“Prison is very, very hard,” a rumpled Viktor Ko�en� told the daily Mlad� fronta Dnes from the Fox Hill Prison in Nassau, the Bahamas.
The Prague-born businessman, 42, is currently in the prison’s maximum-security unit and will stay there, unless he agrees voluntarily to return to the United States, where he faces charges of bribing Azerbaijani officials. The Bahamian court refused to grant him bail; with his pilot’s license and passports from Ireland and Venezuela, and possibly several others, he represents a flight risk. An extradition trial is scheduled for later this year.
“A man has to take it like a man,” he said phlegmatically.
Fifteen years ago, Czechs knew Viktor Ko�en� as the fast-talking, larger-than-life force behind the Harvard Funds. He bought up millions of crowns in shares in then-Czechoslovakia’s “voucher privatization” from people unfamiliar with the concept, promising massive returns for little investment � and then disappeared.
Ko�en� has made plenty of enemies in his time, but his charm and sheer brazenness in achieving his goals can’t be denied.
Today, Ko�en� casts a dubious shadow. In addition to charges of bribery and money laundering in Azerbaijan, in New York state prosecutors charged him with stealing $182 million (Kc 4.47 billion/� 150 million) from various investment funds in 2003, while in 2001 the Czech authorities charged him with stripping companies of $316 million in assets.
In the early days, the media labeled Viktor Ko�en� “the Pirate of Prague.” Now in prison, with a bucket for a toilet, Ko�en� has earned another name: the bouncing Czech.
Serial scams
Ko�en� seems to have made a career out of audacious behavior. Fortune magazine tells how the financier’s family fled to Germany when he was 16, and while living there he attended a lecture by American physics professor Marlan Scully. Ko�en� told the professor he was a prodigy who had escaped the Communist East. Scully was impressed and invited Ko�en� to the United States to study.
Not long afterward Ko�en� is said to have showed up on Scully’s doorstep, looking for a place to stay and a $100 loan. Scully quickly realized he was being hustled but helped the teenager anyway, persuading a colleague to put him up. He eventually ran off with the man’s wife, the magazine reported.
Ko�en�’s deceptions grew in scale. After completing an economics degree at Harvard University and gaining work experience at a London bank, he returned to his country of birth in the early ’90s. There, he launched the Harvard Funds. Voucher privatization gave Czechs the opportunity to buy, for a token sum, vouchers to be used to buy shares in new companies. Ko�en� claimed that if customers entrusted their vouchers to him, he would pay back 10 times their value after a year. His clients, of course, never saw those returns.
The press began to ask how he had access to confidential investment information, and the case against him gathered ground. He fled the country for good in 1994, taking up residence in the Bahamas, and has lived there ever since.
Charm offensive
Despite everything, many are impressed by Ko�en�’s charm. “He exudes personality and friendship,” said Jack McGrath, a fellow resident of the upscale Lyford Cay, Bahamas, development where Ko�en� settled. McGrath told Fortune that Ko�en� said he was using his profits to buy mammogram machines for Czech hospitals. “I thought this guy was wonderful. I thought he was Robin Hood.”
Others weren’t so impressed. “I met him once,” said one businessman who spoke on condition of anonymity. “I thought he was a sleazy, name-dropping hustler.”
Ko�en�’s record limited his options in the West; instead, he tried his luck in post-Soviet Azerbaijan.
Ko�en� learned about a voucher privatization program there and set up shop. For $6.3 million, he obtained 25 percent of the 7.5 million vouchers issued by the Azeri government in 1997 for privatization of state property. Then he raised $450 million from an American investment group, selling them on the idea that the Azeri government would soon be privatizing its oil company, SOCAR.
“The whole thing smelled so bad,” said a Baku-based businessman, recalling Ko�en�’s Baku days. In his opinion, it was illogical to believe that Azerbaijan would sell off its most valuable asset. “I believe he saw the voucher [privatization] and saw possibilities that were similar in some respects to what he already pulled off.”
In the meantime, estimates of fortunes to be earned from oil in the Caspian Sea diminished radically. An estimated 200 billion barrels of crude shrank to 18 billion to 30 billion barrels today, according to the U.S. Energy Information Administration.
In the end, Azerbaijan decided SOCAR should remain state-owned. Ko�en�, claiming innocence, filed suit in a New York court against then-President Heydar Aliyev, his son, current president Ilham Aliyev, and other Azerbaijani officials, claiming at least $300 million in damages (see �Ko�en� to face trial for bribery, money laundering,’ CBW, Oct. 10�16, 2005).
It’s unclear how things will play out for Ko�en� in the current extradition process in the Bahamas. The Czech Republic has also been seeking his extradition, albeit unsuccessfully; unlike the United States, it has no extradition treaty with the Bahamas.
But will investors ever see any money back? Doubtful. The courts froze Ko�en�’s property earlier so that he could cover possible debts if convicted. Ko�en� claims he’s lost everything in divorce proceedings following his three marriages.
With contribution from Valentina Huber.
By: David Creighton
http://cbw.cz/phprs/2005103112.html
