico for supporting his companies: “We need to acknowledge people like Robert Fico, whom we know and who really helps us develop our business abroad. It’s probably the same in Germany where Chancellor Angela Merkel comes to support Siemens projects.”

Beljajev also confirmed his relationship with Andrej Babiš, with whom he was connected through Petrimex. Petrimex’s management was divided by sectors of influence during these years. Beljajev went on to build an empire in Slovakia. “We started doing business in a group of people like Mr. Babiš… To this day, we have remained in contact and get together from time to time,” Beljajev told Motejlek TV.

In an interview with the iHNed.cz server in May 2016, Beljajev said the following about his relationship with Babiš: “We have known each other very well for many years,” but added that he no longer does business with his former colleague. “We split up in business 20 years ago. After the revolution, we had some joint activities that lasted until around 1993 or 1994. We parted on friendly terms and have thus been able to remain friends,” he said, stressing that he does not plan on having further projects with Babiš. “People would be talking since he [Babiš] is in the Czech government. But we do meet for coffee or lunch.”

Beljajev enjoyed close personal relationships not only with current Czech Prime Minister Babiš and former Slovak Prime Minister Fico. In the past, Beljajev was also one of the biggest sponsors of former Slovak Prime Minister Vladimír Mečiar and his Movement for a Democratic Slovakia (HZDS), which was on very friendly terms with the Russian government, Russian intelligence services and organized crime groups via Ivan Lexa, the head of the Slovak Information Service (SIS). In 2007, Beljajev donated through his largest company Optifin Invest SKK 10 million to Vladimir Mečiar for his election campaign. Beljajev also sent funds to Mečiar through intermediaries. There was one legendary episode where an 80-year old retiree named Rudolf Trávniček brought a gift of SKK 7 million to the HZDS headquarters in a plastic bag. According to the Slovak media, the money came from Beljajev.

Perhaps Beljajev did this because he never “had problems getting loans from banks controlled by Mečiar’s government.”

Фельштинский: Именно на период руководства РЖД Владимиром Якуниным приходится экономический расцвет принадлежавшей Алексею Беляеву компании "Татравагонка". Фото: railwaygazette.com

One Ukrainian author concisely summed up information about the connections that Beljajev and Lazar had with people from the Russian intelligence services, Russian business and Russian money:

“Alexej Beljajev earned most of his net worth from transactions with Russian Railways thanks to his close ties with FSB General Vladimir Yakunin who headed Russian Railways from 2005 to 2015, as well as direct contacts with Vladimir Putin and Dmitry Medvedev. It was during the period when Vladimir Yakunin ran Russian Railways that Alexej Beljajev’s Tatravagónka and related business structures experienced their economic heyday. Russian Railways and Tatravagónka signed several major agreements from 2008 to 2013, which made Tatravagónka the largest foreign manufacturer and supplier of rail cars for Russian Railways.”

For his part, Yakunin claimed that he had never had the rank of a General, but, rather, had the rank of “engineer captain,” a military rank in the Navy that corresponds to the rank of colonel, if Yakunin was an engineer captain of the 1st rank (because there were even lower ranks: 2nd and 3rd rank). But Tatravagónka did indeed receive over ten years (2005-2015) significant orders from Russian Railways under Yakunin’s leadership.

“The Czechoslovak Group’s capitalization suddenly increased several years ago thanks to significant investments from companies owned by Alexej Beljajev, one of the most serious and influential Slovak businessmen today, who is the chairman of the board of the Slovak company Tatravagónka and the chairman of the Mechanical Engineering Association of Slovakia,” states the same Ukrainan author.

“The CSG, owned by Jaroslav Strnad, a Czech arms trader well known in Prague as President Zeman’s friend and sponsor, is a company that is subject of multiple investigations by law enforcement, intelligence agencies and journalists. The group has expanded rapidly over the past year through co-investments with its strategic Russian partner into aviation, heavy industry and railcar manufacturing, and is expanding its activities in Russia. Strand’s partner is widely reported to have a business association with senior Russian intelligence officers,” wrote another publication. 

It was Beljajev’s links to Strnad that resulted in the Czech National Security Authority (Národního bezpečnostního úřadu – NBÚ) rescinding the latter’s security clearance. In January 2018, the loss of security clearance led Jaroslav Strnad to sign over formal control of the CSG to his son Michal Strnad, who was 25 years-old at the time.

Commenting on the change of control, a Western defense industry executive with close ties to the Czech Republic confirmed this account on a condition of anonymity: “The primary reason why Jaroslav Strnad stepped down as CEO of the Czechoslovak Group and appointed his son Michal as his replacement was the fact that the former was unable to obtain the necessary NATO-level security clearance from the Czech National Security Office required to continue to be a supplier of equipment to the Czech Ministry of Defense and the Army of the Czech Republic.”

A Czech security official, also commenting anonymously, was more blunt: “It is unthinkable that an individual whose company has a number of existing high-level contracts with the Czech Ministry of Defense and is in the process of bidding on additional contracts should receive an NBÚ clearance while having close personal and business relations with a foreign national [Beljajev] who has proven links to a power hostile to NATO and to organized crime groups.”

