• 17/11/2022
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iRozhlas How much did Babiš a billion -dollar Agrofert?A maximum of 29 million<

Prime Minister and head of the ANO movement Andrej Babiš took control of the billion-dollar concern Agrofert at a time when he could have a maximum of less than three dozen million crowns in his account. This results from a detailed analysis of Babiš's income and expenses over the past thirty years. Radiožurnál conducted it on the basis of publicly available information, current findings and earlier statements of the prime minister.iRozhlas How much did Babiš have for the billion Agrofert? Maximum 29 million iRozhlas How much did Babiš have for the billion Agrofert? Maximum 29 million

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Currently, Babiš did not explain the circumstances of the purchase of Agrofert shares from the beginning of the millennium. At the same time, the holding was already at the highest levels of the domestic business – it reported sales in the tens of billions and its own assets in the order of billions.

Radiožurnál began investigating the Prime Minister's property on the basis of the so-called Pandora Papers case. Exactly one month ago, an international team of investigative journalists published the findings that Babiš bought real estate in France for less than 400 million. At the same time, it is not entirely clear where he got the money. However, it is also not clear what he used to pay for Agrofert shares.

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Holding Agrofert was controlled by Andrej Babiš at a time when he only had less than 30 million at his disposal. At the time, the shares were worth billions. Topic for Vojtěch Srnka and Jakub Troníček

The prime minister bought a 100% stake in Agrofert gradually between 1999 and 2004, from various companies. But his business partners at the time have one thing in common - they were extremely generous to him. If Babiš's official income at the time was enough for his investments, he had to buy many times cheaper than what the market value of the shares was at that time. Babiš would never reach this with his official income.

According to Forbes magazine, although Babiš is currently the fifth richest person in the Czech Republic with a fortune exceeding 70 billion crowns, however, at the time when he bought the food and chemical concern Agrofert, he had no major assets.

Tens of millions were enough

Up to and including 2004, Babiš earned a total of 36.6 million crowns, but 7.3 million of that had already been invested in a luxury apartment in Prague. Even if he had not spent a single crown on anything else until the final takeover of Agrofert, he could not have had more than approximately 29 million crowns available for the holding's shares.

If it really was enough for Babiš to buy shares in the company, the sellers would have to behave irrationally. In response to Radiožurnál's analysis, Czech-American investment banker and financial analyst Ondřej Jonáš, who previously worked for Goldman Sachs, Salomon Brothers or the US Federal Reserve, said this.

"It is really not common for a person to acquire property worth millions for thousands, or to acquire property in the order of billions for millions," stated Jonáš. According to him, Babiš should clearly explain and document the circumstances of the purchase: "Otherwise, these transactions will continue to arouse suspicion."

Tax advisor Ondřej Málek from Moneus made a similar statement. "It is at least non-standard if the purchase price of the shares would be units of a percentage of the amount of the equity capital. This is all the more surprising if we realize that all rights pass to the new shareholder with the shares - including the right to decide on the distribution of the profit share," said Málek.

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Just before Babiš completed his takeover of Agrofert, according to data from the financial statements, the holding had an equity capital of 2.6 billion crowns, and another 900 million represented its retained earnings at the time. "For the amount of 29 million crowns, he would thus acquire shares that entitle him to pay these amounts," Málek commented.

Babiš: I have nothing to say about it

However, Babiš himself never disclosed the purchase price of the shares. And he refused to answer Radiožurnál's current questions. "I am the only politician who showed income, the Financial Analysis Office checked it, so I have nothing more to say about it," said Babiš last week in response to a question about share prices and the sources from which he financed their purchases.

The outgoing prime minister did not respond to detailed written questions about specific transactions. At the same time, the specialized Financial Analysis Office did not look into the circumstances surrounding the takeover of Agrofert and the prime minister's property situation from that time, only assessing whether Babiš had enough legal money to buy French real estate in 2009. And this despite the fact that no notification of suspicious business in this direction the office did not receive.

Data on Babiš's income are based on a report by PriceWaterhouseCoopers and Ernst & Young, which Babiš had developed in 2017. He proved that in 2013 he had enough of his own money to buy Agrofert bonds for 1.5 billion crowns.

