On a chilly June day in 2016, as Britain reeled from the outcome of the Brexit vote, a private jet took to the skies from RAF Northolt, charting a course for Moscow.
On board the 37-seat Embraer ERJ was billionaire Daniel Křetínský, nicknamed the “Czech Sphinx” for his low public profile and inscrutable approach to trade negotiations.
Eight years later, Křetínský is on the verge of closing a deal that would be a momentous triumph even for him: the £3.6bn acquisition of Royal Mail’s parent company, International Distribution Services (IDS).
The only thing that could stop the Czech businessman from acquiring Britain’s 508-year-old postal service would be the intervention of the UK government, which is verifying whether the transaction poses a risk to national security interests.
Křetínský publicly condemned the invasion of Russia in Ukraine and according to reports, the British government intends to approve the acquisition of Royal Mail.
If this happens, ministers can expect to face further scrutiny of their decision.
Today, the Guardian can reveal further details of Křetínský’s dealings in Russiaas well as a series of regulatory disputes and an acquisition saga that could set a worrying precedent for Royal Mail.
Meeting in Moscow
After landing at Moscow’s Vnukovo Airport on the evening of June 29, 2016, Kretinsky and a small group of colleagues were whisked off in a chauffeured Mercedes for talks with Alexei Miller, a close ally of Vladimir Putin and head of Russia’s giant state-owned gas company Gazprom.
Leaked documents obtained by the Organized Crime and Corruption Reporting Project and reviewed by the Guardian suggest the summit was approved at the highest level of Russian politics.
Details of the arrangements for Křetínský’s trip were revealed by leaked emails from the office of Alexander Babakov, a senior member of Russia’s parliament, the Duma, and a major investor in Crimea.
Russia invaded and annexed the territory two years earlier in an act of aggression that, despite international condemnation, proved to be only the beginning of Putin’s territorial ambitions in Ukraine.
Babakov was one of those placed under the sanctions of Great Britain and the EU after the seizure of the territory by Russia.
There is no suggestion that Babakov attended the meeting or derived any benefit from Kretinsky’s presence in Moscow.
Photo: Reuters
But the meeting had a clear geopolitical dimension: Russia was proposing the construction of a new pipeline, Nordstream II, which would carry gas directly to Germany via the Baltic Sea. bypassing Ukraine.
That would be bad news for SPP Infrastructure, the company that owns the rival Eustream pipeline pumping Russian gas to Europe through Slovakia.
Since 2013 SPP Infrastructure is jointly owned by the Slovak state, which has a 51% stake, and Křetínský’s EPH, which has 49%.
The company has a long-term deal with Gazprom, inherited from the pipeline’s previous owners, under which it receives a fee from the Russian company for pumping Putin’s gas into Europe. The contract, which is fully legal under EU law, runs until 2028. It would be illegal for Eustream to take unilateral decisions to prevent Russian gas from passing through its pipes.
Annual reports for Eustream show that the deal has been extremely profitable, with SPP having paid €1.56bn (£1.29bn) in dividends to its shareholders since 2016. this way. EPH, based on its 49% stake, was entitled to around €750 million.
But in 2016 that flow of gas – and money – was threatened.
Such was the risk that Slovak Prime Minister Robert Fico flew in for talks with Putin two months later, reportedly bringing Kretynsky with him for the Sphinx’s second trip to Moscow in two months.
A spokesman for Křetínský confirmed that he had been involved in “intense discussions” over concerns – which he said were shared by the US government – about the energy security of Slovakia and Ukraine if the new pipeline was built.
The spokesman added that Eustream’s agreement with Gazprom is legally binding and predates EPH’s ownership of a stake in the pipeline.
“Before 2022 Russian gas has been a long-standing and accepted part of the energy mix of Europe and the UK, where all European countries were heavily dependent on gas imports from Russia,” the spokesman said.
“This of course changed after the invasion of Ukraine in 2022. and since then Eustream has done everything in its power to help European countries reduce their dependence on Russian gas.”
However, Kretinsky’s relationship with Russia is believed to have given the UK government pause over the proposed acquisition of IDS. In August, the Cabinet took the relatively rare decision to “subpoena” a transaction between two private businesses to examine whether it could be harmful to national security.
