Fact-finding mission to Prague: Assessment of Babiš’ conflict of interests
Daniel Freund, member of the budgetary control committee of the European Parliament, spent the last two days in Prague. The delegation was on a fact-finding mission to look into the conflict of interests of Czech head of government Andrej Babiš.
Daniel Freund comments:
We are disappointed that Prime Minister Babiš and his agriculture minister did not answer the questions of the European Parliament on their conflict of interest. Mr Babiš will find it difficult to convince citizens of his innocence if he refuses to answer basic questions. His attempts to defame the mission by considering the delegation to be an attack on the Czech Republic and its Czech members to be traitors of the nation make him even less credible.
The EU Commission’s audit process is ongoing, but the Commission’s assessment stating a conflict of interest of Prime Minister Babiš with his private interest as Agrofert owner was leaked by the Czech authorities. As Prime Minister, Babiš negotiates EU funds in the EU budget framework and oversees the allocation of EU funds in the Czech Republic. As Agrofert owner, Babiš personally profits from EU funds more than anyone else in the Czech Republic. During the mission, our suspicion of the existence of a conflict of interest has been further substantiated. We got hold of documents from the Czech Ministries containing concrete instructions not to check on potential conflict of interests related to Agrofert and not to take them into account in the distribution of funds.
A conflict of interest at the highest level of government of a member state, if confirmed, cannot be tolerated. In that case the EU’s Financial Regulation leaves Mr Babiš no other way but to resolve his conflict of interest. This would leave him with one of three options: sell his business interests, no longer receive any public subsidies or funding distributed by his government including EU funds, or to step down as prime minister. If confirmed by the Commission, Merkel, Macron and the other EU leaders must deny Mr Babiš to continue his situation of a conflict of interest including at the European Council negotiation table.
Our delegation came to Prague to listen to Mr Babiš’ government but also to Czech citizens, NGOs, journalists, farmers. What citizens, NGOs, journalists and farmers have told us points to a systemic failure to allocate EU funding according to existing rules – under Czech and EU law. Mr Babiš’ company Agrofert already had a dominant market position. But Mr Babiš and Agrofert dominating the market and at the same time controlling the government and authorities that pay out subsidies and funds including from the EU, seems to compromise the distribution of funds to the damage of everyone else in the Czech Republic.
From the Association of Private Farming in the Czech Republic we learned that EU subsidies and funds seem to benefit less than 1 700 big farms, while 30 000 small farms received no additional funding. Mr Babiš profits from this uneven distribution decided by agencies under his authority. EU rules on agriculture subsidies for the next 5-7 years are currently negotiated in Brussels. We Greens suggest capping the subsidies a single person can receive from the EU Agricultural Policy. We need an anti-Oligarch rule for EU funds. European money must benefit the many, not a few Oligarchs.
The EU Commission has frozen the disbursement of EU funds directed to Agrofert, as the suspicion of a conflict of interest was too strong to ignore. What remains unclear is whether Mr Babiš’ government nevertheless continues to make those payments to Agrofert, but now out of the Czech budget. We believe Czech taxpayers deserve to know if they pay for Mr Babiš stubborn resistance to EU rules. I call on the Commission to check, if using Czech taxpayers money to circumvent precautionary measures of the EU Commission, is allowed. Paying Agrofert with Czech money could amount to state aid which cannot be paid without the EU Commission’s consent.
Mr Babiš’s conflict of interest only came to light because he is registered as the so-called end-user of benefits from the Agrofert group in the Slovak Register of Public Sector Partners. None of the Regulations governing the use of agricultural or cohesion funds contains an obligation for the national authorities to publish the ultimate beneficial owner of an individual, legal entity or trust benefitting from the funds. This means that there is no transparency about which individual ultimately benefits from the EU funds paid under shared management. At the moment, the EU institutions do not have the information necessary to check if EU rules are followed. In the ongoing negotiations on agriculture subsidy rules, we need to fix this and finally be able to know who ultimately receives EU money.
The systemic shortcomings in the payments of EU funds in the Czech Republic need to be addressed urgently. They also provide yet another example of why the introduction of a rule of law mechanism with meaningful sanctions in case of violations is so essential. The EU must defend itself against the looting of its funds by oligarchs and corrupt governments.