Top Czech officials go on the offensive over European Parliament criticism of PM Babis

Top Czech officials go on the offensive over European Parliament criticism of PM Babis
By bne IntelliNews June 22, 2020

Both Czech Prime Minister Andre Babis and Minister for Regional Development Klara Dostalova have criticised MEPs following the adoption of a European Parliament (EP) resolution regarding Babis’ conflict of interest over the Agrofert company on June 19. 

The EP condemned the active involvement of Babis in implementing the EU budget while still allegedly controlling his company Agrofert, which is one of the largest beneficiaries of EU subsidies in the Czech Republic.

“If the conflict of interest of the Czech prime minister is confirmed, he has to remove his business interests by giving up control over any company receiving EU subsidies, refrain from participating in decisions that impact subsidies received by any company where he is the final beneficiary, or ultimately, step down as a prime minister,” said the chair of the EP Budgetary Control Committee Monika Hohlmeier, quoted in the EP press release. 

“I do not want to comment on the resolution. As everyone knows, it is backed by Czech MEPs, who are doing everything to harm the Czech Republic in Brussels,” Babis said, quoted by daily iDnes.

However, he went on to add: “The resolution obviously seeks to influence the outcome of audit processes within the EU. It makes no sense to discuss the fact that it is based on the conclusions of the CONT mission [Committee on Budgetary Control of the European Parliament], which was already quite clear about its result even before its trip to the Czech Republic.” 

Dostalova said on June 22 she plans to prepare a response to the EP’s Friday resolution, claiming that the Czech Republic has a sophisticated system of controls and a uniform methodological environment on EU funds financial management.

According to Dostalova, the EP is interfering in the affairs of the Czech Republic and its statements cross a line. “I was also touched by some provisions of the resolution, I don't think it is as described. We have a really sophisticated system of controls, a unified methodological environment,” she stressed, adding that she understands Babis’ anger. 

“I don't understand how the European Parliament can interfere in the affairs of the Czech Republic in this way, in my opinion this has no parallel in history,” Dostalova went on, noting that the European Commission's audit investigation into Babis’ conflict of interest had not yet been finished. 

“After all, it has not been finished yet, so I do not understand how any other institution can interfere in ongoing proceedings,” she stressed.

At the session on June 19, MEPs stressed that until European Commission and the European Anti-Fraud Office investigations are over, Babis should not be included in decisions on EU budgets. 

“Alternatively, any company under his beneficial ownership should cease to receive EU subsidies concerned by the alleged conflict of interest. We also call on the EU and the member states to do more to protect EU taxpayers’ money from oligarchic manipulations. The existing mechanisms are apparently insufficient,” Hohlmeier added. 

“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,” said Hohlmeier, as cited by online EnglishRadio.cz. 

In its resolution, the EP also deplored the this “defamatory language and hate speech” used by Babis against MEPs in a televised statement, following a fact-finding mission to the Czech Republic to assess the situation. 

The two MEPs, Tomas Zdechovsky and Mikulas Peksa, received death threats after Babis described them as traitors because they were “fighting against the Czech prime minister”.

“He characterised the two Czech MEPs taking part in a mission as traitors and qualified the chair of the CONT delegation as insane,” said Hohlmeier in a letter addressed to the EP president in March.

The EP resolution was welcomed by opposition politicians and anti-corruption NGOs. 

“All of Europe can see that Babis has a conflict of interest. He controls Agrofert, a holding company that receives millions of euros in subsidies, which he has no right to receive. Only the Czech government is still playing along, stalling for time and sometimes even openly lying about this not being the case,” said director of Transparency International Czech Republic (TI CZ) David Ondracka, adding that Babis is practically stealing from other eligible recipients, who are losing money because of him. 

Both Babis and Agrofert claim that the PM is no longer connected to the company, however, he has been shown to be one of the beneficial owners of Agrofert and once he leaves his political position, he will reclaim ownership of his Agrofert, TI CZ stressed. 

“The EP’s resolutions are politically significant as a means of political pressure as well as pressure on conscience and morality. However, they are also an important step towards introducing rules that will prevent the accumulation of European subsidies in the hands of oligarchs and make the identification of their final recipients more transparent. The European Parliament cannot punish, but it is its duty to scrutinise and demand law enforcement. I am convinced that resolutions of this type will ultimately lead to penalties for infringements," said Czech MEP Michaela Sojdrova of the Christian Democrats, quoted by daily Info.cz.

The second audit by the European Commission found that Babis has a conflict of interest and continues to control the holding Agrofert in January 2020, following the audit report from the EC in December 2019. Brussels subsequently demanded the return of EU subsidies and blocked the issuance of others. 

Babis has been denying any conflict of interest and stressed that the Czech Republic will not need to return European funds. “I have fully complied with the Czech law lex Babis, adopted purposefully against me. Therefore, I am not and cannot be in any conflict of interests,” he keeps saying.

In April, the Czech government withdrew a suit filed at the European Court of Justice in February over subsidies to Agrofert, as a response to the EC annulling its decision to suspend payments to the company, due to the PM's conflict of interest. 

The Agrofert Group was founded in 1993 by Babis and has grown into a group with more than 250 subsidiaries in areas including the chemical industry, agriculture, food processing, forestry and timbering, ground-technologies, technology and transportation, renewable energy sources and media. Last year, it employed more than 33,000 people in 18 countries.

In its 2019 annual report, the company reported it almost tripled its year-on-year consolidating profit to €166.8mn.

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