Babis’s former businesses will not get agricultural subsidies until a European Union investigation of his possible conflicts of interest is completed, authorities said on Thursday.
Babis is under pressure from swelling protests demanding he resign because of his business ties and an ongoing criminal case.
The step to suspend agriculture-related development subsidies – but not the direct payments all farmers get – highlighted the risk the billionaire turned politician was facing, with conflict of interest accusations threatening the company he built.
Babis placed his Agrofert conglomerate, the country’s biggest private employer, in trusts before becoming prime minister in 2017.
Leaked preliminary audit findings of possible conflicts of interest carried out by the European Commission, the EU’s executive, last week showed the assessment that Babis remained in a conflict of interest over EU subsidies despite the trusts.
It said the shift to trusts was not enough separation from Babis’s executive power because he was both the founder and beneficiary of the funds.
Babis has rebutted the findings, calling the audit dubious and the auditors incompetent. He has said the country is not at risk of having to return any EU funds.
Agrofert, comprising more than 250 companies, is eligible for various development funds managed by different agencies. The Commission has already suspended EU payments; the Czech government has continued paying through the state budget.
The Agriculture Ministry is the first to suspend funds awarded to Agrofert since February 2017, when new conflict of interest legislation took effect.
It does not include direct subsidies that farms are entitled to automatically under the EU’s Common Agricultural Policy.
Martin Sebestyan, chief of the Agriculture Ministry’s subsidy agency, SZIF, told a news conference the move was a precaution, “although we do not agree with the preliminary report findings.”
The Brussels investigation is one of two fronts where Babis is fighting.
Weekly protests, which organisers said numbered 120,000 people on Tuesday, began after a justice minister resigned, a day after police concluded an investigation into whether Babis illegally received a 2 million-euro EU subsidy a decade ago for a farm and convention centre, by hiding ownership of it.
Babis has denied wrongdoing. Prosecutors have yet to decide whether he will stand trial.
Despite his troubles, Babis’s ANO party maintains a commanding lead in polls. It was a runaway winner in a 2017 election after pledging to end politics as usual and run the state with a businessman’s touch.
Political analyst Jiri Pehe said Babis may be able to weather the protests but that the final Commission audit — to be completed after Czech authorities comment on it in the coming months — was a bigger threat.
“If they (EU) state in the final report … that Agrofert has to return subsidies… and the Czech Republic will not get any subsidies at least for Agrofert while Babis is in power, then he has a real problem and will have to decide if he stays in politics,” he said. “He doesn’t have many options.”