Final Word from Tuesday, March 14, 2017

As expected, the "audits" showing that Andrej Babiš had enough legal income to buy tax-free Agrofert bonds were a whitewash. PwC was so eager to assist Babiš in committing asset-declaration evasion that it had the same auditor who examined Agrofert's books for six years, Věra Výtvarová, perform the assessment of Babiš's income. This can hardly be called an independent report of factual findings. (EY at least had a different auditor do the work for Babiš.) The most important finding is how Babiš tunneled Agrofert. In terms of underhandedness, it ranks up there with Zdeněk Bakala's dividend recapitalization at OKD. Babiš, as a private individual, founded companies in fields of Agrofert's interest, ran them briefly as legally independent but sector-dependent entities, and then sold them to Agrofert for tons of money at a 0% capital-gains rate. The only difference between Babiš and Bakala is that Bakala screwed other stakeholders as well, not just taxpayers. [Czech Republic recap legalized one-crown]

Glossary of difficult words

Correction: the original version said "shareholders," instead of "stakeholders."

whitewash - a deliberate attempt to conceal unpleasant or incriminating facts about a person or organization in order to protect the reputation of those involved;

finding/findings - information discovered as the result of an inquiry or investigation;

underhandedness - secretive or dishonest behavior;

dividend recapitalization - an issuance by a company of new debt in order to pay a special dividend to private investors or shareholders;

capital gain - an increase in the value of a capital asset (investment or real estate) that gives it a higher worth than the purchase price;

to screw someone - (in this context) to cheat someone;

stakeholder - a person with an interest or concern in something, especially a business (such as miners and tenants, in the case of OKD).

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