Secret report by the EU’s antifraud office calls on Brussels to take ‘appropriate measures’ over a farm and hotel owned by Andrej Babiš’s Agrofert

This article is more than 2 years old

This article is more than 2 years old

The EU’s antifraud office has found “irregularities” in subsidy payments allegedly obtained by Czech prime minister Andrej Babiš, according to extracts from a secret report.

Details of the investigation released by the Czech finance ministry have confirmed that Babiš, who was sworn into office last month, is in the remarkable position of being an EU leader linked to an investigation by the bloc’s antifraud team.

Babiš has struggled to form a government, as other parties refused to enter a coalition with him, because of the scandal concerning a €2m (£1.8m) payment to a a farm and hotel complex obtained by a company linked to him. He denies all wrongdoing and has said the allegations are a plot by his political opponents.



His political difficulties are likely to deepen after the finance ministry released short extracts from a report by the EU’s antifraud office, Olaf.

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The report called on EU officials in Brussels to take “all appropriate measures … in relation to the irregularities” concerning Stork’s Nest – a farm and hotel complex outside Prague, which had been owned by Babiš’s massive Agrofert conglomerate.

The complex had undisclosed owners when it requested a subsidy intended for small businesses, under the EU’s programme for poorer regions. Czech police have accused Babiš and 10 others of subsidy fraud, because Stork’s Nest is now owned by Agrofert again.

Agrofert, which consists of around 230 entities spanning food, fertilisers and media, is not eligible for the EU’s small business grant. Babiš, who is the Czech Republic’s second-richest man, put Agrofert and other assets into a trust fund last year to comply with a conflict-of-interest law.

Even before the revelations, the new prime minister was expected to lose a vote of confidence in the Czech parliament planned for next week. Czech police have called on MPs to lift his immunity from prosecution.

On Wednesday, the Czech finance minister, Alena Schillerová announced the Stork’s Nest project would be deleted from the list of projects eligible for EU subsidies. She was responding to a letter from the European commission sent to Prague in December raising concerns about the project. “We take the letter very seriously,” she said, adding that the issue would be resolved “within two months”.

Spokespeople at the Czech finance ministry and the European commission in Brussels were not able to confirm if the Olaf report meant any money had to be repaid, the usual course of action. The Olaf report referred to “appropriate measures” concerning 42m Czech crowns (€1.6m), but the extract was unclear about the next steps.



“We have received Olaf’s report on the Stork’s Nest case on 22 December. We are assessing it,” a commission spokesperson said, referring all further questions to the antifraud body.



Olaf did not immediately respond to requests for clarification.

The affair has thrown light on the often-secret work of the EU’s antifraud body, which never publishes investigations that concern EU member states. Countries can choose to publish the reports, but governments often prefer not to.



Following freedom of information requests in the Czech Republic, the Czech finance ministry published three sentences of the Stork’s Nest report which is thought to total around 50 pages.



Tomáš Zdechovský, a centre-right MEP from an opposition party, told the Guardian that it was unacceptable the report had not been published in full. “It is a scandal because it is in the public interest to know what is the result of the investigation of Olaf.”

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The finance ministry has said that publishing the full Olaf report would compromise the ongoing police investigation into Stork’s Nest.

Zdechovský, a member of the European parliament’s budgetary control committee, said he would be calling on MEPs to investigate further. “It is about the credibility of the European Union,” he said. “One of the pillars of the EU is transparency in financial matters and fighting against fraud and corruption. How can the EU expect countries in Africa to fight against corruption when the EU has [such a] prime minister in one member state.”

Babiš came to power after his Action of Dissatisfied Citizens (ANO) party emerged as the largest party in last October’s parliamentary elections. A former finance minister, he vowed to resist EU refugee quotas and promised a businessman’s approach to politics.

Even if Babiš loses next week’s confidence vote, Czech president Miloš Zeman has promised to reappoint him as prime minister, giving him another chance to win parliamentary backing.

The prime minister’s office did not immediately respond to requests for comment.