Court hearings in ex-premier Babis’ EU fraud case begin

Andrej Babis, the billionaire populist and former Czech premier, will go on trial on September 12 accused of fraudulently claiming a CZK50mn (€2mn) European Union subsidy for his Stork’s Nest conference centre south of Prague.

The fraud trial at the Prague City Court comes after seven years of investigation, in a case that critics say was obstructed by Babis while he was premier.

It is far from clear that the court trial will damage Babis’ popularity as the populist leader has painted it as a grand conspiracy against him, designed to damage his electoral chances. Babis has called the court hearings “the first political process since November 1989”,  orchestrated by the “post-November cartel of traditional parties”.

Even though Babis controls some of the country’s most influential media houses, he also recently launched a campaign attacking the media and the public TV and broadcaster in particular, which he claims are biased against him.

These claims appear to resonate with his base. According to the latest opinion poll conducted for Czech TV by Kantar CZ polling agency, ANO would win in the general elections with 30.5%, followed by the ruling ODS at 19.5%, the far -right SPD at 11%, the Pirates at 8.5% and the Mayors at 6.5%.

Czechia holds municipal and Senate elections on September 23 and Babis is due to announce at the end of next month whether he will stand for president in the January elections.

Babis is currently touring the country in a campaign that blames the government for failing to protect people from the cost of living crisis. His campaign also hints that the government is too keen on helping Ukrainian refugees and supporting sanctions against Russia.

In the Storks’ Nest case, Babis is accused of fraudulently claiming an EU subsidy intended for small and medium enterprises by temporarily transferring the conference centre project to a shell company, when it was in reality controlled all the time by Agrofert, Babis’ food and agrochemical conglomerate. Following the police probe, Agrofert has returned the subsidy.

Babis was caught on camera boasting that Stork’s Nest was his idea and was one of his best projects. The footage was later released as part of Vit Klusak’s 2015 documentary Matrix AB.

Stork’s Nest vice-chair Jana Nagyova (formerly Mayerova) is also accused and by law they both could face 5-10 years in prison. However, State Prosecutor Jaroslav Saroch, appointed by Babis’ then justice minister, has only asked for a three-year probation and a fine of CZK10mn (€400,000) for Babis and CZK5mn (€200,000) for Nagyova. He also delayed the trial until after the November general election.

Saroch had halted the investigation of all the 11  accused in the case, including members of Babis’ family who were involved in Stork’s Nest’s structures, but then Supreme State Prosecutor Pavel Zeman overruled him and renewed the investigation into Babis and Nagyova. Zeman later resigned under pressure from ANO and Babis’ media empire.

The case has been embarrassing for the ex-premier as he set up ANO in 2011 as an anti-corruption platform criticising the “traditional post-1989 parties” and the ODS-led governments of Mirek Topolanek – with his shady advisor, the now jailed Marek Dalik – as well as Petr Necas, whose cabinet eventually fell in 2013 amid a scandal over the abuse of military intelligence that revealed the links between the the premier’s office and financier Ivo Ritich.

The succession of scandals boosted ANO’s popularity, making it a runner-up in the 2013 early election and the winner of the 2017 general election. It also discredited the traditional parties and led to a widespread distrust of the democratic process.

However, Babis and his party did little to fight corruption in office and have also been plagued by their own series of  scandals.

Babis was accused when finance minister of using his political influence to promote his business. Klusak’s documentary contains evidence of how he used state officials and banking connections to allegedly force the owners of the Kostelecke meat processing company to the verge of bankruptcy before buying the company in 2005 at a fire sale price and then pressing charges against the former owners for allegedly manipulating its due diligence.  Babis denies any wrongdoing, calling Klusak’s documentary “a grand fraud”.

The Pandora Papers leak before the 2021 general election, which showed that he owned luxury properties in France through an opaque offshore structure, helped lose him the general election. The documents claim that Babis failed to declare an offshore investment company in the British Virgin Islands (BVI) and used it to purchase two villas for €14.04mn in the south of France in 2009. French police are investigating allegations of tax evasion and money laundering. Babis denies any wrongdoing.

The new government is considering suing his Agrofert concern to repay millions of euros in EU subsidies it should not have received because of the conflict of interest between his political and business power. