Babis in Hot Water – EU Declares Fraud in Cap Hnizdo Subsidy Case

Prague, (CTK) – Untrue and incomplete data were provided in the application for an EU subsidy for the Capi hnizdo conference centre that was owned by current Czech Prime Minister Andrej Babis (ANO), daily Hospodarske noviny (HN) writes on its website today, citing the EU Anti-Fraud Office (OLAF) report.


HN quotes the report as saying that the investigation revealed that the recipient of the subsidy paid from a regional operational programme (ROP) provided untrue information for the body deciding on the subsidy and withheld crucial information from it.


According to OLAF, these facts might be considered reasons for criminal prosecution in the Czech Republic.


This may be qualified as a fraud and violation of the financial interests of the EU, the OLAF says, adding that the anonymous ownership structure of the Farma Capi hnizdo company was at variance with the transparency principles of the EU funding rules.


Babis said in reaction to the server’s information that he cannot comment on anything that he had not seen.


The Czech police accused Babis and further ten people of misusing the EU subsidy of 50 million crowns. The lower house of parliament is yet to decide whether it would release Babis for criminal prosecution.


Babis said previously the Capi hnizdo (Stork Nest) company was owned by his grown-up children and his current brother-in-law through bearer shares at the time when the subsidy application was submitted.


The lawyers of Babis and Faltynek will get acquainted with the OLAF report on the Capi hnizdo case on Tuesday.


Babis told reporters after the government meeting today that he would not read the OLAF report. However, he added that after his lawyers studied it, he would be willing to attend a meeting of the Chamber of Deputies mandate and immunity committee that was to recommend whether MPs should release him and Faltynek for prosecution.


Both were to explain their view of the case of the lower house committee last Tuesday, but they asked for the hearing to be postponed.


Babis also dismissed that the OLAF report was connected with the Wednesday vote of confidence in his government in the Chamber of Deputies.


Until late 2007, the Farma Capi hnizdo company belonged to Babis’s Agrofert concern. Afterwards, its stake was transferred to bearer shares for a small firm to win the subsidy, which a firm of the huge Agrofert could never get. It observed this condition for a few years, but later it became part of Agrofert again. Moreover, the investigators concluded that there was no economic or trade reason to make the change.


In February 2017, billionaire businessman Babis transferred Agrofert to trust funds to comply with a new conflict of interest law.


The subsidy for the Capi hnizdo (Stork Nest) was granted within the ROP Central Bohemia in 2008. The Stork Nest countryside conference centre opened in 2010. Babis repeatedly dismissed the view that he is its owner.


The lower house mandate and immunity committee will meet on Tuesday to deal with the police request to release Babis and ANO deputy chairman Jaroslav Faltynek for criminal prosecution over the suspected subsidy fraud. Babis and Faltynek insist that the case is politically motivated.


On Wednesday, Babis’s minority government will ask the lower house for its support. A government cannot rule for a long time if it does not win the confidence vote.