The Pandora Papers case

Exactly one month ago, the Investigace.cz project, together with hundreds of other journalists from the world's media, published information from leaked documents from the Panamanian law firm Alcogal. According to Investigace.cz, Prime Minister Andrej Babiš (ANO) had anonymously set up companies with installed directors in 2009 with the help of a French and Panamanian law office. He allegedly used this structure to transfer 15 million euros, then 381 million crowns, from one of his companies to another. He was supposed to provide himself with a loan, which he used to buy luxury French properties, including the Bigaud residence. The prime minister denied any wrongdoing, saying that he was not active in politics at the time of the transaction. The case is also being investigated by the National Center against Organized Crime, among others.

The report contains an overview of his taxable income from 1996 to 2015. However, the auditors themselves emphasized in the document labeled as the Report on material findings that they did not have access to all the data and that it may not contain all of Babiš's income.

Agrofert is silent

iRozhlas How much did Babiš have for the billion Agrofert? A maximum of 29 million

After all, shortly after the publication of the report, Babiš admitted another hundred million in tax-free income - specifically from the sale of shares. He responded to criticism that his taxed income could not be enough to buy bonds.

“My total income since 1993 was 2,531,768,228 crowns. Of that income, which was taxed to Agrofert, was 1,863,801,107. Of that, I paid 337,503,547 crowns in taxes. (…) So I have 1,049,498,231 left," said Babiš at the press conference at the time.

Babiš mentioned these incomes again last month when he explained the Pandora Papers case and the origin of the money for the purchase of real estate on the Côte d'Azur for the iROZHLAS.cz server.

Radiožurnál also publishes the sum of 2.5 billion crowns given by Babiš. In its analysis, in addition to lists of both types of income, the editors also worked with available data from the commercial register, asset declarations and other public databases, as well as with the prime minister's earlier statements.

Currently, in response to questions from Radiožurnál, Babiš stated that he had published data from all his previous tax returns. However, he did not answer a direct question about any other - so far unreported - income.

Even Agrofert himself did not want to comment on property transfers of shares in the company. His spokeswoman Adéla Čabayová refused to comment, saying that the holding is a private company and the circumstances of the sale of its shares at the beginning of the millennium are not related to it.

Less than six million

At the same time, Agrofert and its background played a vital role in Babiš's political career. Individual companies belonging to the holding at the time ANO was founded supported its movement with donations worth tens of millions of crowns. This is evident, for example, from the movement's annual reports. For example, ANO also uses the offices of the company Imoba from the Agrofert holding.

So how did the current prime minister get Agrofert under his wing and what resources could he have at his disposal? Babiš's first documented major investment dates back to the second half of the 1990s, when, according to data in the commercial register, he pumped at least 5.9 million crowns into the capital of his own company Agroter.

He made the deposit officially in 2000 by adding to his fortune the money he had previously lent to his own company. In this context, Málek pointed out that Babiš's loan to the company is explicitly mentioned in the relevant documents.

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"Given that the loan agreement is created by the provision of its object, i.e. money, these had to actually be provided," commented Málek.

Published income after 1996 would not be enough for Babiš, so he had to use the money saved from the first half of the 90s, when he worked as a manager of Agrofert, or rather its Slovak predecessor, Petrimex.

Babiš never published data on his income during this period. At the same time, it does not follow from his earlier statements that he was already earning millions at that time. For example, the website Hlídací pes quoted Babiš in this context in 2016, saying that in the early 1990s he was "an ordinary top manager of Petrimex without significant assets".

Indebted chemist sells.

It is not clear how he financed the first large investment in his own business. However, it was a key investment, because Babiš bought the first ten percent of Agrofert shares in 1999 through Agroter. In 1999, they were sold to him by the chemist Spolana Neratovice, then a minority co-owned by the state.

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Czech Television reported four years ago that the indebted factory gave up its share to Babiš's company for 2.5 million crowns. For example, the dean of the Faculty of Finance and Accounting at the Prague University of Economics, Ladislav Mejzlík, stated for television at the time, referring to Agrofert's financial statements and the amount of its assets, that the real value of the share in 1999 exceeded 350 million crowns.

