The Richest Czech Keeps a Secret

The firm Agrofert has become the king of the Czech chemistry sector after the collapse of the Chemapol empire. In December 2001 Zeman's cabinet sold to Agrofert the state concern Unipetrol and although the transaction has not been paid up yet, the Agrofert representative Andrej Babiš allows the journalists to call him „the richest Czech“.

The privatization of the chemistry sector is still a matter of great doubt. Babiš has already proved to be a skillful manager and his firms never go bankrupt. But Agrofert does not belong to him - fifty-five percent of the shares is in the possession of the mysterious firm Ameropa. Who is the owner of Ameropa? Nobody knows, even the ministers who entrusted the entire Czech chemical industry to it.

Baar

In the industrial zone in the district of the Swiss town Baar we may find the seat of the firm Ost Finanz und Investition (O.F.I.). The seat is an exaggeration, there is no office in the building, the owners are not working there and you may not meet even the company employees. Nevertheless this invisible company owned the majority interest in the Czech chemical empire Agrofert about which the Czech media state it belongs to Andrej Babiš.

To find out anything about the Czech expansion of the local enterprise in Baar is very difficult. O.F.I. shares its seat with twenty other firms in a small office of the Contrevi company. The building in the ugly Swiss backcountry has no parameters the laic would attribute to the company that owned the Czech firms with the annual turnover of almost one billion crowns for many years. The glass one floor house is situated next to the romming houses, a factory with a former silo where a low-class pub is situated.

„Yes, the firms resides here,“ said the secretary of the firm Contrevi, but refused to say more. Even the information when she saw anyone from O.F.I. for the last time. „It is a long time ago,“ said the man who was just entering the office, but his communication ended with saying this. The address in the Swiss directory includes the phone number in Geneva apart from the address in Baar. The alleged bosses in the unknown place in Geneva refused all the attempts to contact them. After a short ringing we heard a woman's voice. She did not introduce herself and when she heard the Czech journalists wanted to talk to her, she immediately put down the receiver. This was repeated approximately ten times in several days. There is no other contact to the enormously rich company. „O.F.I.? It is a long time ago, " said Andrej Babiš to the question what role the company played in his victorious march through the Czech chemistry sector. "It was the company of my Swiss schoolmates who wanted to earn some money, so I helped them,“ he added and ended the call.

Who is Andrej Babiš?

The only known representative of the Swiss shark who swallowed the Czech chemistry is still „the richest Czech“ Andrej Babiš. O.F.I. has carried out all its Czech activities on his behalf. Babiš himself is a Slovak who came to Prague in 1994 as he says almost with no money. His business career is very similar to careers of other post November captains of the Czech industry, very close is to the broke chemistry magnate Václav Junek.

Babiš's father Štefan became a representative of Czechoslovakia in the business organization GATT in 1969 in the permanent mission of UN in Geneva. Andrej studied in Geneva at grammar school College Rousseau, than at the School of Economics in Bratislava. The archive documents prove that he was listed as the agent of the Secret Police with a cover name Bureš in 1982. In 1998 his file at the counter-intelligence group was closed and submitted to the espionage group. „Unfortunately we may not study the details as the files are archived in Slovakia,“ said the officer of the Czech Secret Service. The visit to Bratislava and meeting with the Slovak policemen did not bring any light on the Babiš's co-operation. „As regards violating laws, we have never been interested in Babiš, although we know that the Czech police are looking into some of his transactions. We have no access to the files anyway,“ they explained. „I have never co-operated with the secret police, on the contrary I was interrogated in the year 1982 due to my refusal to purchase the phosphates of low quality in Syria,“ Babiš comments today. He refuses to say any comment to the fact that he is in the evidence of the official file register of the secret police.

Since the beginning of the 80s Babiš was working in the joint stock company Petrimex (see the frame on the page 15), a monopolist importer of the oil and chemical products to Slovakia. He began as a managing clerk in the year 1985 and when he was 31, he was sent to Morocco. Since the beginning of the year 1990 he represented twelve Slovak firms in Rabat. „Morocco was one of the few Arabic countries where the Soviets had minimal influence. Of course they were trying to establish it. It is possible Babiš was listed to help them do it,“ said the former Slovak employee of the counter intelligence office. (Babiš himself did not answer the question about his work for the espionage group.) After his return home in the year 1990 Babiš became the deputy of the manager of Petrimex and three years later he became the member of the board of directors.

