agrofert andrej babis

Matt Atlas

Agrofert Sues The EU A Second Time

Mlékárna Hlinsko of the Agrofert Group has brought an action before the Court of Justice of the European Union. He complains to the EU tribunal about the suspension of subsidies, which resulted in a conflict of interest of the Czech Prime Minister Andrej Babiš (ANO) as a result of the audit. The dairy does not agree with the results of the audit, according to which Agrofert drew subsidies illegally. This is the second lawsuit filed by companies from the Agrofert holding against Brussels.

“I can confirm that Mlékárna Hlinsko filed a lawsuit with the tribunal on April 16, 2021,” Balázs Lehóczki, a spokesman for the Luxembourg court, told the server. A more detailed description of the lawsuit is published on the court’s website . The company is demanding the unblocking of subsidies because, in its opinion, the European Commission violated its rights and exceeded its powers.

“The applicant claims that the Court should annul the prohibition on the award of grants imposed by the defendant’s letter of 22 October 2020 and order the defendant to pay the costs.” Commission.

This is the second lawsuit filed by a company belonging to the trust funds of the Czech Prime Minister. Already in February, the company Primagra, also belonging to Agrofert, turned to the EU court with a similar complaint.

Both companies put forward the same reasons in the lawsuits. In the first place, they argue that Brussels infringed their rights by not having the “opportunity to be heard” during the audit procedure. Agrofert rejects any error from the outset and points out that the authorities did not communicate with it regarding the inspection.

In addition, according to both companies, the European Commission should not examine specific projects, but focus on the subsidy system. “The defendant ( European Commission – ed. Note ) is only entitled to assess the overall compliance of the management and control systems put in place by the Member States, but has no power to carry out a detailed audit and decide on specific applications,” the claims state.

However, in addition to the conflict of interests of the Czech Prime Minister, the auditors examined the subsidy system as a whole. Thanks to this, they also revealed errors in the selection of some projects. One example for all: according to Brussels, the new Penam toast bread production line was not innovative and should not have received a subsidy of 100 million.

The server requested a comment on the Agrofert holding’s lawsuit, but it does not generally comment on litigation. “Even in this case, it is true that we do not comment on the ongoing proceedings,” said spokesman Karel Hanzelka.

Although Primagra appealed to the European Court of Justice a few months earlier than Mlékárna Hlinsko’s second subsidiary, both cases are in the initial written phase of the proceedings. It remains to be seen whether the court will declare the action admissible.

Prohibition of subsidies

Both lawsuits of the holding companies are a response to the final conclusions of the European Commission on the audit of conflicts of interest, which the commission summarized in a letter sent to the Czech authorities last October. The server described the correspondence in detail HERE . Brussels writes, among other things, that all the EU support that the domestic authorities have knocked on Agrofert in the last three years has been wrongly allocated.

“Any grant awarded to the Agrofert Group after 1 September 2017 (…) shall be in breach of Article 4c on conflicts of interest, provided that the grant application was submitted on or after 1 September 2017 and the grant was awarded at a time when Mr Babiš is a public official, “says the letter.

However, Hlinsko and Primagra dairy believe that the European Commission cannot interpret Czech laws. In addition, Brussels is said to misinterpret domestic and EU legislation on conflicts of interest. The findings of the European inspection are therefore challenged by the company in the application. “The fourth plea alleges that the defendant failed to prove the content of the Czech legislation and misinterpreted and misapplied it,” it states.

Neither the Primagry projects nor the Hlinsko Mlékárna were originally on the list of subsidies criticized by the audit. However, Brussels checked only the selected sample and it showed a high error rate in the selection. He therefore ordered further inspections, which are now being worked on by the Ministry of Industry and Trade. And before they are completed, these additional projects are to be suspended.

Czech courts

The server informed last week that Agrofert’s subsidiaries had also filed a lawsuit with the Czech court several times during the last year. Specifically, four companies have filed a so-called action for failure to act against the Ministry of Industry and Trade five times.

The companies applied for subsidies under the Business and Innovation for Competitiveness Operational Program, which is managed by the Ministry of Industry. And they all waited for many months and sometimes a year to decide whether or not to receive the subsidy.

Reason? Officials did not decide on a number of projects for which companies from the holding company requested money. They justified this by saying that they were waiting for the end of the EU audit on the conflict of interests of the Czech Prime Minister.

It took place in the Czech Republic at the beginning of 2019, the final report came at the beginning of 2020. However, the Ministry does not agree with the conclusions and does not consider the audit completed, and therefore did not decide on the allocation or non-allocation of subsidies even after the audit conclusion.

According to information from the Prague City Court, the final verdict fell in only two of the five lawsuits – in Mlékárna Hlinsko and Primagry. The remaining companies withdrew the lawsuits. In both cases, the court said the delays were unjustified.