As EU leaders convened for a video summit on Friday focused on a 750 billion euro recovery fund to tackle the coronavirus crisis, the European Parliament was set to adopt a resolution condemning Czech Prime Minister Andrej Babiš for conflicts of interest. MEPs on the budget oversight committee argue that until the EU Commission and the European Anti-Fraud Office (OLAF) investigations are complete, he should not take part in decisions on EU budgets.
Slovak-born billionaire Andrej Babiš is accused of continuing to exert control over the massive Agrofert conglomerate he founded despite having placed it into two trusts, having been compelled to do so years ago under a Czech law dubbed “Lex Babiš”. Among other things, the legislation prevents any company in which a cabinet member has more than a 25-percent stake from applying for public subsidies and owning newspapers, radio or TV stations.
A draft European Commission audit in December found that Mr Babiš continues to wield effective control over the Agrofert holding, whose companies have long received substantial EU and Czech subsidies. Brussels subsequently demanded the return of some EU subsidies and blocked the issuance of others. The Czech government is threatening legal action to get the money flowing again.
MEP Monika Hohlmeier, Chair of the Committee on Budgetary Control in the European Parliament, led a fact-finding mission to the Czech Republic earlier this year to assess the situation. She told a news conference on Thursday the MEPs found grave “systemic” failing in efforts to identify potential conflicts of interest while the Czech Supreme Audit Office has no power to carry out on-site inspections.
“Our own impression was that there seems to be no efficient system nor clear mechanism in place to prevent and address situations which may objectively be perceived as conflicts of interest. Secondly, responsibilities between and among [Czech] authorities and bodies are very dispersed so that no institution and no authority really has the whole systemic overview. There is no systemic transparency, so it’s complicated to identify certain problems.”
She noted that while similar investigations have proven contentious in the past, the mission encountered a shocking level of “aggressiveness”. Two Czech MEPs on the fact-finding mission, Tomáš Zdechovský (EPP) and Mikuláš Peksa (Greens/EFA), even received death threats after Babiš described them as traitors because they are “fighting against the Czech Prime Minister”.
MEP Daniel Freund (Alliance 90/ Greens) argued that while there is a “strong suspicion” of a conflict of interest, Mr Babiš should not be allowed to take part in negotiations on the EU’s next long-term budget, the Multiannual Financial Framework, or continue to negotiate on agricultural funds and cohesion funds that could benefit him personally.
“To actually establish whether there is a conflict of interest, one needs to know of course who is the ultimate beneficial owner of the company Agrofert. And there we see that in the official EU rules on the publication of beneficial owners, we have very different implementation in the different Member States. In the Czech Republic, he [Babiš] is not listed in the register as the beneficial owner. In the UK, he is. In Slovakia, he is. In Germany, nothing appears under the beneficial owners of his companies.”
The European Parliament resolution lays out dozens of recommendations for specific actions that the Commission and EU Council should take to halt the abuse of EU subsidies in Czech Republic. It states that the body “Strongly disapproves of oligarch structures drawing on EU agricultural and cohesion funds whereby a small minority of beneficiaries receive the vast majority of EU funds”.