By MINDELL SMALL, Guardian Staff Reporter, mindell@nasguard.com

Lyford Cay resident Viktor Kozeny, who faces 17 counts of fraud-related charges in the U.S., will either have to surrender to U.S. authorities or face extradition, according to a New York City district attorney.

Mr Kozeny, a Czech financier who now holds an Irish passport, was charged on Oct 2, 2003 with grand larceny. The charges stemmed from a 2002 case where he allegedly defrauded clients of New York hedge-fund company Omega Advisors Inc. of $182 million in his dealings in Azerbaijan in 1998. He could face 25 years in prison in the U.S.

Mr Kozeny, 41, has managed to avoid arrest in the U.S. and has been living in The Bahamas since 1993.

A Czech newspaper, 'The Prague Daily News' said he was also charged in July 2002 in the Czech Republic for alleged fraud related to his 'infamous' Harvard Funds. Some 240,000 former clients of Harvard are reportedly still waiting for $403 million he promised them. He is expected to be tried in absentia as a fugitive and faces up to eight years in prison in the Czech Republic.

A Bahamas government spokesperson told The Guardian Wednesday that foreign affairs minister, Fred Mitchell was fully aware of the Kozeny case.

"But individual cases would not be something that the minister would comment on," the spokesperson said.

"The Bahamas would be on the receiving end of some official extradition request and at that point, the machinery of the ministry kicks in gear to deal with it."

Bahamas/Czech diplomatic ties

On Monday, The Bahamas Government established diplomatic relations with the Czech Republic.

The heads of the Czech and Bahamian permanent missions to the U.N., Hynek Kmonicek and Paulette Bethel signed the Czech-Bahamian agreement on diplomatic relations in New York. The Czech diplomatic mission will work under the Czech Embassy in Havana.

Last September when the two countries had no diplomatic ties, the Czech judiciary said it would ask The Bahamas to extradite Mr Kozeny - a request that it said would have been based on the 1925 extradition agreement, which applied to all the then British colonies.

Kozeny rejected charges

Mr Kozeny reportedly rejected the fraud charges, saying Omega's clients got the Azeri privatisation coupons they asked him to obtain for them.

Further details of the case revealed that Mr Kozeny allegedly persuaded several top managers at Omega, including former U.S. Senator George Mitchell, that through buying privatisation coupons, they could assume control of Socar, Azerbaijan's state-owned oil company.

Mr Kozeny claimed that the deal failed because of unsuccessful attempts to bribe Azeri officials. That admission led to the indictment of one of his lawyers, Hans Bodmer, in the U.S. where bribing foreign officials is a criminal offence.

Mr Kozeny further claimed that he was a victim of political persecution by the Czech government.

Flamboyant spender

The troubled financier has been known as a flamboyant spender who owned two planes and a 165-foot yacht. Fortune Magazine reported in 2000 that he built a $14 million swimming pool at Lyford Cay, the size of a small lake.

Mr Kozeny also reportedly used $3 million to buy luxury home furnishings and other items for his homes in Lyford Cay and Aspen, Colorado.

Mr Kozeny's assets have been frozen and the lawsuits against him, filed in courts in the U.S., Britain, The Bahamas and the British Virgin Islands, have been pending the criminal investigation in New York.