The fortunes of controversial former Czech entrepreneur Viktor Kozeny, dubbed the "Pirate of Prague" by Fortune magazine in 1996, looked set to take a turn for the worse last week as the Manhattan, the New York City district attorney's office announced a 17-count grand jury indictment against him.

Kozeny, who now holds an Irish passport, is charged with grand larceny for allegedly defrauding clients of New York hedge-fund company Omega Advisors Inc. of $182 million (Kc 4.97 billion) in his dealings in Azerbaijan in 1998. If extradited from his home in Lyford Cay in the Bahamas and convicted, Kozeny could face up to 25 years in prison.

Kozeny was also indicted in the country of his birth in July this year for alleged fraud related to his infamous Harvard Funds. Some 240,000 former clients of Harvard are still waiting for Kc 11 billion ($403 million) promised them by Kozeny.

While his U.S. indictment was largely greeted with delight in the Czech Republic last week, Kozeny rejected the charge of fraud, saying Omega's clients got the Azeri privatization coupons they asked him to obtain for them.

Kozeny allegedly persuaded several top managers at Omega, including former U.S. Senator George Mitchell, that through buying privatization coupons they could take over Azerbaijan's state-owned oil company, Socar. Kozeny has claimed that the deal failed because of unsuccessful attempts to bribe Azeri officials. The admission has led to the indictment of one of his lawyers, Hans Bodmer, in the U.S. where bribing foreign officials is a criminal offense.

The charges levied against Kozeny by Omega's clients—including an employee retirement fund of Goldman Sachs and New York's Columbia University—are that he used the company's money to buy out his own coupon privatization vouchers and for personal expenses, such as buying furnishings for his homes in Aspen, Colo., and the Bahamas. His assets have apparently been frozen, and civil cases in Denver, London, the Bahamas and the British Virgin Islands have been put on hold pending the outcome of the U.S. criminal case against him.

The Wall Street Journal on Friday quoted John Moscow of the DA's office in New York as saying Kozeny will either have to surrender or face extradition, saying that for the Irish former Czech "traveling will be difficult after this."

The consensus among lawyers in Prague at the end of last week was that the U.S. authorities have an infinitely greater chance of bringing Kozeny to justice than their Czech counterparts.

(PBJ 06.x.03)