Sumichrast attracts deals like a rock star draws fans. He gets his camera repaired and the shopkeeper asks him to finance his dream–Czechoslovakia’s first “same day” photo processing service. Czechoslovakian Airlines hired him and a major I international investment bank, Credit I Suisse First Boston, to reorganize the national airline. A deputy prime minister phones one morning and invites him to buy a big state-owned hotel. “I’ve got 600 promising projects here, most of them joint ventures,” Sumichrast says, flipping through a fat notebook of contacts. They include an automobile factory, a jet-engine plant, hotel- and home-construction projects and the conversion of two dozen castles into tourist attractions. He even has an exclusive license to bring Disneyland to the Danube. Sound like an entrepreneur’s paradise? Not to Sumichrast. “It’s a pain!” he exclaims, shaking his head in despair. “You can’t believe the frustrations of doing business here.”
Frustration–that’s the sorry reality of the East-bloc gold rush. Businessmen are flocking: Germans, Austrians, Japanese, Americans. “You run across foreign investors in even the tiniest provincial towns,” says Sumichrast, who has spent most of the last five months scouring Czechoslovakia for opportunities. But most of his competitors come only to look; few stay to do business. “It’s because . . . to do anything here is a nightmare,” Sumichrast explains. He tells how it took four months to set up his company. (“The office that registers new ventures is only open from noon to 2 p.m., two days a week.”) It took a month to open a foreign bank account. (“The papers had to be signed by the Finance minister himself.”) It took 22 days to deposit a check. (Czechbankers had never heard of American Express Shearson Lehman.) “Czechoslovakia is suffocating in bureaucracy and backwardness,” says Sumichrast. “The revolution changed nothing.”
Searching out bargains amid the hassles is not for the weak willed or unadventurous, as a few days with Sumichrast attest:
Day One. Sumichrast is eying his first industrial acquisition. He sets out at dawn for central Slovakia, Czechoslovakia’s easternmost republic, and tours half a dozen glass factories. He finds several that could be merged into a single company. “They sell this stuff for peanuts,” he says, holding a leaded cut-crystal vase up to the light. The price: $60. In Vienna, Sumichrast assures the manager, it would fetch at least $500. He decides to call his New York partners and make a bid. But he is mindful of the problems. Working conditions are terrible. Equipment is obsolete. He will have to build a new plant, and he expects wages to double or triple within a year. Even so, he says, “We can sell the entire production in the U.S. and make a profit . . . I think.”
Bankruptcy worries Day Two. Bratislava, capital of the Slovak Republic. A duly designated “adviser to the government,” Sumichrast sits in as the Slovak cabinet reviews a list of crises: a fire at an oil refinery, a strike at the state-owned Bratislava Automobile Factory. Sumichrast perks up at this. Renault, Ford, Honda and Fiat are all negotiating for chunks of the giant manufacturer, Slovakia’s largest employer. People worry that it will go bankrupt or be broken up, and that jobs will be lost unless the government quickly restructures the enterprise. But the ministers dither. Elections are just a week away. Leave the problems to the next government, they counsel. “It will be winter before the government even thinks about how to save this plant,” grouses Sumichrast.
An aide to the Slovak prime minister, Milan Cic, pulls Sumichrast aside for a whispered consultation. Then it’s off to Bratislava’s Old Town, where Sumichrast is converting a derelict Renaissance building into luxury offices for foreigners, mostly from nearby Vienna. He has a 32-year lease from the city and expects the renovation to cost $750,000. How much profit, if any, will he make? That depends on whether town authorities charge him 40 crowns (about $1.25) a square meter for use of the land, as he originally negotiated, or the 400 crowns that Prague recently figured its state owned lands were worth. “It’s a gamble,” Sumichrast concedes with a shrug.
He has big plans for the building, even so. Standing in the massive courtyard lined with graceful balconies and arcades, he imagines a dozen shops, boutiques, even an American-style atrium mall. But Sumichrast is not encouraged by a meeting with his architects later in the day. Having always lived in Bratislava, they don’t have a clue to what Sumichrast has in mind. An atrium? What’s that? An hour later Sumichrast is back on the phone to the States. “Send me someone from New York,” he commands. “We’ve got to have someone who knows retail.”
