## Saturday, December 01, 2018

### EU lawyers: Czech PM should return billions in subsidies

Conflict of interests is self-evident to everybody with a brain, Czech culture of the bending laws clashes with different EU habits

Hours ago, Le Monde (FR) and The Guardian (UK) – and now e.g. Süddeutsche Zeitung (DE) and Reuters (UK) – informed their readers that the lawyers of the European Commission have determined (according to a leaked report that you can read now) that the Czech PM Babiš is still the actual owner of Agrofert, a 3-billion-dollars corporation in agriculture, food industry, chemical industry, reproduction hospitals, and media, and therefore the billions of crowns (hundreds of millions of Euros) he has received in 2018 violate the EU rules and should be returned.

The European Commission is usually acting according to the recommendation of its lawyers in such situations although it's not quite certain that this will be the case now.

Babiš, a former communist cadre and agent of the communist secret police, has accumulated over $3 billion dollars in Agrofert – a corporation that largely grown out of Petrimex, a communist company he took over by using ethically and legally murky procedures. Consumers know chickens, salami, and about one-half of the media including the two top dailies MF DNES and Lidovky, their Internet portals (iDNES.cz and Lidovky.cz), the most influential radio Frekvence 1, and others. Police has charged Babiš with a$2 million EU subsidy that Babiš devoured about a decade ago – a subsidy for small businesses, not billionaires – when he was building the Stork Nest, a somewhat luxurious farm/hotel/conference center. It's clear that he masked the identity of the owner to get that money – he wasn't a politician yet so it was expected that one could get away with it.

In recent weeks, police also started to investigate the abduction of his son to Crimea and Krivoj Rog, Ukraine, a year ago. The son of the prime minister, a former pilot, was turned into a schizophrenia sufferer at age of 35; there are extremely good and numerous reasons to think that this whole diagnosis is a fabrication. The Heavy Pochondriac band has released a new song (a parody of "Easy"), I Suffer From Schizophrenia, to elaborate on this point. On Thursday, I was able to identify the Russian-Ukrainian sweetheart of Mr Babiš Jr. I know her last name and the vk.com URL – she erased that whole huge page in the morning. There were thousands of travel photographs, I hope she has copies, she likes to show her body, I think, and it seems rather clear that the Czech PM was the reason why she deleted that regular but impressive enough page with her photos.

But the total financial amount that Babiš has collected through subsidies is obviously vastly larger than $2 million – and the sum is arguably comparable to his$3 billion net worth. It's obviously systemically wrong when a prime minister's (and even a finance minister's, which he previously was) company receives hundreds of millions of dollars in subsidies and various laws say "No" to such a setup. The real question is whether and how these laws are being enforced.

Babiš has reclassified his Agrofert to a "trust" (we have some beautiful, somewhat archaic, purely Czech terminology that was already common in the 1918-1938 capitalist Czechoslovakia) so that he "officially" no longer owns it. Every sensible person sees that it is just a sleight-of-hand and nothing has changed about his ownership. In fact, when he sent his son to Crimea to avoid the investigation, a Russian driver and/or bodyguard Mr Prototopov employed by Agrofert (although he doesn't even have a Czech citizenship!) was sent as Mr Babiš's companion. It's very clear that he's picking people from Agrofert to do things he needs. He does many other things indicating his direct management. The idea that Agrofert is no longer "his company" is a stretch, to say the least. On the other hand, he has probably lost some tools to control it, as indicated e.g. by the fact that he got poorer by some 15+ percent in the most recent year. But even if his ownership was just 50% direct, it would still be a huge clash of interests given the \$3 billion value of the company (Babiš is slightly wealthier than Trump now).

However, the main problem isn't whether Babiš controls the daily business of Agrofert, as he tries to spin it. The main problem is that he is the person who benefits from the subsidies for Agrofert! And as a prime minister, he is influencing such flows.

Czechia has been a (politically) Western country throughout most of the second millennium. But in recent three centuries, much of this Western character was arguably erected mainly due to the Germans on our territory – and other territories of the Holy Roman Empire and Austrian Empire where we have belonged. The Czech nation contains a higher Germanic admixture than other Slavic nations. But it's still a question to what extent a truly separate Czech nation can behave or would behave as a Western nation.

As you know, I am generally supporting the sovereignty of nations that are members of the EU. On the other hand, I do find it natural when more advanced nations "sort of supervise" less advanced ones, to put it euphemistically. In most cases, this assertion is meant to talk about exotic countries that used to be colonies of the European powers – I strongly believe that the decolonization went too far. But to a lesser extent, the question is relevant even for the likes of Czechia.

Are Czechs capable of governing themselves?

You know, this is not quite a heretical question in Czechia – Czechs are surely among the most self-critical nations in the world – and it's being discussed while many people – including rather bright ones – tend to choose "No". The idea that "Czechs can't really govern themselves or exist separately" has been promoted especially during the Nazi occupation. The narrative about the "dependence of Czechs on Germans throughout the history" was heard everywhere. Those Nazi guys were evil and they have lost the war but that doesn't mean that we can't even consider what they said. Czechs do consider it and their views are rather split.

