VZCZCXYZ0000
RR RUEHWEB

DE RUEHPG #0334/01 1661545
ZNR UUUUU ZZH
R 151545Z JUN 09
FM AMEMBASSY PRAGUE
TO SECSTATE WASHDC 1465

UNCLAS PRAGUE 000334 
 
SENSITIVE 
SIPDIS 
 
STATE FOR EB/IFD/OIA HGOETHERT, KBUTLER AND L/CID PPEARSALL 
 
E.O. 12958: N/A 
TAGS: CASC EINV KIDE OPIC PGOV EZ
SUBJECT: CZECH REPUBLIC 2009 REPORT ON INVESTMENT DISPUTES 
AND EXPROPRIATION CLAIMS 
 
REF: SECSTATE 49477 
 
¶1. (U) The United States Government is generally aware of 
many United States citizens of Czech descent who have 
outstanding claims against the Czech Government, but who were 
not U.S. citizens at the time their claims arose.  As noted 
in the introduction, the Act does not require a report on 
their claims.  The Department of State, however, provides 
appropriate assistance to all U.S. persons with claims 
against the Czech Republic. 
 
¶2. (U) In August 1999, the Czech President signed a law that 
permits Czech Americans who lost their Czech citizenship 
between February 1948 and March 1990 to reapply to become 
citizens without losing U.S. citizenship.  Additional 
legislation would be required for these people to obtain 
restitution of their former properties.  The government 
maintains that it has already returned most such properties 
to other Claimants, primarily relatives of those who 
emigrated.  The Department of State will continue to press 
the government to change this policy and provide for some 
form of equitable compensation. 
 
¶3. (U) In July 2000, the Czech President signed a law that 
will benefit some U.S. citizens of Czech-Jewish descent whose 
property was confiscated between September 1938 and May 1945 
in the Holocaust during German occupation.  Several thousand 
objects of art in the possession of the state are to be 
returned to their owners who, in most cases, still have to be 
identified.  A list of unclaimed items is maintained by the 
Ministry of Culture; the list is available on the Internet at 
www.restitution-art.cz.  The government initially set a 
December 2006 deadline for filing claims but Parliament has 
abolished the deadline.  The Czech government, however, 
reserves the right to prevent the exportation of restituted 
art works that it deems to constitute a part of the national 
heritage.  In 2000, a foundation was also established to 
provide partial compensation for real estate confiscated 
during the Holocaust to Holocaust victims (and their heirs) 
who filed timely claims, and whose property the state needed 
to retain or whose property was not in the state's 
possession.  This compensation mechanism, however, was 
concluded in 2005. 
 
¶4. (SBU) The United States Government is aware of one (1) 
claim of United States persons that may be outstanding 
against the GCR and one (1) claim that was resolved in the 
past year: 
 
a)  Claimant A 
 
b)  2001 
 
c)  Claimant A alleges that the GCR's Radio and Television 
Council arbitrarily and unlawfully refused to approve the 
transfer of a television license to its Luxembourg subsidiary 
as agreed with the license holder.  The Council's refusal 
allegedly unlawfully deprived the investor of its contractual 
rights, and devalued its investment in the television station 
operating company, estimated at USD 15 million.  In June 
2002, Claimant A ceased operations and filed for bankruptcy 
in the Czech Republic.  In February 2003, Claimant A filed a 
notice of arbitration under the Luxembourg-Czech Republic 
Bilateral Investment Treaty (BIT).  In the Notice of Dispute, 
Claimant A urged the GCR to discuss with Claimant A whether 
an amicable resolution to the dispute could be reached within 
six months following the date of the Notice of Dispute, as 
required by the BIT.  Settlement discussions between Claimant 
A and the GCR Ministry of Finance occurred throughout 2003 
and 2004, but the parties could not reach an amicable 
resolution.  In August 2005, Claimant A submitted its dispute 
to ad hoc arbitration in accordance with the BIT by filing a 
Notice of Arbitration.  In May 2006, Claimant A filed a 
Statement of Claim.  The GCR filed its Statement of Defense 
in September 2006.  In February 2007, the Tribunal rejected 
the GCR's request to dismiss the case based on lack of 
jurisdiction.  The GCR appealed the decision to the English 
courts.  In November 2007, the English High Court rejected 
the GCR,s challenge to jurisdiction and its request to 
appeal.  In December 2007, the GCR filed an arbitration 
rejoinder, followed by a round of rebuttals from each party 
and a hearing on the merits.  The Tribunal's final decision 
is anticipated during the next few months. 
 
a)  Claimant B 
 
b)  2005 
 
c)   Claimant B alleges that the majority stockholders in 
Kotva, a.s., a corporation for which the main asset was real 
estate where the Prague department store Kotva is located, 
sold the real estate with the intention of fraudulently 
transferring the proceeds out of Kotva, a.s. and depriving 
him, as minority stockholder, of the benefits.  During 
settlement negotiations, Claimant B demanded the majority 
stockholders purchase his shares, failing which, he would 
file civil lawsuits in the Czech Republic to prevent the 
transfer of the real estate.  Based on a complaint by the 
majority shareholders, prosecutors employed by the Czech 
government initiated a prosecution of Claimant B for 
extortion, expressly based on Claimant B's threat to file 
civil lawsuits to protect his rights.  Claimant B states that 
his ability to defend his property interests in the Czech 
Republic was compromised by the pending criminal charges 
brought against him by the Czech government.  In 2007, the 
jury in a civil suit in the United States found that Claimant 
B's primary motivation had not been to delay or disrupt the 
transaction.  Subsequently, Claimant B and the majority 
shareholders reached an amicable settlement and all claims 
and counter claims were dropped.  The majority shareholders 
also notified the Czech authorities that new information had 
arisen during the civil trial to convince them that Claimant 
B had not acted improperly and that they were withdrawing 
their complaint.  In 2008, the Czech prosecutor terminated 
the criminal investigation against claimant B. 
 
¶5. (SBU) Claimant A: European Media Ventures, S.A.; EMV was 
established in 2000 by Argus Capital, sponsored by the 
Prudential Insurance Company of America, whose major 
investors include Prudential and the state of Michigan; no 
privacy act waiver. 
 
¶6. (SBU) Claimant B: Professor Andrew Weiss; U.S. citizen; no 
privacy act waiver. 
Thompson-Jones