Andrej Babis


Minister Apologises For Claims Fraud Widespread Among Entrepreneurs

Andrej Babiš, Capi hnizdo, EU Subsidy Fraud

Prague, July 27 (CTK) – Czech opposition criticises Industry Minister Marta Novakova for saying, when asked about her presence in the cabinet led by a prosecuted man, that the practice over which PM Andrej Babis faces prosecution was widespread among businesspeople, and Novakova later apologised for her words.


In an interview with the DVTV online broadcaster, Novakova (for ANO) said “a large majority of entrepreneurs” behaved like Babis in applying for EU subsidies.


Babis (ANO), a billionaire who transferred his giant Agrofert Holding to trust funds last year to comply with the conflict of interest law, has been prosecuted on suspicion of an EU subsidy fraud. The Farma Capi Hnizdo firm, a part of Agrofert, is suspected of having left the holding expediently in the late 2000s in order to gain a 50-million-crown EU subsidy designed for small firms, and rejoining Agrofert a few years later.


Agrofert’s Imoba company, which owns Farma Capi hnizdo now, returned the controversial subsidy a few weeks ago.


Opposition TOP 09 deputies’ group chairman Miroslav Kalousek said Novakova’s words were an offence to entrepreneurs.


Christian Democrat (KDU-CSL) deputy chairman Marian Jurecka called Novakova’s statement “a crazy argument.”


Last year, the police accused Babis of fraud in financing Capi hnizdo (Stork Nest), a recreation and conference centre south of Prague.


Novakova said Babis’s prosecution “is rather irrelevant.”


“This is how a large majority of entrepreneurs behaved at the time, when applying for subsidies, and they do not face prosecution now,” she said on DVTV.


This [prosecution] is a political campaign targeting Babis, and the voters showed that they do not mind his criminal prosecution much, Novakova said, alluding to ANO’s comfortable victory in the October 2017 general election and its long-lasting position as the most popular party.


“This country needs a government and it is necessary to take a pragmatic approach in this respect,” Novakova said, reacting to the moderators’ remark that she is a member of a minority cabinet of ANO and the Social Democrats (CSSD), which won the parliament’s confidence only thanks to the Communists’ support.


Kalousek said a crushing majority of entrepreneurs are honest, unlike Babis.


“I am resolutely asking Minister Novakova not to offend entrepreneurs,” Kalousek tweeted.


Opposition Civic Democrat (ODS) MP Jan Skopecek, too, stood up in defence of entrepreneurs.


“It is impossible to flatly condemn all entrepreneurs and say that all those who draw subsidies are thieves or fraudsters. Most entrepreneurs are decent people,” Skopecek said on Czech Television.


“We should stop lashing out at this very important group of people without whom our economy could not survive,” he said.


It is unfortunate that subsidies go to entrepreneurs, because they are unjust, as they secure unfair advantages for some entrepreneurs at the cost of others, Skopecek added.


Jurecka wrote on Twitter in allusion to another controversial step of Babis, that really not all entrepreneurs optimised their taxes by using one-crown bonds, thus stripping the state of 55 million crowns, and really not all entrepreneurs tried to accomplish a EU subsidy fraud.


“This is quite a crazy argument on the minister’s part,” Jurecka tweeted.


In 2013 and 2014, Babis bought one-crown bonds worth 1.5-billion crowns issued by Agrofert, the company he owned, in a situation that the yields from such bonds were untaxed and the companies that issued them could deduct their expenses on the interest from their corporate tax.


Some other companies took the same step like Agrofert at the time.


Novakova apologised for her statements later today.


“If entrepreneurs feel offended by my formulation on DVTV, I apologise,” she said, adding that the situation with subsidies is far from simple.


“As I said repeatedly before, I am opposed to them,” she added.


Karel Havlicek, who heads the Czech association of small and medium-size entrepreneurs and tradespeople, said it is difficult to meet the criteria set for applicants for EU subsidies and that no project is 100-percent problem free.


“If a critic wants to find a flaw [in a project], he usually succeeds. This, however, does not mean that the applicant is a fraudster…It is only up to courts to assess whether a project [of subsidy drawing] was unlawful. Until then, every entrepreneur is innocent, irrespective of whether his firm is big or small and whether he is active in politics or not,” Havlicek said.