The Move to the Czech Republic

In 1994 a group of unknown people established the firm O.F.I. in Swiss Baar. At the approximately same time Babiš left Slovakia for the Czech Republic and established the company Agrofert being assigned by Petrimex.

Babiš says that he had to leave Slovakia, because he became unwanted for the people around Vladimír Mečiar. "Not nearly. In the summer 1995 he was still a member of the board of directors of Petrimex, a firm under the full control of Mečiar's people. They got angry with him when he took control of Agrofert, " said the policeman from the Bratislava unit investigating economic crimes. In the year 1995 the company O.F.I. entered the company Agrofert and increased the capital stock. Petrimex did not participate in this increasing and lost all the influence in the enterprise. Therefore Petrimex removed Babiš from his function of the vice-president and even instituted a suit against him because the he was not authorized to let the capital stock be increased - but the firm lost the court dispute. In the years 1995–2000 Agrofert privatized or bought tens of agriculture firms. Babiš says to the media that he purchased the firms for low prices using the credit of the foreign banks. Therefore he took control of the third of Czech agriculture production ranging from the basic industry to the deliveries to the retail network. He owns the network of the supplying and purchasing enterprises or for example the largest Czech fabricator of the turkey meat Adex. In the year 1999 he privatized Dezu Velké Meziříčí, the largest Czech producer of fertilizers and the Precheza company in Přerov.

Once Upon a Time Near Lovosice

Immediately after its establishment Agrofert entered the chemical sector. The privatization start was the company Lovochemie in Lovosice. The tender of the Klaus's cabinet in the year 1995 resulted in the ownership of 55 per cent interest by the firm Proferta that was co-owned by Babiš and the German enterprise BAGS. Proferta lent half a billion for this privatization from IPB - it used the services of the bank that under the pressure of Klaus's cabinet financed a lot of privatizations knowing the credits might not be actually paid up. During the three years Babiš played a trick for which he is being investigated by the police - using the state enterprise Unipetrol he got rid of his liability to the bank and the German partner. Agrofert and Unipetrol established joint venture Agrobohemia for this purpose and this firm by increasing of the capital stock by a quarter of billion gained the majority in Lovochemie. Proferta did not participate in spite of the pressure from the German co-owner BAGS and it was left with a minority interest. The coup strategy was controlled by Babiš, the chairman of the board of Lovochemie, Agrobohemia and Proferta. Right after this he initialized the liquidation of Proferta even with its half billion debt to IPB. It is still a mystery who provided Agrobohemia with the capital necessary for the controlling of the enterprise - the state Unipetrol, Babiš, or the firm O.F.I.? Unipetrol nor Babiš have never explained the reason of the incorporation and O.F.I. remains to be a dark conspirator.

The struggle for Lovochemie ended when the German firm BAGS brought a suit against Agrofert. „The police are investigating the entire transaction with regards to the fact that Mr. Babiš was in all the boards. We think it was misusing of the business information,“ said Lenka Bradáčová, the state prosecutor in Ústí. The police put the investigation aside, but the state prosecutor lodged a complaint and the case was returned to the investigators that are to close the case by the end of this summer. ČSOB, the new owner of the „lion's bank“ IPB empire inherited the Proferta's debt. ČSOB took legal action against Proferta for deceit. Proferta guaranteed the loan by the privatized interest in Lovochemie and when it lost the influence in the enterprise, the value of the bank guarantee was lost as well. The public prosecutor Bradáčová is convinced that it was Babiš's intention.

Courtship to ČSSD

The „Lovosice“ strategy - to prefer the state Unipetrol for the privatization to the credits of half-state IPB - was practiced by Babiš unceasingly. The very good relationships with Social Democratic politicians proved to be very useful. For example in the spring 1999 the then minister of finance Ivo Svoboda enforced the boss of Babiš's Lovochemie Pavel Švarc to the post of the general manager of Unipetrol. It was also three years ago when Andrej Babiš - according to the information of secret services - was pulling through in the Zeman's cabinet to join the state enterprise České produktovody (Čepro) to Unipetrol. Čepro is a key distributor of the fuels in the Czech Republic, it stores the obligatory material reserves and the enterprise tanks will be used also for the needs of NATO. The chemical resort king did not succeed then. The cabinet with a new minister of finance Pavel Mertlík decided that Čepro will be retained in the ownership of the state.

July 2000: Aliachem

In July 2000, a month after the IPB fall, the co-operation of the cabinet with Babiš brought the first great result. The above mentioned joint venture of Agrofert and Unipetrol - Agrobohemia -acquired as the result of the pressure of Zeman's cabinet the bankrupted holding Aiachem associating Spolana Neratovice, Fatra Napajedla and Synthesia Pardubice. Holding was indebted and was not able to pay up the credit of more than three billion crowns.

