Top Czech prosecutor reopens PM's subsidy fraud case

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Prime Minister Andrej Babis is suspected of abusing special EU small business subsidies to create his luxury Stork Nest resort and farm

The Czech Republic's chief prosecutor said Wednesday he was reopening an investigation into EU subsidy fraud involving billionaire Prime Minister Andrej Babis that was dropped in September.

Babis, a 65-year-old mogul pegged by Forbes as the fourth wealthiest Czech, is suspected of abusing special EU small business subsidies to create his luxury Stork Nest resort and farm near Prague in 2007, four years before he entered politics.

Police allege that Babis had only temporarily removed the farm from his Agrofert holding, the largest Czech agricultural and food company, to make it eligible for the subsidy.

Babis has long denied any wrongdoing in the case.

Prague prosecutors cleared Babis, his family members and aides in September, saying the farm met the definition of an independent small or medium-sized company.

"There are shortcomings in assessing the deed and also in the legal assessment" of the case, Czech chief prosecutor Pavel Zeman told reporters on Wednesday.

He also highlighted "an incorrect assessment of evidence and of links between the companies" to explain why the prosecution will resume.

Zeman added that the prosecution only involves Babis and his aide Jana Mayerova, while Babis's family members including his wife were cleared.

"I'm very happy and relieved to see the prosecution of my family, my wife and daughter, halted for good," Babis told the DNES newspaper, which is a part of Agrofert.

The country's President Milos Zeman, Babis's ally, said earlier that he would hand Babis abolition should prosecutors reopen the case.

But Babis said Wednesday that would not be necessary.

"I am convinced I haven't done anything illegal," he said.

- Conflict of interest -

The prosecutor's decision comes a day after Czech media published excerpts from a leaked European Commission audit concluding that Babis's dual role as a politician and businessman puts him in a conflict of interest.

The document also suggests that Agrofert should return some 450 million Czech crowns (17.6 million euros, $19.6 million) in EU and state subsidies that were paid out illegally.

Babis has flatly denied any wrongdoing, saying he had transferred Agrofert into two trust funds, as required by a new Czech conflict of interest law.

"It's not true that money will be returned, there's not the slightest reason for that," Babis told lawmakers on Wednesday.

"It's absurd that European auditors interpret Czech law and teach us how to understand it," he added.

The auditors found that Babis was still the owner of Agrofert and, since February 2017, of two trust funds which he directly controls.

An official Slovak register lists Babis and his wife Monika as the beneficial owners of dozens of Agrofert units. Monika also sits on the board of both trust funds in charge of Agrofert.

Czechs demanded Babis step down at two mass protests in June and November, which drew a quarter-million people each, making them the largest since the country shed communism in 1989.

Babis leads a minority coalition government comprised of his centrist populist ANO (YES) movement and the Social Democrats that relies on the tacit support of Communist Party lawmakers to survive in parliament.

Despite its leader's woes, ANO still tops opinion polls with a stable 30 percent voter support.