Czech audit ordered into sale of CEZ subsidiary

PRAGUE: The Czech finance minister has ordered majority state-owned utility CEZ to carry out an external audit of the 2008 sale of a subsidiary to Hungarian oil and gas group MOL, the ministry said on Friday.

The request by the ministry, which manages the state's 70 percent share in CEZ, central Europe's largest listed company, follows media reports which raised questions over the deal to sell I&C Energo.

Finance Minister Miroslav Kalousek had asked chief executive and board chairman Daniel Benes to set up an external audit to determine whether the sale had been in the best interest of the company.

Kalousek also asked CEZ's supervisory board chairman Martin Roman, who was the utility's chief executive at the time of the deal, to examine the sale's suitability and effectiveness and the action of the management.

"In reaction to publicly stated doubts, the minister decided to take this step," ministry spokesman Ondrej Jakob said, adding that the ministry wanted the report as soon as possible.

A CEZ spokeswoman declined to comment on the audit.

CEZ sold I&C Energo, a service supplier to power plants, in 2008 following a deal in which CEZ took a 7 percent stake in MOL. The Hungarian group then sold I&C Energo in November 2012 to Hungarian group Olajterv, whose Dutch-based subsidiary Yellowraazd is now the sole owner.

Czech media had questioned both the initial sale of I&C Energo at that time and its later transfer to Yellowraazd.

Responding to the questions over the deal, former chief executive Roman told Reuters in a text message that I&C Energo was sold along with nearly 30 other firms as part of streamlining efforts.

"We got a great offer from MOL so we sold the company to them," he said, adding that he had not had any personal interest in the deal. "How (MOL) legally structured the transaction is their thing," he said.

MOL said it had bought I&C Energo at a time when it wanted to expand into power generation, but it suspended investment into projects last year.

Copyright Reuters, 2013