James de Candole of Candole Partners -
“A young and ambitious worker who has some practical experience with commercial work," is how a Communist counter-intelligence agent described his Petrimex colleague, Andrej Babis, 30 years ago.
Never was a truer word uttered by a professional liar. In the last two years, the business conglomerate, political movement and ministerial team of the now Czech Finance Minister Babis have recruited some two dozen senior police detectives, Communist counter-intelligence officers, and state security agents and their collaborators, according to my reckoning based upon a review of public sources.
If you include Babis himself, there are now at least 25 individuals in the Babis team with a skill set that encompasses the covert gathering and control of information, entrapment and the crushing of political dissent.
It is worth asking, then, why the likely next prime minister of the Czech Republic (Babis’ ANO 2011 party is today way ahead in the opinion polls, at some 35%) has such a pronounced preference for people with these sinister skills.There are three reasons: personal loyalty, expedience and necessity. But before examining these reasons in turn, here is a quick reminder of how Andrej Babis actually became a billionaire.
Biting the hand
In the early 1980s, Babis was employed in state-owned Petrimex, the monopoly importer of oil and chemical products to Slovakia. In 1990, he was appointed deputy managing director of the firm and by 1993, he was on the board.
In that same year, Petrimex established its Agrofert subsidiary. Two years later, an obscure Swiss entity, O.F.I., quietly re-capitalised Agrofert, in this way wresting control of the business from Petrimex. Petrimex sacked Babis, suing him without success for allowing its stake in Agrofert to be diluted behind its back. Soon after, 100% of Agrofert miraculously belonged to Babis and the Swiss company was heard of no more. Where O.F.I. got the funds to dilute Petrimex's stake in Agrofert remains a mystery to this day.
Babis has used a similar manoeuvre, over and over again, to acquire his conglomerate of over 200 firms: a mysterious third party brought in to dilute Babis’ existing partner out, with Babis then taking full control. This article, in English, by the veteran Babis-watcher, Jaroslav Spurny of Respekt from 2002, sets the scene well.
Cut from the same cloth
Andrej Babis was not a victim of Communism. Far from it. As a manager of a state enterprise specialising in foreign trade, he was one of the few beneficiaries of a totalitarian system that enslaved and impoverished the majority of his fellow citizens.
It hardly matters that, in the opinion of a Bratislava court, Babis did not knowingly serve as an agent of Communist state security. The essential thing is that, 25 years on, his upbringing as a Communist cadre must produce in him feelings of relief and solidarity, not revulsion, when in the presence of other cadres. These people are cut from the same cloth and will never judge Babis.
Today, Andrej Babis is widely regarded as the country’s most determined anti-corruption crusader. It would be more accurate to say that Babis has hijacked the anti-corruption movement for himself, just as he seized Agrofert from Petrimex, with the help of his many associates in the country’s Communist and post-Communist intelligence and state security services. Associates such as Libor Siroky, chairman of the supervisory board of Agrofert Group. In 1981, Siroky was recruited to the part of the Communist state security services that focused on counter-intelligence against internal enemies. This section worked closely with the KGB in eliminating dissent.
Siroky worked in what was called the "4th Department of X. Administration", responsible for "ideological diversion and emigration". The Western peace movement was his special area of interest. How many were imprisoned as a result of Siroky’s activities is not known.
Siroky went on to work as a lawyer in CKD Services, where he met Dagmar Negrova, who later became CFO of Agrofert. It was Negrova, apparently, who introduced Siroky to Babis, who was looking for a reliable lawyer. He was hired and within a short time was acting as the frontman for the hidden owners of that fateful Swiss firm mentioned earlier, through which Babis wrested control of Agrofert from Petrimex.
Then there is Radmila Kleslova, who runs the Prague chapter of his ANO party and is the controller of ANO’s Adrianna Krnacova, Prague's new mayor. From 1988 to 1990, Kleslova served as a Communist counter-intelligence officer responsible for the recruitment and training of spies in the West.
Kleslova has held several board positions in Agrofert companies and worked for years as Babis’ political ‘fixer’, embedded in the Social Democratic Party (CSSD), which until ANO 2011 came along had held power jointly and continuously with the Civic Democratic Party (ODS) for the last two decades.
Not all Babis’ spooks are Communists. Karel Randak has helped Babis since around 2011, always at one step removed to avoid compromising his mission, which is to legitimise Babis’ acquisition of Czech politics, and above all, his posture as a crusader against political corruption. Randak is the former director of the Czech Republic’s foreign intelligence service. He also served in the Czech Security Information Service, or BIS, specializing in economic affairs and organized crime.
Or Jan Beroun, the new head of military intelligence, appointed by ANO’s defence minister, Martin Stropnicky. Before 1989, Beroun served as a detective chief in a district of Prague. He later served as Randak’s deputy in the foreign intelligence service.
