The period covered in this chapter of the History of Corruption has been characterized by many as the so-called aggrandizement of power. It was a political slogan of the opposition at the time, but in many ways it was based on real events and facts.
Although Babiš has always denied it, his business has been unprecedentedly successful thanks to government involvement. And this is not only due to objective market factors, but mainly because the holding’s businesses have been unusually favoured by the decisions of the government, state administration and regulators. And according to Babiš, it has nothing to do with the fact that many of the institutions related to Agrofert’s business were occupied by former managers of the group. The finance minister and later the prime minister could only repeat that they were good experts, he knew their qualities and that was why he appointed them to the positions.
Convenient concessions
As one of the co-authors of the History of Corruption discovered during his own analysis for the book project My State, My Company, almost one-fifth of the tax breaks granted by the Financial Administration to businesses in the Czech Republic during Andrej Babiš’s term in government flowed to the Agrofert concern. While Babiš’s government was reducing the total amount of tax breaks for Czech businesses, Agrofert’s tax breaks were increasing.
The Ministry of Finance or the Financial Administration decides on tax breaks, which in Czech conditions are de facto subsidies. Andrej Babiš, as finance minister and prime minister from 2014 to 2021, had a significant influence on the functioning of both.
Although the head of the ANO movement has repeated at party meetings and congresses that the generous distribution of common money should be limited, in reality he has been very selective in his approach to the concessions.
Already in 2014, the state recorded a record budget item of CZK 10.79 billion in waived taxes for businesses. In the first year that Andrej Babiš headed the Finance Ministry, his holding received tax breaks totalling CZK 1.47 billion. The company, which had not received any tax breaks before his appointment, suddenly received 13.6% of all approved tax breaks in the Czech Republic after his appointment.
Statistics from the Financial Administration show that between 2014 and 2019, Czech companies received a total of CZK 20.31 billion in pardons, with almost one-fifth of this amount forgiven to companies associated with Andrej Babiš.
A similar story is the allocation of direct subsidies, where the state has supported several dubious investment projects by a group of companies of which Babiš is the end user of the benefits. In some of these projects, where EU funds were also used, there was no reimbursement from Brussels and the Czech state bears the entire cost. We do not need to go back to the Stork’s Nest or toasted bread.
Agrofert’s companies that trade with the state-owned Forests have done similarly well. The latter played into the hands of the Minister and the Prime Minister. Profit was also recorded by other companies significantly dependent on trade with the state or those that were significantly influenced by state regulators.
Andrej Babiš has often been accused of not trying to get rid of his influence over his business empire after entering politics, even in appearance. The trust fund game worked for a while, but over time the oligarch’s arrogant demeanour began to give the strong impression that it was merely a jibe in the face of his critics. Eventually, Babiš began to refer to Agrofert’s companies as his own, even though he had denied for years that he had anything else in common with Agrofert besides its foundation.
Not only Babiš, but also his people, even in ministerial positions, have fought for measures that suit Agrofert at the international level. At the same time, they called them Czech state interests.
Green is the colour of money
Babiš himself, even before his direct entry into politics, vehemently promoted an amendment to the Air Protection Act. This was supposed to achieve green goals by increasing the share of biofuels blended into motor fuels.
Andrej Babiš invested CZK 1.6 billion in a biofuel production plant in Preol and expected huge profits thanks to the mandatory blending of biofuels. However, the amendment was vetoed by President Klaus when he was out of the political ring. After Babiš’s public appearances, open letters and appeals to the president, the ČSSD came up with an extraordinary meeting to override the president’s veto. To this day, there is controversy about how the whole amendment came about, how amendments were tacked on to it, and how this piece of legislation came to be among the priorities of the government of the day. The whole procedure in the Chamber of Deputies is one of the best testimonies to the influence Babiš had on the CSSD at the time. It is certainly interesting to note that Radmila Kleslová, an assistant to the Social Democrat MP Miloslav Soušek, was very active in promoting the amendment. Kleslová later co-founded the ANO movement and served for a long time in its leadership. It was she who prepared the argumentative analyses in favour of the amendment, drafted the amendments and promoted them among her colleagues.