Another anonymous source, a member of the Czech Foreign Security Service provided this assessment of Beljajev’s known security risks: “Alexej Beljajev is known to have close links to Russia’s senior leadership, including Russian President Vladimir Putin, Russian Prime Minister Dmitry Medvedev and former Russian Railways President Vladimir Yakunin and members of his family. Beljajev is considered an unofficial envoy of the Kremlin’s interests in the EU.”

“Beljajev has had several contracts with Russian state-owned enterprises, including Russian Railways. He also actively participated in the contracting related to the 2014 Sochi Olympic venue – widely to be considered one of the largest graft schemes in the history of the Russian state. In the costliest ever Winter Olympics in which US$51 billion was spent, Yakunin’s Russian Railways was awarded US$10 billion in contracts, giving a golden opportunity to an enterprise already long known for no-bid subcontracting deals and other embezzlement schemes to hand out a huge pot of money to its supporters and executives,” press wrote. 

Expanding Strnad’s business: Retia and Tatra

In 2012 Jaroslav Strnad took over Tatra’s debt in exchange for its shares using a loan and guarantee from J&T bank and Creditas savings bank. Tatra had hitherto been owned for almost 10 years by US and Indian businessmen represented by Ronald Adams, once a top manager at Terrex, one of the US’s largest manufacturers of heavy machinery. At the end of the last decade, Tatra received an order from the Czech army for 1,000 vehicles and was negotiating with the Polish army an analogous supply. The Czech army proposed joint projects on a unique type of suspension that Tatra’s engineers had developed at the behest of Ronald Adams.

The company seemed to have a bright future, but things didn’t work out that way. The Czech army order was halted following criticism by senators from the then-ruling coalition of ODS (Obcanska demokraticka strana: Civic Democratic Party), as well as misgivings on the part of the Czech defense ministry. The suspension of the order looked suspicious, and the Czech police investigated it as a corruption attempt by deputy defense minister Martin Bartak (from the ODS party). Suspicions were raised that the order had been suspended artificially, with certain Czech officials extorting bribes in exchange for lifting the suspension. The defense ministry, which was then led by ODS member Alexandr Vondra cut the order by half, officially to economize; meanwhile Tatra, which had invested in production in the hope of receiving a large order, started experiencing cashflow problems in meeting its loan repayment terms.

Adams accused Bartak of corruption. Bartak responded by suing Adams, in turn accusing him of attempting to pay a 20 million koruna bribe for Tatra to receive a state order for army vehicles. A legal investigation was launched, which could have led to Adams being sentenced to eight years in prison. At this point, Strnad, in exchange for writing off 650 million koruna of debt owed by Koprivnice-based automaker Tatra to Composit Com, received the company’s shares, declared it bankrupt, and acquired the factory, worth 1.2 billion koruna, for around 300 million koruna at an auction in the town of Cheb.

As noted by Adams in February 2013 “the sale will not affect the work of the factory, which has orders and has normal production levels; it is a legal step that allows the promisingly developing production to not be halted.” Three months after the sale, Adams was removed from Tatra’s management team, and sometime later was fully exonerated by the court regarding the bribery charges. The court exonerated Martin Bartak half a year later. Czech magazine Respekt wrote that ”according to many statements, the real reason for the sale at an auction was entrepreneur Jaroslav Strnad’s desire to obtain control of the company.”

Over the next year, Strnad received orders for nearly a hundred Tatra suspension systems from the defense ministry (now headed by Vlastimil Picek), and in the following year, the company signed an agreement to supply trucks reconfigured according to specifications. Starting in 2013, Strnad bought at least 10 companies each year, and by now owned 59 companies. In the spring of 2016, CSG bought Retia and transferred ownership to Michal Strnad who at the time owned CSG.

Retia emerged at the site of Tesla Pardubice. It specialized in producing radars, and at the time was participating in a tender to supply the so-called 3D air-defense radars for countries using the MADR system. For this tender Retia teamed up with Israel’s Elta Systems, and they won, despite their proposal being more expensive than that presented by Omnipol in tandem with Sweden’s SAAB. The Czech Republic was to pay CZK5 billion (not counting VAT) for the Israeli technology, or approximately CZK 600 million more than the Swedish systems would have cost.

However, as of July 16, 2017, the contract for the radar production and delivery had not been signed “due to numerous serious issues”: Elta and Retia’s winning tender had not met the army’s required G to G (government to government) format. Moreover, reports surfaced in the arms trade circles about problems integrating the Israeli technology into the NATO system and about firms not meeting the conditions of local integration.

In October 2017, Retia sponsored and participated in the Interpolitex exhibition in Moscow, the purpose of which was to assist the Russian authorities in acquiring some of the latest European military technologies. The exhibition was organized by Russia’s FSB, Interior Ministry and Federal National Guard Troops Service (headed by Viktor Zolotov, a close associate of Putin and former head of his security detail).

The investigation began on May 1. To be continued.

The opinion of the author may not coincide with the opinion of the publisher.