A 45-day deadline for the review expired in September, indicating that the government has extended its investigations.
The business secretary, Jonathan Reynolds, was not involved in the review but sought to allay concerns raised at a select committee hearing by the Liberal Democrat MP Joshua Reynolds (no relation) last month. Kretinsky was a legitimate businessman and his ties to Russia were not a cause for concern, the minister said. He indicated that in 2022 the previous government was happy for Kretinski to build up his stake in IDS after such a hiatus.
The Cabinet Office does not comment on such reviews, and it is unclear whether officials scrutinized other aspects of Kretinski’s business dealings, let alone those of his business partner Patrik Tkáč.
Tkáč has an even lower profile than Křetínský, but they have been close business partners for decades.
They already are co-investors in West Ham United football club. The majority of holding companies within Křetínský’s EP Group empire are 44% owned by Tkáč and investors “connected” to his J&T investment group. If the Royal Mail deal goes through, Tkáč is expected to hold the same stake in the company.
In June, The Guardian revealed that Tkáč’s J&T Banka is embroiled in a lawsuit over a $6m (£4.7m) loan it made to former Turks and Caicos Prime Minister Michael Misik, who is facing corruption prosecutions.
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At the time, J&T denied any wrongdoing to the Guardian.
There were also questions about compliance with the regulatory requirements within the collective efforts of Křetínský and Tkáč.
A hiccup in 2012 saw EPH – a coal and gas plant owner in which Křetínský is a majority shareholder but Tkáč also holds a stake – fined €2.5m by EU regulators for allegedly obstructing a raid by competition officials by spoofing emails.
“This decision sends a clear message to all companies that [European] The Commission will not tolerate actions that could undermine the integrity and effectiveness of our investigations by manipulating such information during an investigation,” then-EU competition commissioner Joaquin Almunia said in a statement.
Nor was this EPH’s only run-in with regulators.
He also owns a British company, EP SHB Ltd fined £23.63m last year after regulator Ofgem concluded it had rigged the energy market.
Fulfilling promises
Křetínský has indicated he wants to modernize Royal Mail, raising fears of job losses.
That looks even more possible after IDS warned last month that Labour’s decision to raise employers’ national insurance contributions would cost the loss-making company £124m a year.
Some speculate that Křetínský may merge IDS with the Dutch postal company PostNL, in which he holds a majority stake.
The specter of spending cuts also looms large.
This year, Křetínský’s EP Global Commerce was part of a consortium that completed the deal for troubled French supermarket Casino.
According to reports in France, the consortium indicated in 2023 that it has no plans to cut staff and that there are no agreements to sell stores.
But over time, French media reported, Křetínský successfully got Casino to sell larger stores to competitors, despite union protests. In April 2024, Casino announced plans to cut up to 3,267 jobs, a decision described as a “social disaster” by a union representative.
A spokesman for Křetínský did not respond to questions about this.
Elsewhere in France, Kretinsky faced opposition to another potential deal, again due to concerns about his intentions for the target company.
Křetínský, through his business EP Equity Investment, is bidding for a division of French IT company Atos, a deal that would have seen him take a 7.5% stake in the entire company.
Bondholders reportedly opposed Křetínský’s proposal, fearing he would break up Atos. Politicians have also raised national security concerns about a deal that would introduce foreign ownership of a company that plays a key role in the country’s nuclear weapons program. The resistance was enough to prevent any chance of a deal.
To date, the UK government has yet to step in to acquire Royal Mail, and all indications are that it will not.
If the transaction goes through, Royal Mail will become the second major asset in the hands of a leading Czech investor following inquiries about their history in Russia after billionaire Karel Komarek won his National Lottery license bid.
Like Křetínský, Komárek also counted Gazprom among its business partners and even took huge loans from state-owned Russian banks while the national lottery process is underway.
Komarek publicly condemned the invasion of Ukraine, apparently to the satisfaction of Westminster.
In a statement, a spokesman for Křetínský emphasized that he had done the same, describing the invasion as “against the very foundations of European civilization.”
All signs point to the Czech sphinx having solved its latest mystery.
