27. září 2016 | News

Janusz Konieczny: Babákovo zlaté vejce 5 let poté

Comment

Donations, which should be unselfish by definition, make up for no small part of the income of political parties and movements. However, past experience confirms that no small amount of gifts is part of a broader agreement or commitment under contract. A person or concern that face financial problems are deemed standard suspect donors.

In 2011, an affair broke out around Public Affairs deputy Michal Babák, who gave his party a gift of 6.5 million CZK and lent another five million crowns to it.[1] Michal Babák took a loan to finance his donation and claimed at the time that he would sell 15 percent of the shares of the firm Bene Factum, for which he said he had been offered a hardly believable sum of 35 million CZK. At that time, he described the firm as a golden egg, since it had enough contracts to last for the next 5-10 years. Five years on, we can see if it was really so.

Michal Babák presented a declaration of his assets in July 2011.[2] In it, the member of the parliament of the day declared debts totalling 16 million CZK. Logically, therefore, the provision of a gift and loan in excess of 10 million CZK was, well, quite illogical in such circumstances. Consequently, Michal Babák had to produce an explanation, which would make it seem that he was so rich that the donations were a “drop in the sea”. Michal Babák tried to outwit the taxman: he said the selling of 15% of Bene Factum shares would yield up to 35 million crowns, but offered nothing to support his claim. It should be noted that according to a document from that time, a “Report on Relationships”, Miloš Havránek and Petr Šrámek each held 50 percent of the shares and there was simply no room left for Babák’s 15 percent.[3] More importantly, it was hardly conceivable , way back then, that the value of these shares was really so high. Had the price of Babák’s shares really amounted to 25 million CZK, the company as a whole would have been worth 167 million crowns.[4] Its very low profit hardly tallied with such an enormous value. If, however, the worth of these shares had been at least half the said amount, it would have been possible to ascertain it on the face of financial statements filed five years later, which means now, in 2016. I have no wish to keep you in suspense any longer and let me disclose that the economic result for the 2015 accounting period was actually in the red. Total assets had dropped to a half of the 2011 figures, the firm’s equity increased by only one million crowns, although fortunately its debts also decreased. From today’s vantage point, it is safe to say that the 15-percent share could not have been so incredibly valuable at that time and it is a matter of guesswork if Michal Babák really held those 15 percent. The veracity of Michal Babák’s assertions therefore gives rise to very serious doubts.

Let me say in conclusion that the current party financing system is a shambles and absolutely escapes control, which would reveal not only such manifestly outrageous cases. Fortunately, thanks to mutually interacting NGOs, associated in Rekonstrukce státu (Reconstruction of State), and mainly an active involvement on the part of the general public, it was possible to make politicians pass stricter new rules of political party funding. There must ne no letup to this thrust and maybe in time, even Michal Babák will assemble courage and openly admit how it really was with the “golden egg”, reportedly worth an unbelievable 35 million crowns.

[1] 31.5.2011, Česká pozice, Tomáš Hlaváč

[2] http://zpravy.idnes.cz/poslanec-babak-priznal-dluhy-16-milionu-i-desitky-milionu-za-akcie-ph5-/domaci.aspx?c=A110712_100626_domaci_hv

[3] http://ceskapozice.lidovky.cz/komora-auditoru-setri-babakovo-bene-factum-i-auditora-key-investments-1z2-/tema.aspx?c=A110818_044105_pozice_32954

[4] http://zpravy.aktualne.cz/domaci/babak-mluvi-o-milionech-zlate-vejce-vydelalo-165-tisic/r~i:article:709689/

Janusz Konieczny - NFPK analyst