CSOB considers the Agreement concluded by the Czech Republic and Japanese investment group Nomura, which was signed today, to be a real platform for the final settlement of all open issues linked to the rescue of ex-IPB depositors. CSOB is not the party of the signed document therefore it cannot make a position towards its particular provisions nor to comment on them.
In the past CSOB/KBC Group drafted a number of proposals for synchronized settlement of all open disputes with participation of all three parties: Czech Republic, Nomura and CSOB. CSOB is ready to leverage a platform created today for the final completion of negotiations. The ruling parameter which CSOB sticks to is a definite and undisputable settlement of the IPB rescue operation, close-down of the guarantees issued for this operation thus creating a status quo which does not provide any party with a possibility to reopen the issues. This would lead to the withdrawal of all claims filled with the courts.
Most frequent myth circulated in the Czech media
Because of the unyielding demands of CSOB, the government was not able to conclude a favourable agreement on settlement with Nomura and the taxpayers will have to pay for the defeat at arbitration.
CSOB quote
“It was not about CSOB not wanting to give ground or its demands. It was always about certainty for everybody that, after a while, somebody would not reopen a Pandora's box of never-ending disputes. I think there is the will to find an out-of-court settlement to the disputes with Nomura on all sides. CSOB has been providing the government with all possible support. What we need, but don't have, in order to reach a settlement with Nomura is clear leadership and uniform, efficient management of the talks by the state administration. Such negotiations are an extraordinarily complicated project that cannot be managed in a manner that is merely political,” said Pavel Kavánek, CSOB Chief Executive Officer.
Background information
CSOB is in no way interested in artificially drawing out the disputes. The settlement should be based on all the parties accepting the principle that the rescue of IPB is closed once and for all, that the solution adopted, which was approved by the Office for Protection of Economic Competition and the European Commission, cannot be questioned and that it will not be contested in the future in any way. Such an agreement would open the way to the withdrawal of all actions and the closure of the government guarantees issued in favour of CSOB once and for all. Unfortunately, all the concepts that have been submitted have only gone halfway.
The diagram shows that the partial resolution of disputes between the Czech Republic and Nomura would not deal with other consequences for the Czech government, which could run into tens of billions of crowns.
Ongoing disputes:
- Nomura x CR
- Nomura x CSOB
- IP banka x CSOB
- IP banka x CR (or its representatives)
- Promise of the Czech Republic and the Czech National Bank to compensate for damage arising to CSOB due to the takeover of IPB
The concepts presented to date envisaged for example taking back ‘direct’ actions between the government and Nomura, while most other, no less important legal actions with Nomura, which influence the application of the government guarantees issued during the IPB transaction were disregarded. This might lead to further claims from the state budget of the Czech Republic. These circumstances cannot be ignored at the negotiating table.
Press statements of CSOB:
‘I believe all the parties have the will to settle the disputes out of court. CSOB, which these complicated cases administrated or still administers is providing to the government all possible support. But to reach an agreement we need clear management on the part of the Czech government. The government must be able to create a single platform to end the dispute successfully. It is a project of extraordinary complexity and it cannot be managed in a way which is, I should say, merely political. We must also have the certainty that everybody leaving with everything sorted out and no other Pandora’s Box will open again after some time with endless interlinked disputes,’ said Pavel Kavanek (weekly Ekonom, 6 May 2006)
‘I have the feeling that all the parties concerned are working hard to reach a sensible balanced compromise. I think all the parties are motivated to prevent future legal costs. I won’t speculate how soon this can happen. Chances are it’ll be very quick. I should add the final solution must be quite clear and legally incontestable, so that nobody is left at a disadvantage. It is utterly unacceptable to keep any sort of backdoor to have the dispute come back another way, as in the case of Diag Human. I think it likely to be settled in a few weeks rather than months,’ said Pavel Kavanek. (daily MF Dnes, 17 October 2005)
‘
Settlement means all the parties accept the principle that the saving of IPB is finished for good, is indisputable and will not be contested in the future in any way. This will open the way to withdrawing all actions and concluding guarantees’, said Milan Tomanek, spokesman for CSOB (daily Pravo, 23 September 2005)
‘The objectives of the premier and the bank are identical. Not to repeat the case of Diag Human II, not to have any partial, imperfect or provisional settlement, which could lead to further legal disputes or even incite such disputes’, said Milan Tomanek, spokesman for CSOB (station CT 24, 30 September 2005)
Overview of disputes related to the settlement with Nomura
- Arbitration Saluka and the Czech Republic
- Arbitration according to Czech-Dutch agreement on support and protection of investments;
- Begun in July 2001, place of arbitration Geneva;
Saluka claims from CSOB 40 billion for alleged damage to its investment in IPB Award made; arbitration will continue to quantify loss
- Arbitration the Czech Republic v. Nomura
- Arbitration based on agreement on purchase of shares in IPB between National Property Fund and Nomura;
- Begun in December 2002, place of arbitration Zurich;
- Czech Republic claims CSOB 100 to 263 billion for losses caused by fall of IPB
- Action CSOB v. Nomura, Saluka et al – case ‘Czech Beer’
- Commercial dispute for damage compensation;
- Begun in February 2002, before Municipal Court in Prague;
- CSOB (as successor to IPB) claims CZK 24 billion for operation ‘Czech Beer’ (illegal disposal of shares in Plzen Prazdroj and Radegast brewery from IPB Nomura without providing equivalent)
- Action CSOB v. Nomura and Association of IPB Shareholders
- Begun in December 2004, before Municipal Court in Prague
- CSOB claims CZK 2 billion for tarnishing its reputation by misinformation published by Nomura together with Association of IPB Shareholders
- Action Nomura v. CSOB and KBC
- Begun in June 2002, before Municipal Court in Prague
- Nomura claims CZK 1 billion for alleged unfair competition practices of CSOB and KBC, in consequence of which Nomura forfeited IPB
- Action Nomura v. European Commission
- Begun in October 2004, before Court of First Instance of the European Communities
- Nomura demands overturning of EC decision approving state aid in the case of IPB.
- Action Nomura v. Antimonopoly Office, Administrator of IPB, Czech National Bank
- Series of complaints; by each plaintiff claims damage compensation of approximately CZK 40 billion.
- Association of IPB Shareholders v. Czech Republic (Ministry of Finance and CNB)
- Begun in June 2002, before District Court for Prague 1
- In this class action the Association of Shareholders claims ca CZK 170 million for alleged prejudice of its members (shareholders in IPB) by imposing administration on IPB.