Day Three. A 7 a.m. breakfast with Sumichrast’s lawyer, Tibor Meyer. He has spent four months registering Sumichrast’s business, a task that in America might take a day. The legal expense might bankrupt a start-up in the West. Here, at $4 an hour, it’s merely a hassle. Sumichrast looks over a two-page, finely spaced contract required to open yet another bank account. “It took two weeks just to get permission to get this stamp,” he says, pointing to a blurry seal marking his signature. There are five other signatures: the minister of Justice, the minister of Finance, the minister of State Planning, the minister of Construction and the minister of Statistics. Why statistics? “Why any of them?” Sumichrast snaps. Meyer blandly explains the delays. “You have to see every official in person,” he says. And you can’t phone ahead for an appointment. The phones don’t work or no one answers or there is no phone. “I got an appointment once,” Meyer says wistfully. “But when I arrived, early, the man had already left.”
Ski resort Sumichrast dashes off for a flurry of meetings. At the Ministry of Trade and Tourism, he hurriedly makes arrangements for a delegation of New Hampshire developers interested in opening a ski resort in the Tatra Mountains. “We need a helicopter,” he says, but the ministry can’t afford the $1,000 daily fee. Sumichrast sighs, figuring he will have to foot the bill. After several quick phone calls to Bratislava’s mayor and the Slovak Finance minister, Sumichrast heads for lunch with the deputy minister of Construction, Ivan Knosku. Knosku is a minority partner in Sumichrast’s real-estate venture, and for a time they debate the merits of East European labor. Yugoslavs are most expensive, but they work almost twice as fast as the Czechoslovaks. “Your building could be rehabbed in 10 months,” the minister tells Sumichrast. Almost in passing he mentions that McDonald’s will soon open an outlet in Bratislava, not far from Sumichrast’s property.
Talk turns to Knosku’s own agency, the City of Bratislava Construction Co., which Slovakia plans to “privatize” within the year. The company has a lock on all city construction contracts, as well as ready access to cheap labor and materials. Knosku figures it is probably worth, conservatively, $4 million. “We could probably pick it up for less than $1 million,” Sumichrast muses. The minister nods. Who would set the price so low? “Me,” says Knosku. Sumichrast has seen it all before. “That’s the way it is all over Eastern Europe,” he says. “Governments want to sell off state industries and we’re among the few who are ready to buy.”
Outside the restaurant, a man accosts Sumichrast as he is about to climb in his car for the drive to Prague. After a brief powwow, Sumichrast shakes his head. The man smiles, then saunters off with a wave goodbye. He is a construction engineer who has driven six hours from faraway Kosice, near the Russian border, to pitch a housing deal to the American he has seen on television. “He wants to go into business,” says Sumichrast. “What can I do?”
Day Four. Prague. Sumichrast looks over an apartment on the edge of town. Lite, bright, 4 BR duplex, nu kit, gar, $10,000. It’s a kit expensive, but still, Sumichrast says, “a bargain.” Not far away, he points to a large vacant lot near the Vltava River. He almost bought it, before discovering the catch. The seller didn’t own it. “The guy was selling me the Brooklyn Bridge,” he laughs. “Everyone in this town is on the make these days.”
The sun is shining, Prague looks golden. Sumichrast instructs the driver to head out of town. Where to? It’s a surprise. Amid rolling farmlands, in the little town of Kamenice, stands a castle that local authorities have been using as a school. “They will give us the castle and all this land,” Sumichrast says, gesturing across the spreading fields. “All we have to do is build a new school.” In neighboring Stirin, Sumichrast comes across another castle, a Baroque gem glittering in the sun. But he is too late. President Vaclav Havel recently gave it to a New York think tank, the Institute for East-West Security Studies. “Now that,” says Sumichrast, “is a chance missed.”
Back in Prague, Sumichrast is about to meet a trio of Czechs who want him to finance their new import-export business. They buy computers and telefax machines in Hong Kong, ship them home and sell them for twice what they paid, all costs and duties included. “That kind of business will evaporate before long,” Sumichrast says, as Czechoslovakia’s opening to the world evens out prices.
Just then the phone rings. Sumichrast is puzzled. Not many people have his home phone. He picks up and, sure enough:
“Mr. Sumichrast?” says the voice on the other end of the line. “I saw you on television and . . .”