Miroslav Grégr, the minister of industry, decided about this cabinet's decision - in spite of the protests of his colleague Mertlík. „All my reports on the firm Agrofert are positive,“ said minister Miroslav Grégr to the journalists. „As far as I know it is profitable and pays taxes,“ he added.

The price for Aliachem was never published, but the unofficial information of the financial analysts says it might have been almost two billion crowns. „There is no guarantee that Agrobohemia will be able to finance the operation and restructuring of the firm. Moreover why did Unipetrol not buy Aliachem itself, but through Agrobohemia in which it does not have the majority interest and managers' control?“ asked Mertlík then. Babiš and Agrochemie did succeed in Aliachem nevertheless. At least the accountant's reports prove this stating that the Aliachem raised up from the loss of many billion to the profit of thirty million in the last year. " I have always trusted Agrofert to manage this, " minister Grégr says today.

But it is not clear who paid for the purchase of Aliachem and the firm's restructuring. Babiš said that the purchase of his interest was not financed by the majority owner of Agrofert - O.F.I., but from the credit of the Citibank. It is not possible to verify the information, the banks do not publish the information on their debtors. We may not rule out the information from the cabinet's lobby that the entire purchase price was paid by the state Unipetrol.

Ameropa

Just one company was missing to create a chemical empire Agrofert - Unipetrol itself - the holding comprises mainly of the Chemopetrol in Litvínov, Kaučuk Kralupy, Paramo Pardubice, Czech refinery company and the network of the petrol stations Benzina. The Unipetrol privatization was decided by the cabinet in December 2002, two month before this date an important change happened in Switzerland. Ost Finanz und Investition sold its interest in Agrofert to the company Ameropa. Why did O.F.I. allow to lose such a advantageous business as the privatization of Unipetrol was? „It was not possible to sell such a strategically important enterprise to a firm that was under such conspiracy as O.F.I.,“ said the man from the Office of the Foreign Relationships and Information. „Especially in the time when the British firm Rotch Energy offered a price higher by three billion.“

So the interest of O.F.I. was bought by the Basel firm Ameropa AG in October last year and today it owns fifty five per cent of Agrofert. Therefore it took the decisive control of the Czech oil industry, chemical industry and partly of agriculture sector. We may read on the website www.ameropa.ch that the firm was established in the year 1948, it is an important dealer with the fertilizers and it has been owned by the family Zivy. The boss of the company today is Andreas Zivy and the company employs approximately six hundred people in the tens of countries.

The seat of the firm is a neat detached house in the Basle neighborhood Binningen. Ameropa seat is announced by an unostentatious sign at the entrance to the villa. „No one is going to give any information on the firm with the exception of the manager,“ said the secretary and added that the firm does not employ any press spokesman. Andreas Zivy was busy. „Call in the morning,“ the secretary asked us to leave. The boss is busy in the next morning too. „Please call about three o'clock,“ proposes the voice on the telephone. At three we were told to call at five, at five on the next day, then on the next day.

Mr.Zivy did not react within ten dasy, so it was impossible to ask him where the firm would get the money for the Unipetrol purchase from, nor to verify the ownership structure. „We have examined the firm and we have found out that no one else than the people named on the official pages is behind it,“ the officer of the Czech espionage group said. The one people talk about is Marc David Rich, the oil businessman, who was sentenced in absence some years ago to nine years in prison in USA for illegal business with Iranian oil under the embargo in the 80s (last year he got an amnesty of Bill Clinton under scandalous circumstances). Rich has had his official seat in the Swiss town Baar (in a place where the O.F.I. company has its residence). Rich's connection to Ameropa is proved also by the fact that the Swiss firm and Rich own the firm Kolmar Petrochemicals - this is the information found by the Czech espionage group. „It is just a chance,“ said Andrej Babiš. Andreas Zivy has never commented this connection.

Ameropa is not a known firm in Basel, no significant news was published about it in the local press during the last year. Even the ministers who approved the privatization of the Czech oil industry to its hands. „I do not know it,“ said the minister of interior Stanislav Gross. „I do not know it,“ said the minister of transport Schling. The same answer we heard from the chairman of the ČSSD deputy committee Bohuslav Sobotka, the boss of the deputy club of the Union of Freedom Karel Kühnl or the economic expert of the People's party Miroslav Kalousek.

