Prague, March 21 (CTK) – A Prague court imposed on Wednesday four-year prison sentences on two former top managers of the state Cepro fuel distributor, Tomas Kadlec and Alexandr Houska, for their disadvantageous deals amounting to breach of trust, and ordered them to jointly cover the damage of 260 million crowns.

Houska must pay an additional 1.4 million on his own, the court said.

The verdict has not yet taken effect. Kadlec, 55, and Houska, 52, who have pleaded not guilty since the beginning, are expected to appeal it.

State attorney Tomas Minx said Kadlec, Cepro’s former general director, and Houska, former sales director, transferred money out of Cepro in favour of the Czech Energospace company in 2005. They sold fuels to the company cheaply and re-bought them expensively. Czech Energospace had no history or assets at the time.

This aspect was noted by Prague 1 district court judge Ivana Ticha during the court proceedings on Wednesday.

“Czech Energospace was established shortly before, this was its first fuels transaction. It had a low capital and completely lacked experience,” Ticha said.

She said Kadlec and Houska did not act as responsible [Cepro] managers in dealing with Czech Energospace.

“A good manager should be loyal to his company and should seek to maximise its profit. It had absolutely no logic to sell so large a volume of fuels to an entity that was a newcomer to the market and that evidently failed to fulfil its previous first contract with Cepro,” Ticha said.

Houska and Kadlec, who in the past headed the Czech Security Office (NBU) and also worked with the counter-intelligence service (BIS), deny any wrongdoing on their part.

They say by the now disputed transactions they were fulfilling a strategic task ensuing from the Czech EU entry – updating the country’s fuel provisions.

They also said Cepro was in a difficult situation at the time as it faced “a criminal pressure” from controversial businessman Radovan Krejcir, who, according to the investigators, tried to illegally siphon off money from the company.

However, Ticha said it was only Krejcir’s attack on Cepro in November 2004 and pending audits which made Kadlec and Houska develop a “zealous activity” in order to get Cepro’s previous advance payment of one million dollars back from Czech Energospace.

Ticha said no other than prison sentence could be imposed in view of the multiplicity of criminal steps, their sophisticated character, applied methods, the height of the damage and Cepro’s strategic importance for the Czech Republic.

Kadlec and Houska were previously repeatedly acquitted by judge Helena Kralova, from whom, however, an upper-level court finally took the case away for disrespecting its instructions.

Kralova also halted the prosecution Kadlec and Houska faced for similar activities from 2003-2004, which became statute-barred.

Minx, the state attorney, demanded a six-year prison sentence for each Kadlec and Houska and their ban from companies’ management for five years at least.

As far as the motive of their deed is concerned, there was probably a certain financial link between the parties involved, which, however, has not been uncovered, Minx said.

In separated criminal proceedings, Kadlec faces accusations in connection with a financial sum that arrived in his Swiss account at the time.