In 2010, the amendment to the Air Protection Act increased the minimum share of biocomponents in petrol from 3.5 per cent to 4.1 per cent and in diesel fuel from 4.5 per cent to 6 per cent. It also introduced a tax rebate for high percentage and clean biofuels, on which Babiš had a virtual monopoly.
After the government was formed, Babiš appointed Richard Brabec, a former employee of Agrofert and until 2010 the head of Lovochemie in Lovosice, as Environment Minister. The oligarch’s biofuel investment was thus able to be profited from, albeit laboriously but massively.
In 2008, the Czech Republic committed to the European Union’s proposed reduction in transport emissions. By 2020, the EU wanted to reduce greenhouse gas emissions in transport by 6 percent, according to the plan the Czech government was working on at the time.
Most other Member States have identified electrification strategies or switching to other alternative fuels as key measures to reduce transport emissions. Although the management of biofuels in motor fuels is only a partial tool in the fight against emissions, and the EU itself has long been studying them and warning of their negative effects on the environment, Andrej Babiš in the Czech Republic presented the matter in such a way that the blending of biofuels is required by Brussels. And the government presented the measure as the main instrument for meeting anti-emission targets. This is also why the problem of insufficient electromobility and the lack of strategic plans has been dealt with by Czech governments for years afterwards.
The Union has even criticised the excessive tax rebate for biofuels in the Czech Republic, which was introduced by the government in 2010. However, its criticism did not resonate in the Czech Republic; on the contrary, Babiš’s people started to think of ways to extend the temporary tax rebate for biofuels. The support was due to expire in 2015, but Prime Minister Bohuslav Sobotka’s cabinet extended it for another five years. Again, with false arguments and justifications based on the requirement from Brussels. Tax support for biofuels, including those produced from rapeseed, expired in 2021.
In 2014, ANO Vice-Chair and another former Babiš employee, Jaroslav Faltýnek, also pushed hard for support for biogas plants. He even convened the Economic Committee of the Chamber of Deputies to discuss it. He pushed through the support, which also concerned dozens of biogas plants of his recent employer. Interestingly, the first investments in biogas plants came in the Agrofert group in 2013, after Babiš entered politics and a year before the biogas tax rebates were introduced.
Agrifertilization from ministries to civil servants
As we have already written above, Andrej Babiš has massively imported people from his holding into important positions in the state administration. Unfortunately, it is widespread in our country that a new government replaces the previous government’s people with its own; however, the extent to which Andrej Babiš did this was unprecedented. It was not just the highest positions, but the entire structures of not only ministries, but all the offices with which his Agrofert group came into contact. In sum, it was not dozens, but hundreds of people. They then helped him set the rules to suit Babiš’s political and business goals.
Another perfidious specificity of the so-called agrofertilization of power was that the nominations for key positions came not only from the political, but especially from the business environment of Babiš himself, and more than once they were people directly from the Agrofert structures.
The nominees of Babiš’s governments were known mainly for their loyalty, while professional qualities were on the lower rungs of the criteria. In addition to setting favorable conditions for Babiš’s business interests, they often helped to hammer out his political and business troubles, or to put the pedal to the oligarch’s enemies.
One example is the head of the Czech Environmental Inspectorate, Erik Greuss, who together with Environment Minister Richard Brabec did everything possible and impossible to prevent the Agrofert chemical company from being suspected of poisoning the Bečva River.
When Babiš was the target of criticism not only domestically but also internationally for his conflict of interest, he was vigorously defended, also on an official level, by the head of the State Agricultural Intervention Fund, Martin Šebestyán. His office has defended Agrofert before the European Commission and for years has heavily financially supported Babiš’s business with subsidies. The fund’s management board also included ANO MP Monika Oborná, MP and former Agrofert employee Josef Kott, and former Babiš holding board member Jitka Věková.
Josef Vojáček, the head of the Czech Forestry Service, was close to Jaroslav Faltýnek. Both he and the head of the Military Forests, Petr Král, were powerful in saturating the needs of the timber part of Agrofert. Miroslava Ferancová, the wife of MP Milan Feranc, also belonged to the management of Military Forests.
Libor Kazda, the head of the Financial Analytical Unit, became famous for “knocking down” businessmen who stood in the way of Babiš’s business interests. However, we could find dozens, if not hundreds, of such stories, where a loyal manager did as he saw fit for the oligarch at the head of the government.