Unipetrol

When the cabinet promised to sell the entire Unipetrol to Agrofert, it carried out a very unconventional transaction. Agrofert offered the least money out of all the bidders. When the dealers found out that the public tender was won by Agrofert, the value of the share fell from fifty to thirty crowns.

„It is unbelievable,“ said the police expert on the investigation of economic crimes. „Unipetrol helped Agrofert with its finance to privatize all the significant enterprises that belong to the Babiš's empire now. And at the end the cabinet approved the privatization of Unipetrol to the ownership of Agrofert. It reminds me of a gigantic corruption,“ he added. The politicians do not seem to be excited. " I do not know a lot about it, it passed by me," said the deputy Sobotka, the bank expert of ČSSD. "I do not know a lot about it, " said Karel Kühnl for the Coalition.

Agrofert is to pay twelve billion and the general interest of the economic public was drawn to the question how it is going to do it. According to the information published so far the transaction will be carried out in two stages. During the first there should be the compensation of Agrofert to Unipetrol. Agrofert is according to the financial experts going to borrow twelve billion - from Unipetrol or from some of the banks and the price of Unipetrol will by paid from such credit.

Then it will sell a part of the Unipetrol enterprise, especially the company Benzina, which owns more than three hundred petrol stations - it is the largest network in the Czech Republic, modernized eight years ago with the costs amounting to 5 billion. The American firm Conoco has a right of refusal for Benzina sale, the announced price is three to five billion crowns. For the second - Unipetrol will get rid of the fifty-five per cent interest in the Czech refinery, one of the largest Czech oil fabricator for the price of more than eight billion crowns. The consortium IOC (Conoco, Agip, Shell) is interested in purchasing the interest in the Czech refinery company. All Babiš needs to privatize is the credit that will be soon paid up by the sale of the part of the firm. In any case he will have the overwhelming majority of the chemical factories in the country actually for free.

The Cabinet to the Enterprises, the Enterprises to the Cabinet

The new managers of Babiš type have acquired their influence in the economy during the rule of the social democrats. One of them is Jozef Čimbora, Babiš's long term colleague in Petrimex (he worked in the board since the year 1969 to the year 1993) who is managing the firm Falkon Capital now. Without any public tender Falkon acquired the right to enforce the Russian debt of one billion crowns for twenty billion crowns. The transaction arose unusual suspicion: Russia remunerated more than fifty billion - the thirty billion difference vanished on the way from Moscow to Prague. Falcon is similar to Agrofert not just by the close relationship to the cabinet - also it belongs to the company with the seat in the only office in the outskirt of the out-of-the-way Swiss town. Babiš and Čimbora are not doing their business together, they even deny their contacts from Petrimex. „I do not know Mr. Babiš, there is nothing to talk about,“ he said to the question whether they continued their mutual co-operation. Babiš has not commented his relationship to Čimbora and did not answer even the written questions.

Similar non-transparent firm is Housing and Consulting, which is registered in Israel and which got the public order for the construction of the highway in Ostrava also without any public tender. The wangled public tendering and hard governmental pressure accompany the effort to buy the gripen air-fighters (see the page 5). The fact that the cabinet's business activities seem to be connected with the same names all the time is proved by the fact that the purchase of the gripens from Britain for more than one hundred billion crowns should be accompanied by the British investments into the Czech firms - among the chosen ones there is Babiš's Deza and Aliachem with promised investments of twelve billion crowns.

Who owns Ameropa?

Babiš is different to other chemical magnates by the fact that according to the available information his enterprises are profitable. Babiš's firms are also profitable - with the exception of the Proferta case in the amount of half billion - they regularly pay installments of their credits which according to the available information amount to five billion. „The firms of Mr. Babiš pay up the credits in full compliance with the preset installment plan,“ said the officer of Živnostenská banka for example.

The secret services monitor Babiš in more critical way. Up to now his co-operation with the communist espionage group has not been explained (the documents were allegedly lost), the origin of his capital and the background of the O.F.I. firm that controlled the whole holding Agrofert for seven years is not clear either. Also Ameropa refuses to inform about its ownership structure.

The secret services warned Zeman's cabinet about the non-transparency of the Swiss firms in one of their reports last year. They stated that the Swiss may have been hiding the investments of a third person. The reports points out that the change to take control of the oil chemical industry and the chemical sector in the member state of NATO may draw interest of a lot of risky companies. It is not possible to rule out an owner behind whom Russian, Arabic or Chinese secret services may stand or the organized crime. The cabinet did not get excited and to the question „Who is the owner of Ameropa?“ no minister knows the answer or wants to answer.