Watching (and then hiring) the detectives
The second reason for the preference Andrej Babis shows for police detectives and spies is expedience. Such people are obviously a useful tool for a businessman who does so much business with the state and the bent politicians who run it.
But their role is much more profound than simply helping Babis grow richer. These people are priceless for a politician with an instinct for absolute control and a contempt for collegial habits of behaviour.
They have helped Babis to discredit some of his most prominent political competitors, most notably the country’s former prime minister, Petr Necas, who was forced to resign in 2013 after his chief of staff, who was also his lover, was shown to have been tasking intelligence chiefs to spy on the prime minister’s wife.
Efforts to convince us that these romantic antics were a threat to national security have not been convincing. But the Necas-Nagyova scandal paved the way for Babis, lending enormous weight to his anti-political stance. One day, when the archives are opened and historians set to work, it will surely be shown that the sting operation was not merely the result of good, old-fashioned police work.
Recruiting senior police detectives and spies is an expedient way for Babis to manage his rise to power. It is also a deeply unprincipled way, in a political system built on liberal democratic principles, including, for example, the principle of the separation of powers.
It is a measure of Babis’ cynicism that, whenever another senior police officer is recruited to his team, he explains that the man was being prevented from investigating crimes properly because of police corruption and interference from party politicians. In his eyes, he is liberating them in hiring them, offering them the chance to realise their potential.
But potential for what? A closer look at the work of these detectives suggests that the value of such people to Babis is their professional skills in gathering compromising information on his business and political competitors.
The most impressive detective on Babis’ payroll is Jiri Vesely, a member of the Agrofert board and its director of internal security. Before joining Agrofert in 2011, Vesely spent 20 years in the police, most recently as deputy director of the unit for combating corruption and financial crime (UOKFK).
Then there is Tibor Levai, head of security at an Agrofert poultry firm ("Chicken Run" fans will understand why a poultry business requires a highly trained police detective to watch over the hens). Levai worked at UOKFK and later at the police department for combating organised crime (UOOZ). He was involved in several cases related to Andrej Babis, none of which led anywhere.
Libor Kazda is the new director of the financial analysis unit (FAU) of the Czech Ministry of Finance. Before joining Babis’ team at the ministry in early 2014, he had served for 17 years in the police, leading the Plzen branch of UOKFK since 2008. He was recommended by Vesely, for whom he worked.
Bronislav Schwarz is a member of parliament for ANO. He served as a police officer for 20 years. He chairs the long-running parliamentary inquiry into Opencard, a showcase of municipal corruption that has been used to ruin the careers of many of ANO’s political competitors in Prague.
Schwarz is also vice chairman of the security committee in the lower house of parliament, as well as a member of the parliamentary commission for control of the secret services. Parliament lifted his immunity at the end of 2013 to allow him to face criminal prosecution for breaking into a house without a search warrant and handcuffing the occupants while serving as police chief in Most. Schwarz, despite his name, is not overly fond of people with dark skin apparently.
Then there is Oldrich Hlusko, leader of ANO in Cesky Krumlov. He served for 15 years as an investigator at the Ceske Budejovice branch of UOOZ, working on cases such as Opencard. In March 2013, he filed spurious charges against the then mayor of Prague, Bohuslav Svoboda, and another member of the municipal government, Tomas Hudecek, who would later become mayor himself, in connection with their alleged role in a scam that was hatched long before either had ever dreamt of going into municipal politics. Both are from ANO’s fiercest party rivals, ODS and TOP 09.
Who knows what
The third reason why Andrej Babis has surrounded himself with former high-ranking detectives and Communist intelligence officers is necessity: he had very little choice.
There is good reason to believe that Babis has employed these detectives not only because of what they know about his competitors, both in business and in politics (it is very hard to make the distinction in this country), but because of what they know about him.
A number of Babis’ past business transactions, such as the acquisition of Lovochemie and PKN Orlen’s acquisition of Unipetrol (which went so disastrously wrong for Babis), have been the subject of police investigations by detectives whose colleagues he has now employed.
As for the Communist intelligence officers, men like Libor Siroky, who can say for certain that they are not in control? Babis is obviously a boss, but is he the bosses’ boss? No one knows to this day where that Swiss entity O.F.I. got the money to allow Babis to kick Petrimex out of Agrofert and grab it, apparently for himself.
Power before popularity
The popularity of Andrej Babis continues to rise in spite of the sinister company he keeps. And because of this company, so does his power. He is on a trajectory to become the country’s next prime minister.
People seem convinced that Babis’ team of detectives and spooks are actually needed to eliminate the corrupt politicians that have been ruling the country for the past 25 years. Eliminate them he most certainly will. Politicians are now his competitors where once they were his business partners.
But the notion that such a man surrounded by such people could ever hope or even wish to restore legitimacy to the country’s failing democratic institutions is absurd.
Andrej Babis is building a world in his own image. It is a world in which the covert gathering, control and misuse of information, not popular support, is the source of power. Today he has both at his disposal, but he is preparing for the time when he has only power.
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