According to Málek, it can be assumed that the company bought the shares precisely from the loan that Babiš previously gave it. According to the records in the commercial register, Agroter had no major turnover or profits and functioned more like the administrator of Babiš's property.

From the entries in the commercial register and the real estate cadastre, it appears that apart from shares in Agrofert, he only owned a villa in Průhonice near Prague worth around 4.5 million crowns, in which Babiš used to live.

In addition to the loan of less than six million, Babiš increased the capital of the company as its sole owner already in 1996, from the original 100 thousand to 2.5 million. According to Málk, he could theoretically use the money that the company had earned up to that time, but at the same time, referring to incomplete information about its management, he called such a possibility unlikely.

The company founded by Babiš in 1994 reported a loss in 1996 and a year earlier had a zero balance sheet at the end of the year. Data for the first year of its existence are missing. "It is rather less likely that the company in 1996 had the means to increase the share capital from its own resources, and rather that the company was directly provided by the partner," Málek explained.

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In practice, such a possibility would mean that Babiš invested at least 8.5 million in Agroter during the 1990s, while his own declared income by the end of 2000 was only slightly higher - at 8.9 million. Even so, Babiš was able to buy less than half of the growing holding company with such a balance sheet.

In 2000, Babiš already controlled 45 percent of Agrofert - this time, at the turn of the millennium, he bought another thirty-five percent package of shares for himself, from the Slovak chemist Duslo Šaľa. In the first year of the new millennium, the holding company Agrofert reported sales of thirty billion crowns and a net profit of two and a half billion crowns.

How much did Babiš buy the shares for, but he never disclosed. "The fact is that in 1999 and 2000 I bought 45 percent of Agrofert shares from Spolana and Duslo Šaľ relatively cheaply, but on the other hand, I immodestly think that I brought the greatest added value to Agrofert, and this fact was taken into account in the share price ," quoted Babiše in 2002 in Mf Dnes.

Savings from Morocco fell on the house

Later, Babiš came up with an explanation that savings from the communist era, when he worked in Morocco as an employee of the Petrimex foreign trade company, played a significant role in his life business.

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"I worked in Morocco for a long time, so I earned money there, and that was the capital," Babiš said in a June 2013 broadcast on Czech Television. But it follows from Babiš's other statements that the current prime minister apparently used all the savings from Morocco to build a family home in Slovakia.

In 2013, Babiš also described his work in Africa in his official biography, which is available on the website of the ANO movement: "I had a salary of about $600, half of which I put aside and saved so that I could pay off the house that I built in Děvínská Nová Ves and for which I took a loan of 600,000 for 15 years at one percent interest. We lived decently with $300," wrote Babiš himself.

At the same time, he worked in Morocco between 1985 and 1991. In six years, after three hundred dollars a month, Babiš was able to save approximately $22,000, which at the exchange rate of 1991 represented exactly 600,000 Czechoslovak crowns at the time. That is, the entire amount of the home loan.

Definitive control of the holding

In any case, Babiš became the majority shareholder of Agrofert in 2002, when he bought another ten percent of the shares from the Swiss company O.F.I.

And he continued his investments in the following year, 2003, when he bought a luxury apartment in Prague's Bubenč for 7.3 million crowns.

In 2004, after deducting the known expenses to date, Babiš could have had a maximum of around 20 million crowns, given his income. And it was with this capital that the head of the ANO movement completed the full takeover of Agrofert when he bought the remaining 45 percent of the holding's shares from another Swiss company, Ameropa.

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At that time, Agrofert had sales of forty billion and with twelve thousand employees it was among the ten largest manufacturing companies in the country. At that time, the group consisted of approximately thirty companies. Among them were several chemists, meat processing plants and traders in agricultural products and fertilizers.

However, Babiš did not disclose the price for which he bought the shares even after he became the sole ruler of Agrofert: "Ameropa sold its shares. It's up to them to comment on that," he said. However, representatives of the Swiss investment company, like Babiš himself, never disclosed the price.

