DOKUMENT: Audit Jiřího Čunka - Summary

Kroll has addressed three questions:

Could H&B Real have gained an advantage such as to provide a motive to reward Mr. Cunek?

Can Mr. Cunek provide convincing explanations as to the legitimate sources of his family’s wealth?

How coherent is the evidence that a bribe took place on 11 February 2002?

This report documents our findings to date.

H&B Real entered into a joint venture with the city of Vsetin in 1999 incorporated as Vsetinske Byty s.r.o to buy apartments from the bankrupt Zbrojovka armaments manufacturer and sell them to the public. H&B Real agreed to buy out the city’s stake on 23 October 2001. There are indications that H&B Real may have gained unfair advantages at several stages of the relationship.

H&B Real may have gained advantages in the manner of their selection as the city’s real estate partner, in the management of that housing stock, and/or in the pricing of the City’s stake.

The General Manager of COOP Therm, a utilities company, which also wanted to buy the properties alleges that Vsetin “played a dirty trick on us”. They were not invited to attend the city hall meeting which decided that the joint venture should be done with H&B Real, whereas the General Manager of H&B Real did address the meeting.

The independent specialist who valued the city’s stake in Vsetinske Byty at CZK 3,618,000 for sale to H&B Real made a number of unusual accounting decisions which undervalued the asset, for example the cash reserve of CZK 11,898,000 does not appear to have been included. Kroll’s research also suggests the value of the unsold apartments was significantly undervalued. The first valuation made on behalf of the police valued the asset at CZK 6,700,000 on the basis of the same figures.

The existence of such a large cash reserve also raises questions about the management of the joint venture as most of the money was intended to have been spent on repairs to the properties that were sold.

Some of the explanations given by Mr. Cunek to Kroll in regard to these issues have been inaccurate. On the other hand the success of the enterprise in and of itself provides no evidence that Mr. Cunek was enriched as a result and it should also be noted that the city generated revenue from virtually no city expenditure and secured discounted sales of apartments to residents.

Can Mr. Cunek provide convincing explanations as to the legitimate sources of his family’s wealth?

Mr. Cunek gave Kroll full access to his finances and those of his family. We have also received from him explanations of sources of income during the 1990s that mean our estimate of his wealth in 1998 is considerably higher than that previously estimated by the police. We have been able to partially validate his claims.

Mr. Cunek was engaged in a number of special tasks on behalf of his employers during the 1990s that allowed him to accumulate cash from legitimate sources. This means that Kroll finds it plausible, and not suspicious, that he was able to deposit CZK 1,000,000 in his account in 1998.

Kroll learned through interviews that Mr. Cunek’s business associations brought him additional income not included in the compensation summary provided to Kroll by the state appointed auditor. These contributed to a cash reserve that allowed him in December 2001 to pay a cash deposit of CZK 400,000 on his house. In August 2002 his wife deposited CZK 200,000 in the family account. In October 2002 a further deposit of CZK 170,000 in cash was made to the account.

A family member has told Kroll he allowed Mr. Cunek to borrow CZK 1,500,000 in seed capital for a planned business. That sum was not fully repaid until 2003. This alone would mean it is entirely possible that he could have had the CZK 497,000 which he deposited in the bank on 14 February 2002.

Kroll has seen Mr. Cunek’s accounts, as collected by the police, which show that the CZK 497,000 deposit he made into his account on 14 February 2002, was immediately prior to bank transfers to builders on 15 and 18 February 2002 totalling CZK 441,022.

The withdrawal of CZK 499,000 from H&B Real’s bank account at 1425 on 11 February 2002 by Ms. Hurtova, wife of the owner of H&B Real, is an important piece of evidence that supports allegations that an act of bribery occurred that day, as alleged by Ms. Urbanova. However Kroll has seen the computer record of that same amount being deposited at H&B Real on the same day, as obtained by the police, and we have no reason to doubt its validity. This is independent evidence that the money taken from the bank by Ms. Hurtova is not the origin of the money deposited by Mr. Cunek three days later.

Ms. Urbanova claimed that Ms. Hurtova gave Mr. Cunek the money in the morning, which is contradicted by the timing of Ms. Hurtova’s cash withdrawal.

Kroll also finds that the delay in making the allegation by Ms. Urbanova, and the fact she had previously made an allegation of sexual harrassment against Mr. Cunek, undermines her reliability as a witness and the credibility of her claims.

The witnesses who claim to have been told about the bribe by Ms. Urbanova are her former boyfriend and a close friend, whose intimacy with her also undermines their credibility. Also, there is not one witness aside from Urbanova who saw Hurtova at the city hall on that day.

There are contradictions in the evidence available as to the timing of the whereabouts of Mr. Cunek on that day. However these contradictions do not support the claim that a bribe took place.