PRAGUE (Reuters) - The head of the Czech Republic’s police oversight body GIBS said on Tuesday he had been asked to resign by Prime Minister Andrej Babis and that the government began an inquiry into the agency’s use of public funds.

FILE PHOTO: The leader of ANO party Andrej Babis speaks to the media at Prague Castle after a meeting with President Milos Zeman in Prague, Czech Republic November 28, 2017. REUTERS/David W Cerny/File Photo

The case has raised a political flap as the police, overseen by GIBS, have been investigating Babis and several others over allegations that he fraudulently obtained 2 million euros in European Union business subsidies a decade ago.

Babis, a billionaire, denies any wrongdoing and on Wednesday denied that his call for Murin to step down had any connection with the police investigation into subsidies obtained for the Stork Nest conference center project.

Murin, who was appointed in December 2015 by the previous government in which Babis served as finance minister, said he had two meetings with the prime minister in February.

“The reason for the (requested) resignation from GIBS is an alleged loss of confidence on the prime minister’s part,” Murin said in a statement posted on the agency website. “The prime minister suggested the end of February as a suitable date, when it would happen without further scandal.”

Murin did not say whether he would resign or not.

On Monday, the Finance Ministry began an investigation into GIBS’s handling of public funds in 2016-17, the ministry said.

Chief State Attorney Pavel Zeman told news website Aktualne.cz on Wednesday there had been long-term shortcomings at GIBS, but declined to elaborate.

Babis denied any connection between the subsidies investigation and his effort to remove Murin.

“Some of you are again running the Stork Nest campaign, although there is no connection. I have serious and substantiated doubts about (Murin’s) professional and moral integrity as director of GIBS,” he told reporters.

Given his legal troubles, Babis has struggled to find partners to form a new government in the central European country after his minority administration lost a vote of confidence in parliament last month.