The European Commission (EC) has warned that it could suspend the payment of subsidies if the Czech Republic does not improve the control of conflicts of interest and the provision of subsidies to companies in trust funds, says the website iROZHLAS.cz. According to him, this follows from a letter that the commission sent last week to the Ministry of Industry and Trade, the Ministry of Finance, and the Ministry of Regional Development. The subject of disputes between the Czech Republic and the European Commission has recently been the alleged conflict of interests of Prime Minister Andrej Babiš (YES).
In a six-page letter, the head of the Directorate-General for Regional Policy, Mark Lemaitre, and the head of the Directorate-General for Employment, Social Affairs, and Inclusion, Joost Korte, called on the Czech authorities to report on measures to improve the functioning of the European grant distribution system. In the event that Czechia does not improve control, senior EC officials warn against “possible partial interruption of the payment period,” for any future interim payments, states iROZHLAS.cz. The Commission could thus suspend the reimbursement of projects until the Czech authorities have sufficiently dealt with the objections.
The Commission requires the Czech Republic to keep the ministries responsible for distributing European subsidies a list of public officials and companies they own or control. Brussels also requires the Czech authorities to introduce a methodology according to which they should pay special attention to companies invested in trust funds when assessing conflicts of interest. For all operational programs, the Czechia is also to determine all beneficiaries from trust funds who have drawn subsidies since 1 September 2017, when the Conflict of Interest Act applies in the Czech Republic. The authorities are then to send a list to Brussels.
The subject of disputes between the Czech Republic and the European Commission has recently been the alleged conflict of interests of Prime Minister Babiš. According to the EC auditors, the Prime Minister has a conflict of interest because he controls the trust funds in which he has invested his assets. Subsidies from the structural funds of the European Union in the total order of hundreds of millions of crowns, which companies received from the Agrofert holding since 1 September 2017, are therefore unjustified, according to the auditors’ conclusion. Both the Prime Minister and Agrofert have repeatedly rejected conflicts of interest.
The EC rejected the application for payment of the subsidy for the plastics company Fatra from the trust fund of Prime Minister Babiš. According to iROZHLAS, the Czech authorities tried to test whether Brussels would not actually pay the money due to Babiš’s conflict of interest, and to obtain a decision to reject the payment, which could be challenged in court.