Czech Republic Political Briefing: the Case of Andrej Babiš: the PM Still Exposed to Prosecution Ladislav Zemánek

ISSN: 2560-1601

Vol. 27, No. 1 (CZ)

March 2020

Czech Republic political briefing: The Case of Andrej Babiš: The PM Still Exposed to Prosecution Ladislav Zemánek

1052 Budapest Petőfi Sándor utca 11.

+36 1 5858 690 Kiadó: Kína-KKE Intézet Nonprofit Kft. [email protected] Szerkesztésért felelős személy: Chen Xin

Kiadásért felelős személy: Huang Ping china-cee.eu 2017/01

The Case of Andrej Babiš: The PM Still Exposed to Prosecution

The Czech Republic´s Prime Minister remains to be investigated in connection with an alleged subsidy fraud and harming of the European Union´s financial interests which could have happened 13 years ago. This distant case has been misused by the current Andrej Babiš´ opponents for particular political goals. Nevertheless, the prosecution has been narrowing, the majority of suspected being pronounced innocent. In the analysis, I will inquire into the recent events related to the case, which occurred in February. They will be put into the context of both the development of the affair itself and struggles on the Czech political scene.

At the end of February, the prosecution of the PM´son Andrej Babiš Junior was stopped by a prosecutor Jaroslav Šaroch. The reason was the fact that he had not committed a crime. Originally, the affair was a part of the broader case aimed against the Prime Minister himself. Later, it was singled out and investigated separately. The prosecutor Šaroch´s decision was subsequently reviewed by the Prosecutor General´s Office which concluded that the stance of the subordinate authority was correct as there were not any legal reason to annul the former decision. According to the Prosecutor General´s Office, the evidence available did not prove that the PM´s son had been involved actively in the process of getting the EU subsidies.

The case timeline in brief

Let´s remind the major points of the affair briefly. Opponents of the current Prime Minister Andrej Babiš provoked a politically motivated campaign against him, his family members and colleagues with the aim of weakening his position and, ideally, forcing him to step down from his political and state posts. Later, a criminal prosecution was initiated. Andrej Babiš has been suspected of harming the EU´s financial interests and a subsidy fraud residing in a preparation and execution of a plan which made the Stork´s Nest Farm company (Farma Čapí hnízdo) possible to apply for a 50 million CZK (2 million EUR) subsidy designated for small and medium-sized enterprises. The alleged problem is that originally, the company was a part of the Agrofert holding1 owned by the current Prime Minister and it became an

1 The Agrofert was founded by Andrej Babiš in 1993. In the first years, the company´s business was focused primarily on fertilizers trading. Nowadays, the holding has consisted of more than 250 subsidiaries operating in

1 independent joint-stock company in 2007 prior to the application for the subsidy which would have not been technically and legally possible in case of belonging to the Agrofert holding as earlier. The ownership structure was not transparent and open but anonymised which was, nevertheless, in full conformity with the law. After several years, the Stork´s Nest Farm joint- stock company joined the holding again. This fact became a welcome pretext for Andrej Babiš´ accusation of purposive conduct, the aim of which had allegedly been to circumvent the rules set by the EU for its subsidies.

The affair of the Prime Minister and his alleged conflict of interests is very complex and ramified, having supranational dimension. It has become an „evergreen“ on the Czech political scene, grounds for repeated criticism from political opponents and a pretext for permanent attacks. Naturally, it has complicated the work of the Government led by Andrej Babiš, weakening the position both of the Government and the PM himself. At the same time, however, his popularity has remained very high and stable, being the most popular politician. This fact makes Babiš´ critics even more aggressive. But it is not only Babiš´ popularity which makes his critics increasingly aggressive and intolerant. Gradually, the police investigation has been stopped in case of the majority out of 11 suspected who were subjected to the prosecution together with the PM. It regards for instance Andrej Babiš´ wife and children, brother-in-law, a former member of the board of directors of the Stork´s Nest Farm company, and also a deputy, the first vice-chairman of the ANO movement Jaroslav Faltýnek. Moreover, the prosecution of the Prime Minister himself was stopped by the prosecutor Jaroslav Šaroch in August last year and subsequently confirmed by his superior Martin Erazim who manages the City Public Prosecutor´s Office of Prague. According to the prosecutors´ opinion, the Stork´s Nest Farm company was a small or medium-sized enterprise and as such, it had been eligible to apply for the subsidy, no fraud thus being committed. In response to the decision, the ANO highest representatives stressed that the affair had been prepared and orchestrated in order to damage the Movement and his leader and that it became obvious there was no evidence proving a guilty of anybody involved in the investigation. The official statement of the Agrofert holding pointed to the fact that they were exposed to an unprecedented attack from different subjects whose

