A billionaire, a coder and a probe into EU funds
By PETER LACA, LENKA PONIKELSKA, MICHAEL WINFREY | Bloomberg | Published: January 19, 2019
Martin Vytrhlik carefully scans packages of meat and cartons of milk with his smart phone. It responds, but not with information about nutrition, price or availability. Up pops a picture of the Czech prime minister.
The app developed by the 34-year-old computer programmer turned political activist tracks food supplied by agriculture and chemical conglomerate Agrofert. The company was founded by billionaire premier Andrej Babis and is now at the center of an investigation into alleged conflict of interest.
Babis put control of his empire -- more than 250 Agrofert businesses and 34,000 employees in 18 countries -- under two trusts before taking power last year. Political opponents say he remains the final beneficiary while his government oversees policies ranging from taxation to negotiating European Union subsidies that benefit industries where Agrofert is active.
Vytrhlik said he created his app, called "Bez Andreje," or "Without Andrej" in English, to protest. About 200,000 people have downloaded it so far, enabling them to scan meat, milk, butter, flour and bread linked to Agrofert, he said.
"He's producing an awful lot of things that people buy every day," said Vytrhlik, who until now has had little engagement with politics. "And he is the prime minister, so I think that's a problem."
Babis, 64, founded Agrofert in the early 1990s as a fertilizer trader with four employees. He now has an estimated fortune of $3.3 billion and remains a popular leader in the Czech Republic thanks to increases in social spending.
Czech lawmakers stripped him of his parliamentary immunity from prosecution a year ago in conjunction with a probe into alleged fraud involving EU funds. Babis rejects any accusations of wrongdoing, and the inquiry has ground on for three years with few results. Agrofert has repeatedly rejected any accusations that it's violating Czech or EU rules.
But European lawmakers have taken notice. Prompted by a complaint from anti-corruption watchdog Transparency International, the European Parliament approved a resolution in December asking the EU to suspend subsidies for all companies linked to Babis and conduct a "thorough investigation" into any conflict of interest. Auditors from the European Commission arrived in Prague last week to assess whether he has sufficiently severed ties with Agrofert.
"We wanted to fix an enormous conflict of interest in relation to EU funds by transferring the game to the EU level," said David Ondracka, the head of Transparency International's Czech branch. "It's a breakthrough."
It's difficult for Czechs to escape Agrofert's presence. With $7 billion in annual sales, Agrofert took Babis more than two decades to build into an array of products that include fertilizer that boosts the grains it processes into food to rubber and chemicals used by major tire makers.
More than half a million people read the biggest broadsheet daily, Mlada Fronta Dnes, the flagship of his media empire. In the summer, much of the country's rolling hills are covered with the yellow rapeseed fields that Agrofert harvests as the biggest local biofuel producer.
In its December resolution, the European Parliament asked the Commission to recover any funds Agrofert received in error. The company said it received the equivalent of about $230 million in subsidies from 2014 to last year.
"We insist that on our side, everything is in line with the Czech and European law," Agrofert spokesman Karel Hanzelka said. "We don't see any legal reason why we should stop drawing subsidies, or even return subsidies."
At home, Czech police are investigating Babis and his family over a recreation center formerly owned by Agrofert called the Stork Nest, which has spa facilities, horse stables and a golf academy. The probe is centered around whether EU subsidies worth some $2.2 million were used illegally during its renovation a decade ago.
The accusations, which Babis says were fabricated by his political opponents, have intensified scrutiny of Agrofert and Babis's rise to the ranks of eastern Europe's billionaires. But the political clashes, probe and public protests have failed to dent his support. His party's backing hit a record high in opinion polls late last year.
For Vytrhlik, it's more about raising awareness of how people's lives intersect with Babis's.
"This is only the tip of the iceberg," Vytrhlik said of the grocery items his app can track. "There are lots of other products that we don't even see."
Bloomberg's Krystof Chamonikolas contributed.