PRAGUE (Reuters) - A Czech state attorney has halted a fraud investigation against Prime Minister Andrej Babis, the newspaper Denik N reported on Monday, citing two sources with knowledge of the decision.

FILE PHOTO: Czech Republic's Prime Minister Andrej Babis arrives to take part in a European Union leaders summit, in Brussels, Belgium July 2, 2019. REUTERS/Piroschka Van De Wouw/File Photo

Babis is charged with securing a 2 million euro ($2.2 million) EU development subsidy illegally to build a conference center outside Prague a decade ago, before entering politics.

His populist ANO party, which won an election in 2017 and remains by far the most popular political group, has found it hard to build a ruling coalition as most opposition parties have refused to cooperate while Babis faces charges.

ANO’s minority coalition with the center-left Social Democrats relies on support in parliament from the pro-Russian Communist party.

A spokesman for the state attorney’s office said the attorney who had been overseeing the case for four years had “submitted his final decision in the case, in which he changed his legal opinion”.

But he declined to provide further details, except to say that “a senior state attorney will now revise the decision to determine whether the change is legal and justified”.

Babis, who turned 65 on Monday, told Reuters in a text message that he would not comment because he did not know the substance of the decision.

He has repeatedly denied any wrongdoing and said the investigation is politically motivated.

Agrofert, the chemicals, farming, food and media group that Babis has built since the 1990s, returned the subsidy provided to the Stork’s Nest conference center after the EU’s auditing body, OLAF, found irregularities in the case.

Babis, his wife and two adult children were charged with fraud in 2017 for allegedly illegally manipulating the ownership of the firm to get the subsidy, which was intended for smaller businesses.

Under the Czech legal system, police charge a suspect on the basis of initial findings, then complete evidence gathering and hand the case to the state attorney, who decides whether or not to bring the case to trial.

Babis transferred ownership of Agrofert to two trust funds in 2017 to comply with a law on conflict of interest.

Apart from the criminal investigation, Babis faces an audit from the EU, which has reached a preliminary conclusion that he remained in conflict of interest despite moving the ownership of Agrofert.

A confirmation of that finding could strip Agrofert of some past and future subsidies, an important source of income, especially for its farming division.