EU tells Czechs to improve subsidy controls, says some payments may be halted

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The European Commission has warned the Czech Republic it may interrupt sending some European subsidies unless the country boosts control of conflicts of interest, Czech Radio reported on Monday.

The EU executive concluded in an audit released in April that Prime Minister Andrej Babis was in a conflict of interest as final owner of a business empire, mainly under the Agrofert group of companies, that receives EU funding.

The Commission said in July the Czech Republic needed to improve transparency and preventing conflicts of interest when distributing EU funds.

Babis has repeatedly insisted he has not broken any laws, having moved his business holdings into two trust funds.

Public broadcaster Czech Radio cited on its website a letter in which two general directors at the European Commission warned Prague that EU reimbursements for projects under the concerned programmes could be interrupted unless control systems were strengthened.

It asked that Czech authorities disbursing EU funds keep a log of public officials and companies they control. Special interest should be given to trust funds, and a list of recipients from trust funds should be sent to Brussels, it said.

Agrofert is a group of over 200 companies, and one of the country’s largest employers in agriculture, food processing, chemicals, media and other businesses.

As such it has received tens of millions of euros in direct farm payments – which have not been the subject of the EU probes – abut also smaller amounts in funding for development projects such as innovative technology and others under various programmes.

The Commission letter reiterated an earlier stance that the Czech government should not to ask for reimbursements for projects related to Agrofert and related companies.

Babis nor industry, finance and regional development ministries had an immediate comment when contacted by Reuters.

Babis’s centrist, populist ANO movement leads opinion polls ahead of an Oct. 8-9 election despite the conflict of interest row and a separate investigation into suspicions of subsidy fraud. Babis also denies any wrongdoing in that case.