Well, I think that the political rise of Andrej Babiš is a strong piece of evidence supporting the – unpleasant – answer that the Czechs cannot really govern themselves. Babiš couldn't rise in Poland, Hungary, and even in Slovakia where he was born. I know that principled or hardcore populists – "really strong fans of democracy in the sense of the rule of the most mediocre mobs" – dislike such propositions. But I have always believed that it's just wrong to allow the most mediocre mobs to control everything – and/or the political atmosphere in every corner of a country – and democracy just cannot be an argument that they should have such an excessive power.

When it comes to laws preventing the conflict of interests and subsidy frauds, and perhaps other laws that Babiš has violated, way too many Czechs love to close their eyes and enable the violations of the law – even very clear ones. For example, it is very obvious that Babiš has deceived the officials about the actual owner of the Stork Nest center. But one million or two millions of his fans just say: He was able to submit some documents, the officials accepted them, so everything is legally fine!

It's not fine simply because the deception of the officials about the vital information – especially who is actually the recipient of the subsidy – is how the subsidy fraud is defined. If you successfully deceive an authority and they accept your documents on a sunny day, it doesn't prove that you haven't committed any crimes. It doesn't mean that you won't be put in jail.

There is a "different level" of the laws enforcement that may arrive after you successfully submit some documents etc. The simple Czechs – the kind of Babiš's voters – just don't get to this level at all. When they get through, everything is fine from their perspective. And they support such "minor offenses", like the masking of the actual owner, because they find it normal. They find it normal because they would be doing the same thing in a similar situation. Most of such people are arguably doing such things although the amounts are smaller. And they assume that everyone does. They're also using (or at least trying to use, things are getting better) their friends and relatives in the government organs to get certain advantages that others couldn't get. And they think that this is normal, too.

If and when they tell me "let him who is without sin cast the first stone" again, let me say that I am innocent – and I would happily accept the offer and eagerly throw a rock against Babiš's skull to break it into pieces. I have never done such a thing and I am ashamed because millions of Czechs apparently find this fraudulent behavior normal. It must be unbelievable for Babiš's voters but millions of other Czechs don't find this behavior normal and most of them have never done such things.

Exactly the same comments apply to his reclassification of Agrofert as a trust. He was just told to do something by his lawyers, and because he did "something" about the legal status of Agrofert, it's automatically assumed to be "enough". But it's obvious that laws that try to prevent the conflict of interests must care about the true final owner of the company, not some superficial bureaucratic name written on some papers to fool the stupidest readers of the document. And he is pretty clearly the actual owner of Agrofert, despite the utterly insufficient "trust". That's why it was totally logical and correct for Transparency International to complain about the ongoing conflict of interests.

I don't think that everything that Babiš does is wrong. He is active and visible enough and he is mostly doing foreign policy that is mostly compatible with the preferences of most Czechs including your humble correspondent (well, I don't think that his recent attack on the New York Times was right). But I don't think he's really "irreplaceable" in this respect. Hundreds of good politicians or managers would be able to do the same thing. It's utterly crazy to suggest that he should be allowed to devour billions of crowns for this job – this job has the value of a few millions crowns.

Domestically, he's worshiped as the prime minister behind a growing economy but this is already a pile of šit. He's mainly praised for increasing the pensions, welfare, subsidies for pensioners and students' transportation, and salaries of the government employees, not to mention a few other mostly parasitic groups that make up the core of Babiš's voters. All these things are just cheap populism that can't be done in a sustainable way.

Meanwhile, the GDP growth was almost 5% when he was becoming the prime minister – among the 3 highest rates in the EU – while now it is just 2.3% during his first year, by far the lowest growth rate in the Visegrád Group. So he is not doing a good job as a manager of the economy. And he's doing many bad things that are erosive and corrosive for the Western character of our country, including the centralization of power (that was also clear from yesterday's shareholders' meeting of ČEZ where the government has a majority – the minority shareholders were treated like Jews in Nazi Germany!), his constant lies in the media, people's growing fear to oppose him, and just way too many things that resemble the Stalinist regime after 1948.

If the European Commission demands him to return a few billion crowns – and/or leave politics – this will obviously create a rather controversial and explosive situation. Maybe it will be refreshing for me to stand on the EU side. The EU is doing many bad things but it's an entity that exists, that has its funds, and has rules how these funds may be distributed. It is common sense for every entity, including the EU, to protect its funds according to its free will. Their rules that try to fight against the conflict of interests look totally sensible to me which is why I won't be surprised at all if the European Commission demands the billions to be returned. (Babiš responded to the Guardian and Le Monde articles simply by saying "it's just lies". Pure denial of reality.)

Obviously, that money should be paid from the assets of Agrofert (the recipient) i.e. from Babiš's assets. He could lose up to 15% of his wealth, about CZK 10 billion, if the rules were applied universally. I am terrified by the idea that he could try to steal this money from the public coffers – but I have seen enough to think that even this could be possible in my country and he could still find a million or two millions of really šitty people who would just endorse such a "solution". Babiš is a nasty guy but he's their nasty guy, a primitive man with an overgrown ego who is saying and doing similar things as they do. He's an authentic representative of the working class, or a rabble, and this rabble thinks that this should mean that he should get away with literally everything.

It's sad because with this overgrown rabble, one may argue that the Czechs cannot govern themselves.

RIP George H.W. Bush. He was the only president who ever visited Czechoslovakia – exactly 1 year after the Velvet Revolution, on November 17th, 1990.