State sheds light on secrets involving settlements over rescued bank IPB
It was the biggest bank rescue in modern Czech history when the state rushed to take over the country’s fourth biggest bank, IPB, as queues formed to withdraw cash and a total collapse of the banking system threatened in 2000. In the aftermath, a decade long legal battle with tens of billions of crowns at stake broke out between the state, the bank’s former owners and new bank management. Now the state has lifted the lid on some of the secrets relating to those battles and how it fought them.
But getting to the core of what happens when politicians are forced to act under extraordinary pressure and big questions are posed of the political and financial system is worth the effort.
In the case of IPB, a series of legal claims and counter claims and international arbitrations followed the bank rescue, lawyers for all sides clocked up expenses running into hundreds of millions of crowns. But just before Christmas, the last arbitration battle concerning the state over IPB was concluded with the state being ordered to pay around 1.7 billion crowns to new bank owner, ČSOB.
Commentator with the weekly magazine Respekt, Jan Macháček, says the new documents reveal just how willing the state was to lean on the judicial system to first launch criminal proceedings against managers of Nomura to increase pressure on them and then call them off as part of the peace settlement.
“We know that the minister of finance at the time, 2006, Vlastimil Tlustý, sent a letter to judges, to police, and to state attorneys. He lets them know that the state has nothing against the managers of Nomura. All these things are described there. He says the state will not provide any additional analysis for investigations and that they should not start any investigations. It clearly goes against the principle of the rule of law in this country.”
Mr Tlustý himself has welcomed the publication of the secret deal saying that it showed how he saved the country 17 billion crowns that it would otherwise have had to pay to Nomura in damages. Some analysts though have questioned his self congratulations and why the state dropped its own counter claim against Nomura.
One chapter of the IPB saga appears to have been closed and perhaps another opened with a little more light shed on what happened over the last decade. But legal disputes involving the bank’s old and new owners, with ramifications for the state, and other questions are still outstanding. The IPB saga looks like it has some staying power into another decade.