On Monday, the European Commission informed the Czech Republic that payment of some EU subsidies will be suspended until the country tightened its legislation to prevent conflicts of interest.
In an April audit, the EU executive ruled that Prime Minister Andrej Babis had a conflict of interest as the ultimate owner of a corporate empire, primarily under the Agrofert group of companies, which receives EU funding.
Babis has argued that by putting his company holdings into two trust vehicles, he has not infringed any laws.
However, the Commission announced on Monday that, for the time being, it will not repay any expenditures on EU projects claimed by companies held in trust funds.
While Agrofert’s expenses have yet to be refunded, the Commission believes the problem is more widespread, according to an EU official.
The Commission also urged Czech authorities disbursing EU funding to keep a register of public personnel and the enterprises they manage. It was suggested that a list of trust fund recipients be submitted to Brussels.
In the fields of agriculture, food processing, chemicals, and media, Agrofert is one of the country’s top employers.
As a result, it has received tens of millions of euros in direct farm payments – which have escaped EU inspection – as well as smaller sums for development projects such as innovative technology under various programs.
Agrofert’s spokesman claimed the company had no knowledge of the letter because the matter was between the Commission and the Czech authorities.
Regional Development Minister Klara Dostalova said during a televised press conference that her ministry would coordinate efforts to meet the Commission’s demands as soon as possible.
Despite the conflict of interest row and a second probe into charges of subsidy fraud, abis’s centrist, populist ANO movement tops opinion polls ahead of an Oct. 8-9 election. In the case, Babis also denies any wrongdoing.