Babiš has to agree with creditors of Unipetrol,

said Jiří Soustružník, the financial analyst of the company Patria Finance Agrofert is buying Unipetrol for twelve billion. What will it actually acquire?

It is the dominant company in the chemical industry. The firm is significant even from the point of view of the entire Czech economy. the Czech refinery company had been the key stone of the Unipetrol, but the results in the last year and in the first quarter of this year report that the company loses its former position in the holding. The actual pillar is Chemopetrol today, where the investments are carried out to other capacities as the same is done also in Kaučuk Kralupy. These firm have a significant impact to the amount of the Czech export. In what way are these firms essential for the Czech economy in your opinion?

They are key suppliers of the raw materials for the chemical industry. Where will Agrofert get the money to pay up?People say that by the sale of the Unipetrol interest in the Czech refinery company and the network of petrol stations Benzina. The time consequence will be probably such that Agrofert will have to borrow the money for the purchase of Unipetrol. Then Unipetrol will sell the Czech refinery company and Benzina. The public was informed that Unipetrol is to get eight and half billion crowns for the Czech refinery company.

If Agrofert counts with the money for the Czech refinery company, it will intend to get away from Unipetrol. There are three basic alternatives. The dividends, but it is not very probable. The second is the loan of this money to Agrofest, the third variant is the Unipetrol's acquisition of the assets in ownership of Agrofert. There is problem though. The creditors of Unipetrol (its debts amount to approximately twelve and half billion crowns) allegedly have according to the contract a right to require a immature repayment of the debt when Unipetrol is sold. The question is how the new owner will agree with them - may be it will be forced to use the money from the sale of Czech refinery company to repay the debts. Who are the creditors of Unipetrol?

Unipetrol has issued the bonds and then there are the classical bank credits. Unipetrol and Agrofert own the firm Agrochemie in the exact proportion half to half. Through this company they control Aliachem and Lovochemie. What were the advantages of such connection to the state Unipetrol?

I cannot see any positive economic advantage. But I evaluate is as a man who stands outside, it is possible that the management may see some advantages in it. Is twelve billion for Unipetrol enough? Some firms offered more.

I would not like to evaluate this. The cabinet had a condition that Unipetrol would stay altogether after the privatization, the strategy of the firms doing their business in the Central Europe region, is also important. Other facts may play their role too. I do not know the privatization bids.

The private life of Andrej Babiš

Andrej Babiš lives in a luxurious villa in Bratislava. His address in Prague is in Roháč street in Žižkov. The Slovak magnate is married, has a 23-year old daughter and 18-year old son. The daughter is on a practice stay in an investment bank in New York, his son studies a grammar school in Prague. Babiš owns the Slovak firm Berg together with his brother Alexander. His brother entered the firm in the year 1998 with a deposit of twenty-two million crowns.

Babiš likes plying tennis. He regularly organizes the tournament of the Slovak top celebrities at the courts of his club Slávia Agrofert STU in Bratislava. The celebrities as the Slovak president Rudolf Schuster and the Prime Minister Dzurinda take part. Babiš likes to talk about the tennis match of his daughter against the prince Moulay Rachíd (the brother of the today's king) during their stay in Morocco. She beat the prince and won a dog with royal blood confirmed by a certificate.

Petrimex

The Bratislava firm Petrimex is Slovak equivalent of the Czech Chemapol. It was established in the year 1948 as an exclusive importer of the oil materials to Slovakia. Similar to its Czech equivalent in the year 1969 it became a state joint stock company in which tens of firms had their interests, the firms it provided the import of materials for. And Petrimex also went bankrupt in the year 1999 as the firm Chemapol.

Anton Rakický was the manager of Petrimex since the year 1990, after his removal in 1995 he disappeared hiding from the legal prosecution in the USA. It was him who named Babiš his deputy in the year 1990 and he said the same as Babiš - that Mečiar's cabinet wanted to destroy him.

The former Mečiar's minister of finance Sergej Kozlík authorized Petrimex enterprise to enforce 300 million of Slovak crowns owned to Slovakia by Egypt. Petrimex sold the account receivable for 150 million Slovak crowns to the firm Broadfield Finance registered on the Virgin Islands. The contract with the cabinet did not authorize Petrimex to sell the account receivable to anyone. Petrimex then went bankrupt and up to now it is not clear where the money from Broadfield Finance finished.