Babis, who also faces police charges over EU subsidy fraud, insists he has done nothing wrong (JOHN THYS )

Prague (AFP) – The European Commission says Czech Prime Minister Andrej Babis must return millions of euros subsidies after a draft audit report found the billionaire in a conflict of interest, Czech media reported Saturday.

The Commission conducted the audit in January and February, suspecting Babis of taking decisions on EU subsidies as a politician but drawing them as an entrepreneur.

It found Babis, the second wealthiest Czech, still rakes in profits from the Agrofert food, chemicals and media holding he founded.

The Commission, which halted subsidies to Agrofert pending the audit verdict, said it wanted the Czech Republic to return the equivalent of 17.4 million euros ($19.5 million) in subsidies drawn counter to the rules.

The 64-year-old Slovak-born Babis transferred Agrofert to two trust funds in February 2017 — months before he became prime minister — to comply with conflict of interest regulations.

But citing the funds’ articles of association, the Commission said that “Mr Babis is the settlor and the sole beneficiary of these Trust Funds.”

“The two main objectives of the Trust Funds are the administration of the Agrofert group and the protection of the interests of Mr Babis,” reads the draft report.

– ‘Direct economic interest’ –

“Mr Babis… therefore has a direct economic interest in the success of the Agrofert group,” it says, adding Babis’s impartiality as a politician was compromised.

The draft report also highlights a number of other flaws related to EU subsidies drawn by Agrofert.

“The total amount of corrections proposed… amounts to CZK 451,174,585,” the report says.

The Czech finance ministry said it would comment on the report only when it has received the final version in Czech.

On Friday when a Czech daily published an extract from the report, Babis said the allegations were not true.

“The Czech Republic will definitely not have to return any subsidies. There is no reason for that because I’m not violating Czech or European conflict of interest laws,” he added.

In an emotional speech in parliament, he called the newspaper story “a filthy lie” and accused lawmakers of “having no other topics but Agrofert.”

The Commission declined to comment on the matter on Friday. Its spokesperson told AFP that it “never comments on ongoing audit procedures and certainly not on leaks.”

Babis leads a minority centre-left government of his populist ANO movement and the leftwing Social Democrats, relying on tacit support from the Communists for a parliamentary majority.

The former Communist is also facing police charges over EU subsidy fraud and allegations he served as a secret police agent in the 1980s when the former Czechoslovakia was a Communist state.

Babis has repeatedly rejected the allegations as a smear campaign. 

Despite his woes, ANO won last weekend’s European elections, gaining 21.2 percent of the vote.

Disclaimer: Validity of the above story is for 7 Days from original date of publishing. Source: AFP.