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bne December 2018 Cover Story I 23
In 2010, an array of environmental years, Uniles grew from a small, regional with profitability; its primary business
company to one of the largest forestry firms in the country. Receiving more than $90mn worth of state contracts, it more than quadrupled its revenues.
For every winner there is a loser. In
this case, apart from small and medi- um-sized businesses, it was the trees themselves that perhaps paid the highest price. Today the Czech Republic’s mainly coniferous forests are facing the worst bark beetle infestation in at least 200 years. According to a number of experts interviewed by bne IntelliNews, the new
NGOs and small business owners
lined up to protest against the adop- tion of the new commercial policy of the state-owned company Czech Forests, the largest owner of forest land in the Czech Republic. They feared that the proposed new system for subcontracting forestry work would lead to the market domi- nation of a few large companies, with potentially devastating implications for Czech forests.
They were right to be worried. A mere eight years later, the single largest sub- contractor of work in state-owned forests is a daughter company of the Agro-
fert holding, controlled by the current Prime Minister of the Czech Republic Andrej Babis. And the forests? They are now in the worst shape since the 19th century, according to experts.
Babis is a billionnaire tycoon, who in part built his fortune in the agro-sector. The Czech Republic’s second-richest man, Babis has long been known as one of the most influential people in Central Euro- pean agriculture. Until 2017, he was the sole owner of the Prague-headquartered Agrofert holding, a massive enterprise controlling 230 companies in multiple countries across Central Europe.
Although Babis is formally no longer the owner of the company – he was forced to transfer ownership of Agrofert to trust funds controlled by family members and lawyers when he became prime minister to comply with new conflict of interest laws – the nature of his informal rela- tionship with the company has become the object of investigation. Babis himself vehemently denies any wrongdoing.
Whatever Babis’ current role at the com- pany, the business is still up and running. Although it is best known for its presence in agriculture and media, Agrofert is
a major player in a number of other fields, including forestry since 2011.
Likely incentivised by the modified tendering rules of the state-owned Czech Forests – a move that handed all the trump cards to the biggest players – Agrofert bought two forestry companies: Uniles and Wotan Forest. In just seven
was to ensure that forests remained a sustainable resource for future generations. Since the founding of the company in 1992 until 2009, the average yearly gross profit was a mere $28.2mn.
Within a couple of months of Sykora’s leadership, this number shot up beyond any reasonable expectations. After
just a year in office, the former Babis employee brought more than $137mn in profits to the company, adding another $92mn in 2011.
“For every winner there is a loser. In this case, apart from small and medium- sized businesses, it was the trees themselves”
tendering rules for work in state-owned forests, which brought quick riches to companies like Uniles, have been one
of the problems along with the extreme droughts that have led to the ecological catastrophe the country currently faces. The origins of the story go back more than a decade.
Money comes first
On January 1, 2009, Svatopluk Sykora, the former CEO of Aliachem, an Agro- fert-controlled chemical company, was appointed the new director of the state- owned Czech Forests. Founded in 1992 by the Czech Ministry of Agriculture, the company’s primary responsibility is to manage more than 1.2mn hectares of forestland owned by the state, around 50% of all forest land in the country.
Prior to Sykora’s appointment, the company wasn’t particularly preoccupied
Czech Forests profits (in mln. CZK)
According the renowned Czech agri- cultural expert Petr Havel, that extra money was needed to fill some holes in the state budget.
“Czech Forests used to keep their profits on their own accounts. But, under Sykora, part of it went to the state bud- get. That’s why the need to increase the profits of the company; it went straight to the state coffers,” Havel told bne Intel- linews in an interview.
How to quadruple profits in one year?
Since its foundation until 2010, Czech Forests was the principal manager
of the forests it owned. It did most of the forestry work with its own limited manpower. The work beyond its capaci- ties was subcontracted. The contracts were awarded to private companies for two basic types of work: tree harvesting and tree planting. The subcontracted
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