Data don't lie
The week in corruption, 10 September 2021
Signs at a June 2019 protest against Czech Prime Minister Andrej Babiš in Prague. Image: Tereza Koudelkova / Shutterstock
Czech Republic’s billionaire Prime Minister, Andrej Babiš, has his hands full these days with the upcoming elections. But his company Agrofert continues to drag him down.
This week, a Czech court rejected Agrofert’s request to resume payments of EU subsidies, which were paused over the company’s controversial connection to Prime Minister Babiš. Agrofert is an agricultural conglomerate which operates companies involved in everything from pig breeding to food processing.
Before he was elected in 2017, the Prime Minister claimed that he had walked away from the corporation, transferring Agrofert’s ownership to two trust funds. The following year, Transparency International Czech Republic discovered that Babiš was the sole beneficial owner of those trust funds, which together owned 100 per cent of Agrofert’s shares. This discovery meant that Babiš, despite what he claimed, had continued to benefit from the company. What’s more, he had a conflict of interest in relation to a 17-million euro package of EU agricultural subsidies that Agrofert was selected to receive.
Tracking down Agrofert’s true ownership was easier said than done. At the time, the Czech Republic did not have any publicly available records on who owned those trusts. The discovery of Agrofert’s real owner was only possible thanks to Slovakia’s free and public platform which records ownership information of companies receiving public contracts.
Since then, the European Commission has confirmed Prime Minister Babiš’s conflict of interest, first in 2019, and then again in 2021. Due to this, just last week the European Commission announced it would halt the disbursement of other EU subsidies to the Czech Republic under the economic recovery fund until the government addresses these systemic issues relating to decision-makers’ conflicts of interest.
This decision may affect many other businesses and communities, whose lives those subsidies could potentially improve in the wake of the pandemic. The public should not have to pay for their leaders’ misconduct. The Czech government needs to urgently heed the European Commission’s recommendations.
After years of powerful resistance, Financial Action Task Force members are now finally open to suggestions on the ways to revise of the global standard on beneficial ownership transparency.
The case of Agrofert and Babiš demonstrates the remarkable impact of company ownership data, when it’s publicly available. The Czech beneficial ownership register was private until recently, but in June, authorities finally granted the public access to it. In a win for transparency, Babiš is now listed as a beneficial owner of Agrofert.
Information about the real individuals behind companies is critical for everything from a fair tax system to stopping corruption. There’s an urgent need for public registers with verified beneficial ownership data to become the global standard.
Members of the Financial Action Task Force have a chance to make it happen this fall. This will send a strong message to the corrupt who hide behind anonymous companies – their days of pigging out are over.
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