If the sale prices of the shares corresponded to Babiš's capital at the time, it would be suspicious, according to Jonáš. "These facts raise legitimate questions about the circumstances of the purchase of those shares. If individual companies sold Agrofert shares so cheaply, then the question is why they behaved in this way and whether, for example, there could not have been deception of the owners, blackmailing them and so on," Jonáš evaluated the transactions with Agrofert shares.

'For what? That's not your problem'

How exactly Babiš financed the key operations and at what price he bought the shares remains unclear to this day. The prime minister never answered the media's questions about the takeover of Agrofert. “I've built a business that has 200 billion in sales and I see no reason why I should tell you every operation. It's not your problem what I bought it for. I bought it for money," he said, for example, to the ČT Reporters program in 2017.

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At the same time, Babiš ruled out for television that he would finance the purchase of shares with a loan: "Of course I had the money for it. I certainly didn't borrow.'

For example, Michal Bláha, the founder of the Hlídač statuo server, described Babiš's long-term statements about his own assets as implausible: "In 2017, Mr. Babiš revealed his income from 1996 in relatively great detail in order to defend the legal sources for the purchase of Agrofert bonds. Back then, he presented the audit as all the money he earned. And the other claim that it didn't contain all the income, I find untrustworthy and completely unverifiable."

Classmates from Geneva

It is still not clear who actually sold Agrofert shares to Babiš and why he left them to him so cheaply. The aforementioned Swiss company O.F.I. played a key role in this. - i.e. Ost Finanz und Investition - which invested the first major capital in Agrofert in the 1990s and cut it off from the parent Petrimex.

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An opaque company based in an industrial zone on the outskirts of the Swiss town of Baar then held a decisive majority stake in Agrofert for seven years. But Babiš never revealed who was behind her. "It was a company of my classmates from Switzerland who wanted to earn some money, so I helped them," said Babiš to the Respekt weekly in 2002.

The company O.F.I. sold its majority stake in the first half of the new millennium to the Swiss family investment firm Ameropa, from which Babiš then bought the rest of the shares.

Villas for children

In any case, for Babiš, full control of Agrofert represented a ticket to one hundred million in earnings. He achieved these for the first time in 2009. At the end of the decade, his own Agrofert bought the shares of Profrost and Afeed from him for more than half a billion crowns. Before that, Babiš invested millions of crowns from himself. It was the one hundred million income from shares in 2009 that enabled Babiš to massively invest through offshore structures in the French residence and adjacent real estate.

Jonáš pointed out in this context that Babiš's move to higher property spheres raises doubts. "Such a large and, above all, rapid jump in assets raises the legitimate question of whether managerial ability, chance or unfair practices are behind these results. We know desperately little about the success factors of Andrej Babiš, and the prime minister owes us a credible justification and a verifiable life story," the investment banker noted.

A year before buying a villa on the Côte d'Azur, Babiš started the Sparrow's Nest project. However, he bought an extensive conference complex and also his own luxury residence and subsequently reconstructed it expensively through the structures of Agrofert. Formally, it was a small independent company with unknown owners at the time, which received a fifty million dollar subsidy for construction.

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It is precisely because of this operation that Babiš is currently being prosecuted and threatened with trial. From a detailed analysis of his financial circumstances, it follows that his personal account at the time, due to previous income and expenses, could have had a maximum of less than 40 million crowns. The received subsidy thus exceeded his personal property at the time.

Since 2009, Babiš's income has regularly exceeded the hundred million mark per year, and Babiš's personal investments have been increasing accordingly. After 2010, for example, he transferred his second villa in Průhonice to himself and also invested in Prague houses for his children from his first marriage – daughter Adriana Bobeková and son Andrej Babiš Jr. At the same time, both of them had shortly before held anonymous shares of Čapí hnízd.

In 2013 and 2014, Babiš invested a total of 1.5 billion crowns in Agrofert bonds. It is the income from them that currently provides him with an annual tax-free income of around one hundred million crowns per year.

Jakub Troníček, Vojtěch SrnkaShare on FacebookShare on TwitterShare on LinkedInPrintCopy url addressShortened addressClose