EC Crack Down on Babis – Demands Halt to Funding of Stork Nest Project

Andrej Babis

Prague/Brussels (CTK) – The EC has asked the Czech Republic to remove the costs of the Capi hnizdo (Stork Nest) project from the EU-subsidised Regional Operational Programme for cohesion in Central Bohemia (ROP SC), the Finance Ministry said today, adding that it has not decided on the removal yet.


The ministry reacted to today’s information by the EC spokeswoman that the Czech authorities had deleted the Capi hnizdo (Stork Nest) farm, owned by new Czech PM Andrej Babis’s former concern, from the projects co-financed by European funds.


She also said the EC is assessing a report of the European Anti Fraud Office (OLAF) on a suspected EU subsidy fraud in the Capi hnizdo case.


Eleven people, including ANO chairman Babis and ANO deputy head Jaroslav Faltynek, face charges in the case.


When asked about his position to the earlier media information that OLAF had arrived at the similar conclusions as the Czech police and found inconsistencies in the financing of the farm, Babis said the question made no sense.


The Chamber of Deputies, the lower house of Czech parliament, released Babis and Faltynek for prosecution in September. However, their prosecution was interrupted as both were re-elected to the Chamber of Deputies and regained lawmakers’ immunity in October. The police asked for their release for prosecution again, but the lower house has not decided on it yet.


The EC confirms that it has received the OLAF recommendation concerning the Czech “Capi hnizdo” project and it will study and assess the document. The EC was also informed about the Czech authorities’ decision to remove the expenditure on this project from the programmes financed from the EU funds, the EC spokeswoman said without elaborating.


Speaking to, Babis said he does not understand this.


“I don’t understand how they [the authorities] could have removed the subsidy if it was granted [to Capi hnizdo] within the European funds’ support and the Regional Operational Programme (ROP) for Central Bohemia,” Babis told the server.


The Finance Ministry, however, subsequently said it has not decided on the removal yet. Pending the closure of the OLAF and the Czech police enquiries, it is not clear whether the Capi hnizdo costs are eligible for EU subsidies or not, the ministry’s spokesman Michal Zurovec said.


“After consulting the Regional Council as the body supervising the ROP SC, the ministry will release information on whether the [Capi hnizdo] project was removed,” Zurovec said.


The ministry and the EC will jointly decide on the possible removal of Capi hnizdo from the operational programme in two months, Zurovec said on Czech Television (CT) later today.


The EC wants the Capi hnizdo project to be deleted from the programme for the EU not to have to deal with it any more and for the EC to be able to close the ROP SC programme,” Zurovec said.


Milos Petera, former head of the ROP Central Bohemia council, told CTK that the 50-million-crown subsidy to Capi hnizdo was approved under former regional governor Petr Bendl (Civic Democrats, ODS) and it was drawn under Bendl’s successor David Rath (then Social Democrats, CSSD).


The project was submitted to the Regional Development Ministry for funding, Petera said.


The subsidies are paid to projects from the Czech state budget and the state subsequently submits the costs to the EC for approval.


The server has written that Brussels authorities want to ask the Czech Republic to return the subsidy provided to Capi hnizdo. If the project were deleted from the ROP SC programme, it is Czech taxpayers who will pay the 50 million crowns in the first phase, wrote.


Until 2007, the Farma Capi hnizdo company belonged to Babis’s Agrofert Holding concern. Afterwards, its stake was transferred to bearer shares for a small firm to reach a 50-million-crown EU subsidy, which a firm of the huge Agrofert Holding could never get. It observed this condition for a few years, but later it again returned to Babis’s concern.


Billionaire businessman Babis transferred the Agrofert concern, including some media outlets, to trust funds in February to comply with an amended conflict of interest law.


Babis and Faltynek are suspected of an EU subsidy fraud and Babis also faces charges of harming EU financial interests in the case. Both deny any wrongdoing and say their prosecution is politically motivated.


Some parties have denied support for a government headed by Babis arguing that a prosecuted man cannot be the prime minister.