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Is the empire of the Šuška brothers sinking? The authorities have run out of patience and seized 145 million worth of property.

Is the empire of the Šuška brothers sinking? The authorities have run out of patience and seized 145 million worth of property.
photo: Archives/Is the empire of the Šuška brothers sinking? The authorities have run out of patience and seized 145 million worth of property.
25 / 11 / 2021

"You can run, but you can't hide". It seems as if this well-known saying has begun to apply to the company owned by Rudolf and Peter Šuška, brothers in the railroad business. Rail Target has learned from public sources that, after years of inaction, the tax authorities have taken an interest in the management of one of the key companies in the business empire and have decided to put a claim on it.

The poor financial condition and a series of likely profitable accounting actions did not go unnoticed by the authorities. Although the action lasted too long and may be related to last year's NCOZ raid at the headquarters of Ostrava Repair and Engineering Works, the Financial Directorate for the Moravian-Silesian Region was affected in mid-September this year. Two months ago, it announced a decision on the establishment of a claim on the business shares and assets of Ostravské opravny a strojírny a.s. (hereinafter referred to as OOS) for non-fulfillment of tax obligations for an estimated 145.6 million CZK.

The Financial Directorate may have been bothered by several factors that ultimately led it to take this step. Since OOS has not been communicating with our office for a long time, we started a detailed examination of the company's published accounts. This shows that the company has been reporting unchanged liabilities from issued bonds of CZK 2 billion since the 2012/2013 fiscal year. Its parent company, Rail Invest a.s., first reported liabilities from issued bonds of CZK 4.2 billion in 2013, to show the same item of CZK 3.9 billion in 2014 to 2018, and in the latest published financial statements, the amount of issued bonds is already about CZK 5.1 billion. In total, therefore, the entire Group has bond liabilities of approximately CZK 7.1 billion! Formally, this is a highly indebted business group, which, according to the available accounting data, is further increasing the volume of its bonds. The indebtedness of the most profitable part of the entire group, OOS, can and probably does pose a serious threat to the future of the Šušek brothers' business.  

It's not just the OOS that has problems. We have observed violations of the Accounting Act and the Registration Act at the parent company Rail Invest. First, the company did not send its 2019 financial records to the registry court until 4 May 2021, although it was obliged to send this document by 31 December 2020. Second, the 2019 financial statement dates were not audited by an auditor, although the company is legitimately obliged to have its financial statements audited by an independent auditor. Finally, the company also ignored its obligation to issue an annual report for the 2019 financial year. However, the misconduct does not end there.

The Rail Invest group also includes TSS Cargo, which has total assets of approximately CZK 4 billion. However, this company has never published an annual report. In addition, the last time an audit of the financial statement data was published was in 2016. It is therefore highly questionable whether audits have taken place at all. According to Section 21(2) of the Accountancy Act, the only exception to the obligation to audit financial statements is if the company is in bankruptcy or the bankruptcy has been annulled due to lack of debtor's assets or the company is undergoing reorganization according to a reorganization plan approved by the court in insolvency proceedings. Do any of these facts apply to the Šušek brothers' companies?

Rail Invest has established three more subsidiaries from 2020, including Wagon Legios a.s. A part of the assets of the company to be divided, Trastova strojní společnost, a.s. (TSS), has been transferred to it. The business of this company, where the only member of the supervisory board is Peter Šuška and the only member of the board of directors is Rudolf Šuška, also does not inspire confidence. There is no website and no mention in the media. In addition, the headquarters of the company with assets worth hundreds of millions of euros is located at the "fictitious" address of Prague 5 - Košíře, Musílkova 257/48, where, according to the Commercial Register, ten other companies are based. The property is owned by Radhostone Monasterio Management SE, which is also based there. The sole shareholder of this company is the entrepreneur Ing. Aladár Štefunko, resident in Trnava. If you expect Wagon Legios to be engaged in the railway business, you would be mistaken, as the business activity registered in the Commercial Register is the management of its property. This is in stark contrast to the fact that, according to the Public Register and the Collection of Deeds, the parent company Rail Invest has transferred a large amount of wagon repair equipment to its new company, ranging from welding machines to sheet metal benders to a crane cat. One can only wonder whether this is the purposeful disposal of assets.

According to trustworthy sources of our office, one of the companies of the Šušk brothers' empire, specifically TSS, is participating in the contract announced by the Railway Administration in April this year under the title "Motor universal trolleys including the on-board part of ETCS". The subject of the contract is the supply of 50 units of motor universal trolleys for the maintenance of the railway infrastructure with a predicted cost of 900 million. All tenderers for this tender must provide evidence of several qualifications and complete affidavits. In Annex 4 to the tender documents, they must certify that they are not a tenderer that:

(a) has tax arrears in the Czech Republic or the country of its registered office in respect of excise duty,

(b) is in arrears in the Czech Republic or the country of its registered office in respect of insurance premiums or public health insurance penalties,

(c) is in liquidation, has been the subject of a bankruptcy order, has been placed under receivership under another legal provision, or is in a similar situation under the law of the country of the participant's residence.

It is not clear whether the company can participate in the tender as it is not possible to confirm compliance with requirements a, b, c based on incomplete mandatory disclosures. What is certain while acknowledging the available documents, is that the company has had a deferred tax liability of half a billion for several years. This, of course, raises a hypothetical question of interpretation of the law, namely whether legislation should be amended so that companies owing the state tax cannot participate in public tenders. Alternatively, whether a distinction should be made between the owner's debt and the company's debt. Our magazine will continue to focus on this topic.

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