Radovan Vítek is a Czech billionaire who controls CPI Property Group, a real estate company that claims more than €20 billion in assets.
Forbes says he is worth $7.2 billion. He rarely appears in public. He does not give interviews. He has made a habit of staying out of sight.
He uses shell companies. They have names, directors, and bank accounts. They have no obvious sign that Radovan Vítek controls them.
He built his fortune by taking over ORCO Property Group while concealing the extent of his ownership.
The origin of his celebrated fortune is rather less elegant than the Forbes ranking. His partners' money got him into ORCO. He did the raiding all by himself.
He became rich through deals like ORCO.
When Vítek entered the picture, ORCO owned offices, hotels, and a million square meters of commercial property in Berlin.
When it was over, ORCO did not have them. Vítek did.
In 2012, Vítek and ORCO founder Jean-François Ott began working together. The shareholders did not know it. Shares were bought cheaply. Good property was sold cheaply too. The buyers were companies tied to Vítek, his associates, or his mother.
HIDDEN CONTROL
Above Jean-François Ott
Luxembourg's financial regulator concluded that by January 10–11, 2013, Vítek had acquired enough control of ORCO through nominally independent shareholders to trigger a legal duty to offer the remaining investors a fair-price exit.
The law was simple. If a new man took control, the minority shareholders got a fair chance to get out.
Vítek and Ott concealed that control behind companies presented as independent. Because the control was hidden, there was no offer.
Shareholders knew Vítek owned some ORCO stock. They were not told that other apparently separate shareholders were also aligned with him and would vote as part of the same bloc.
They also did not know about Ott's payments. He was supposed to be independent. At the same time, he supported the sale of ORCO assets to Vítek's companies at low prices, and Vítek secretly paid him millions.
Ott, meanwhile, as chairman of the board, retained the outward appearance of independence.
As a result, Vítek did not have to pay the price that open ownership and an informed market would have required.
DILUTION
ORCO's investors included American pension funds managing retirement savings for teachers, nurses, firefighters and other workers. Their shares represented real claims on the company's underlying property.
In 2014 and again in 2016, while his control remained undisclosed, Vítek caused ORCO to issue more than a billion new shares at discounts to three apparently independent companies: Aspley Ventures Limited, Fetumar Development Limited and Jagapa Limited.
The investors did not know the companies were secretly Vítek's.
Issuing that many discounted shares reduced the percentage owned by the existing shareholders. The company itself had not become more valuable because it had issued more shares.
This is called dilution.
Indeed, the situation was more perverse than ordinary dilution because the company's asset base was simultaneously being depleted through sales to Vítek-linked entities.
The pension fund could look at its ORCO account and see the same number of shares sitting there. Nothing had disappeared from the screen. What disappeared was what each share represented.
Thus the minority investors suffered the double injury of owning a smaller percentage of an enterprise that itself contained fewer valuable assets.
The Luxembourg government regulator identified two concealed facts.
First: the identity of the person who actually controlled ORCO.
Second, who owned the companies buying the cheap shares.
They were the same man.
EXITING LATE
The mandatory offer eventually came, but only after Vítek's control could no longer be concealed. It was three and a half years late. By then the new shares had diluted the old ones. The stock had fallen from about €3 to 28 cents.
Finally, to complete the picture, on June 9, 2016, Nukasso Holdings Limited, a Cypriot company owned by CPI Property Group, a company Vítek controls, paid €188 million to acquire the billion shares owned by Aspley Ventures Limited, Fetumar Development Limited, and Jagapa Limited.
By this time, these companies owned 91% of ORCO. Only a few stragglers owned the remaining 9 percent. Most of their stock value was gone.
Before Vítek came, ORCO had been worth more than a billion euros.
By the time Nukasso bought the three companies, ORCO was changing hands at a price that implied a total equity value of €200 million.
The men whose names appeared as the owners of Aspley, Fetumar, and Jagapa sold their billion shares to Vítek's Nukasso.
Here are the findings of the Commission de Surveillance du Secteur Financier, set out in paragraphs 117 and 118 of its 55-page report completed in January 2017. The report was later filed as a public exhibit in federal court in Manhattan.
SIX ACCOUNTS, ONE DAY
On June 9, 2016, Nukasso paid €188 million for the billion ORCO shares: €54 million to Aspley, €54 million to Fetumar, and €80 million to Jagapa.
The money then began a remarkably energetic journey.
It first entered the bank accounts of Aspley, Fetumar and Jagapa.
The next day, the entire €188 million moved out again, passing through accounts belonging to J&T Private Equity, J&T Private Investments, Blackwall Intertrade, Mormar Enterprises, Foxbury Management and finally Zelig Holdings.
It was a corporate relay, impressive chiefly for the speed of the handoffs. Nobody dropped the baton.
From Zelig, the penultimate stopping point, the €188 million left and went into a non-corporate bank account.
All €188 million ended up in Radovan Vítek's personal account at J&T Banka.
Two of the intermediate companies, Blackwall and Mormar, were controlled on paper by longtime Vítek associate Marek Galvas. Zelig, the final company before the money went to Vítek, was controlled by his lawyer, Tomáš Rybář.
The men listed as owners did not get the €188 million. Maybe they were paid something. Maybe they were not. But whatever they got, it did not come out of that pile.
The pile went home.
CPI PAID THE BILL
The consequences extended beyond ORCO's minority investors, whose investment had already been devastated.
Nukasso was not Vítek's personal company. It belonged to CPI Property Group. CPI provided the €188 million.
Vítek controlled CPI, but he did not own it outright. Other shareholders owned about 12 percent. Put it together. CPI — 12 percent of it owned by people other than Vítek — supplied €188 million to acquire 91 percent of ORCO.
The minority owners got stiffed on both ends of the deal.
WHAT THE FINE BOUGHT
The people on the wrong side of the deal lost almost everything.
Kingstown Capital, which managed American pension money, ultimately exited ORCO with a 94 percent loss.
But it came at a cost for Vítek, one that some might find laughingly small or, alternatively, surprisingly encouraging for those who might embark upon the same path that Vítek has trod.
For violating the takeover rule, Luxembourg imposed the maximum fine:
He paid it.
Luxembourg's market-abuse law permitted a larger sanction where misconduct produced financial gain:
Vítek's fine there was €1 million, making a total cost of €1,012,500.
Measured against the €188 million traced through the shell-company chain, or against the vastly larger gains alleged from the broader ORCO takeover operation, the €1.012 million sanction takes on the air of a modest transaction cost.
Vítek paid the €1 million fine.
He kept the rest.
If all this sounds too neat to be true, if a reader thinks this is pure fancy, the CSSF report describing the June 2016 transfers has been publicly available in the Southern District of New York since September 2019.
It appears in Case 1:19-cv-03170 as Document 64-1.
ARTVOICE AI ART
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