Prague - Explosia, a state-owned explosives producer based in Pardubice, is considered to be causing of a possible conflict of interest to billionaire Agrofert owner Andrej Babis, leader of the ANO 2011 party and a hot candidate for finance minister.
The company is facing bankruptcy and has received multiple bailouts from the Finance Ministry in the past years. Most recently, the government of Prime Minister Petr Necas decided during its last session in July last year to pour CZK 250 million (EUR 9.1 million) more into Explosia.
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This financial boost helped not only Explosia but also its trade partners and creditors, including Babis's Agrofert. Explosia has its headquarters on the premises of Synthesia, a chemical company belonging to Agrofert. Synthesia provides Explosia with energy as well as other services and it also collects rent from the state-run company.
Arms-trading company Omnipol is another entity that benefits from the bailouts awarded by the Finance Ministry to Explosia. Omnipol is owned by the family of Richard Hava, a long-time friend of former Finance Minister Miroslav Kalousek. Kalousek served as finance minister from 2007 to 2009 and again from 2010 to 2013.
Explosia's relation to the Finance Ministry has thus been defined by a possible conflict of interest already for some time, and if Babis gets the post, this will go on.
According to CEO Josef Tichy, Explosia will not need any more financial help from the state. Tichy says that his company is paying off debts and can get back in the green this year. "At present we have a number of new, important orders. Thanks to the financial support from the state, we have been able to start investments," said Tichy, adding that the company is benefiting from a boom in the industrial explosives industry he expects to last between two and four years.
Explosia's revenue increased by CZK 100 million (EUR 3.6 million) to CZK 615 million (EUR 22.4 million) last year, and the company hired 50 new employees. This year, it has even started to pay bonuses to workers.
Last year, the Necas government started to prepare the privatization of Explosia, but the cabinet was brought down by a corruption scandal in June and the process has been frozen ever since. Tichy now says that no privatization will be necessary.
Agrofert owner Babis suggested to move Explosia under the control of the Industry Ministry to avoid a conflict of interest.
If named finance minister, Babis is ready to step down from the boards of Agrofert and its subsidiaries. Agrofert receives state subsidies and some of its daughter companies have trade links with the public sector (such as Synthesia-Explosia or Wotan-Lesy CR).
