Final Word from Wednesday, September 21, 2011

ČEZ's share price has fallen by 8.7% since the announcement of Martin Roman'sdeparture as CEO, wiping out Kč 36bn in market capitalization. How much of this is due to investor fears that ČEZ will be the Czech Enron isn't yet clear. Shareholder fraud is difficult to prove in the CR, esp. when no one in any official position wants to do it. But a Yankee bond issued by ČEZ in 1997 gave jurisdiction to the U.S. SEC and the Dept. of Justice. As CEO, Martin Roman signed affidavits attesting that ČEZ's 20-F submissions were true and accurate, yet the 20-F form itself omits any mention of related-party transactions with Škoda Holding. If found in violation, ČEZ could be fined millions of dollars and Roman could potentially face up to 20 years in prison. He might be saved by the statute of limitations (the bond was deregistered on June 6, 2006), but that's something for the prosecutors and lawyers to work out. [Securities and Exchange Commission conflict of interest ]

Glossary of difficult words

Yankee bond - a dollar-denominated bond issued by a non-U.S. entity;

market capitalization - the total value of all of a company’s outstanding shares;

SEC - Securities and Exchange Commission;

affidavit - a written statement confirmed by oath or affirmation;

to attest - to certify; to declare that something exists or is the case;

statute of limitations - a statute prescribing a period of limitation for the bringing of certain kinds of legal action.

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