the field of chemical industry, agriculture, food processing, forestry and timbering, ground-technologies, technology and transportation, renewable energy sources as well as media. The Agrofert holding belongs to the largest private employers in the Czech Republic giving work to nearly 33,000 employees in 18 countries in total, including China, Russia, Brasil, the USA or the CEE region countries. In 2012, the company started to be active in the media market which finally led to the purchase of the Bauer Media Group, thus owing several major newspapers and radios. In 2018, the holding turnover amounted to 157.5 billion CZK (6.3 billion EUR). The holding was owned by Andrej Babiš until 2017 when he decided to place it into trust funds in response to a political and media pressure culminating in passing of a so-called Lex Babiš, a law on conflict of interests. At this moment, all 628 common stocks are owned by the AB private trust I and the AB private trust II, managed by fund managers.

2 representatives did not respect the fundamental principle of the presumption of innocence. The decision allegedly confirmed that all steps had been made in accordance with the law and set rules, therefore, the halt of the prosecution was a satisfaction for the injured.

Never-ending story

However, the story was not over as it could have seemed. In December, the Supreme State Attorney Pavel Zeman rejected the former decision, returning the case to the Prague prosecutors. Jaroslav Šaroch together with the police have been obliged to continue investigating the Prime Minister and his business associate Jana Mayerová. This December decision gave new impetus to the political opponents of the Government and Andrej Babiš who have stirred up demonstrations aimed against the PM, the President Miloš Zeman, an alleged oligarchisation of the Czech state, gradual elimination of the liberal democratic system and turn to „the East“. This opposition narrative has become quite strong and influential, contributing significantly to a split of the society, to social and political tensions. A Czech branch of the NGO Transparency International has even made a motion to the European Commission to start an investigation of what they present as a conflict of interest of the Czech PM. But it is not only some NGOs who have endeavoured to scandalise and criminalise Andrej Babiš. Several opposition deputies have filed a complaint with EU authorities.

As a result, a delegation of deputies of the European Parliament arrived in our country in February to investigate the case, i.e. the alleged conflict of interest and the ways how the Czech authorities deal with the EU subsidies. The group was led by the EP Chair of the Committee on Budgetary Control Monika Hohlmeier. The MEPs held talks with representatives of the Ministry of Finance, of Agriculture and of Regional Development together with the President of the Czech Republic Supreme Audit Office, NGOs or journalists. The delegation was also joined by two Czech MEPs Tomáš Zdechovský (Christian and Democratic Union – Czechoslovak People's Party) and Mikuláš Peksa (Czech Pirate Party). Neither the Prime Minister nor representatives of the Agrofert holding met with the delegation. Andrej Babiš did not consider a meeting beneficial in terms of effectiveness and purposefulness, while the Agrofert stated that given the fact the affair did not come under competence of the European Parliament (unlike the European Commission), there was no reason why to cooperate, all the more that such an activity was an example of an unjustifiable interference in and influencing of the audit proceedings conducted by the Commission at that moment. Following the delegation´s visit to Prague, the Czech PM called the two Czech MEPs „traitors“ as they should defend the

Czech national interests and not to fight against their own Government. Andrej Babiš emphasised that there was no conflict of interest in relation to his position, always abiding by the national law. Therefore, he interpreted the mission as a political one which was closely connected with the domestic political struggle.

This February event demonstrates that the affair regarding the Prime Minister is far from conclusion. His domestic opponents have been doing their best to maintain this issue at the top of both the political and media agenda, not hesitating to engage different EU authorities and institutions in this clash. It can be expected that their activities will be intensifying in view of the oncoming elections, PM´s high popularity and gradually terminating prosecution.