New charges have been brought by Czech prosecutors against the former head of the Komercni Banka (KB) department for funding bank operations.

Jirina Kaplanova has been charged, along with four other former KB employees, with fraud in connection with deals with BCL, an Austrian trading company controlled by businessman Barak Alon, which caused multimillion dollar losses for the bank.

Ghost deals

The charges centre on a series of alleged 'ghost deals' in which the value of letters of credit (L/Cs) exceeded the value of goods shipped, thus enabling the fraudsters to siphon off cash.

Business tycoon Alon is alleged to have arranged ghost wheat deals with a Ukrainian firm. KB opened the L/Cs for these transactions. There was no grain delivered under the deals, but Alon and his accomplices ultimately received the proceeds from the L/Cs, to the value of up to US$250 million.

Allegations

In this case the state prosecutor alleges that the defendants deceived members of the KB board by submitting distorted information on the basis of which the board approved credit limits for opening L/Cs for BCL.

If they are found guilty, the defendants could face jail terms of up to 12 years.

Related cases

In December a Czech court acquitted nine former executives of KB charged with violating banking obligations in connection with these suspicious deals. (DC World News, 9 December 2005).

Kaplanova is already standing trial in Prague, along with six other former KB executives, in connection with allegedly fraudulent loans provided to companies owned by former Bohemian and Moravian Football Association head Frantisek Chvalovsky. The accused in this case face between 5 and 12 years in prison if found guilty.

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