ČSOB fined CZK 30 million in Czech credit union case, no charges

The Czech National Bank has fined ČSOB 30 million crowns — so far the only notable punishment in the saga of the Entrepreneurs’ Credit Union, which political disputes dubbed the “Fiala credit union”. The police inquiry has dragged on for several years but, according to a journalistic investigation, no one has been charged to this day.

In April 2024 ANO leader Andrej Babiš called the credit union “a laundromat for the dirty money of ODS politicians”. The then opposition, now the ruling coalition, also spoke of “Palermo” and of “the interests of the Czech rabble”. The then prime minister and ODS chairman Petr Fiala also held an account there. The Czech National Bank later did find violations of anti-money-laundering rules, revoked the credit union’s licence, and it went into liquidation.

The investigation is at a standstill

A former member of the credit union, Pavel Wurst, a cousin of its central figure Kamil Bahbouh, filed a criminal complaint back in 2021, accusing Bahbouh and his circle of fraud and other criminal activity. Last week Wurst received a letter from the supervising Municipal Public Prosecutor’s Office in Prague: according to it, the Prague economic crime police are still investigating one branch of the case and, in the prosecutors’ view, already have “enough evidence to reach a final decision”. But Wurst has heard such assurances before: “They told me the same thing in January last year, and nothing moved.”

According to journalists, the National Organised Crime Agency is also still looking into the credit union. There is no concrete result there either: agency spokesman Jaroslav Ibehej said the unit generally does not disclose whether it is or is not dealing with a particular matter. Police spokesman Jakub Vinčálek spoke in similar terms.

Bahbouh believes no crime was committed at the credit union: “In the end these verdicts show that it was an inflated bubble.” According to him, the police have never once questioned him directly in the credit union case. All they wanted from him was testimony in an indirectly related case concerning arms dealers and money intended for buying ammunition for Ukraine.

Why ČSOB was fined

The fine is linked primarily to how the bank monitored the credit union, a source at the central bank confirmed. ČSOB itself, citing banking secrecy, neither confirmed nor denied it. The anonymised decision of the Czech National Bank describes a client that the bank itself had classed as problematic, unacceptable or very high-risk. Even so, in the regulator’s view, the bank did not sufficiently establish the purpose and nature of its transactions or whether they matched the client’s profile.

Between November 2022 and November 2023 alone, this client made 58 cash withdrawals, taking out a total of 136.4 million crowns, 3.75 million euros and 45 thousand dollars. The regulator also reproached the bank for failing to separate the client’s own transactions from the payment services it provided to its own customers. As journalists note, the description strikingly matches the credit union.

ČSOB stressed that the shortcomings lay in older control processes that have since been fixed. “The investigation found no involvement of ČSOB in money laundering,” said bank spokesman Petr Milata. According to him, no one suffered harm and the conduct was not intentional; on some specific issues the bank interpreted the rules differently from the regulator. It paid the fine as early as July.

Bahbouh confirmed that the credit union did have an account at ČSOB but, he says, that bank was not its main one: the credit union worked with about eight other financial institutions, and if anyone made a mistake it was bank employees, not the credit union. Wurst describes it differently: he says the credit union’s central account was precisely at ČSOB and that he repeatedly saw Bahbouh go there for cash. If the credit union worked the same way with other banks, the question arises whether the regulator also examined them — and whether further fines might follow. The Czech National Bank declines to comment, citing statutory supervisory confidentiality.

Hundreds of millions in cash

The central bank’s inspection of the credit union revealed huge volumes of cash transactions: from the start of 2020 to August 2023, clients withdrew roughly 669 million crowns in cash, and deposits were also in the hundreds of millions. The regulator pointed out that for many of these transactions, in which the same circle of clients kept turning up, the purpose and circumstances were not sufficiently established. Some individual withdrawals reached tens of millions of crowns or hundreds of thousands of euros.

Bahbouh does not consider such volumes anything extraordinary and claims the credit union operated like other financial institutions. The credit union’s founder, Příbram lawyer Antonín Janák, said earlier: “You can walk into a bank with ten million too. If they took that kind of money at the credit union, they have the right to, since they have the same authorisation.”

One more detail concerns the possible interests of the civilian intelligence service. According to earlier reports, the secret service cooperated, including financially, with a project of the company CyberGym Europe, which built a cybersecurity training centre near Prague. Bahbouh sat on that company’s board, and the company was itself a member of the credit union. The Office for Foreign Relations and Information denies that it influences the police investigation. Bahbouh categorically rejects any financial links between the credit union and the intelligence services.

Around Prague, based on reporting by seznamzpravy.cz