Czech real estate billionaire Radovan Vítek will ringfence more than a half a billion euros in assets after a Cypriot court ruling in favour of two convicted Czech fraudsters, who claim they were themselves swindled out of their secret investment in his Frankfurt-listed CPI Property Group (CPIPG).

“Senior executives of CPIPG […] are preparing plans to segregate €537mn of assets following a freezing order from a Cypriot court,” the Financial Times (FT) reported on November 25.

The FT also wrote that CPIPG “believes it can easily pledge unencumbered liquid assets from its €20bn portfolio to meet the court order’s requirements […] and will not have to pledge cash,” referring to its sources.

The Cypriot court ruled in favour of Czechs Marek Čmejla and Jiří Diviš, who claim that Vítek cheated them after they secretly put money into boosting CPIPG expansion in the early 2010s. CPIPG is now one of the largest real estate groups in Central Europe, with assets in all V4 countries and Germany.

Vítek, who has a controversial reputation for dealing aggressively with business rivals and partners,  denies any agreement was in place and is appealing the case.

“Although CPIPG executives dispute the allegations, the group has been forced to develop legal contingency plans to comply with a notice expected from the court in Cyprus,” the FT wrote, referring to people familiar with the matter.  

The pair's lawyer, however, said his clients expected the disputed money to be held in segregated bank accounts, the FT reported.

The Cypriot ruling follows the failure of  Čmejla and Diviš  to persuade courts in Czechia, Luxembourg, and the USA.

Čmejla and Diviš were themselves convicted in a Czech privatisation era fraud related to the Mostecká uhelná společnost (MUS) coal company in a 2013 Swiss court ruling. In 2023, a Prague court handed prison terms to MUS managers in what is the largest case from the murky 1990s privatisation era.

The group has also faced accusations by hedge fund Muddy Waters, that accused it of inflating the value of its assets, hiding related party transactions, and misleading investors. CPIPG commissioned a White & Case independent review, which stated in September that Muddy Waters’s accusations were unfounded.

CIPPG's ratings were downgraded by S&P Global as well as by Moody's earlier this year.  

“CPIPG’s strategy is unaffected by the downgrades. Our group owns the largest real estate platform in the CEE regions, with rental income continuing to rise and occupancy at high levels,” CPIG said in a statement issued by Moody’s downgrade in July. It added that CPI PG signed a framework agreement with subsidiary Immofinanz “to review further strategies to integrate and optimise the groups’ structure”.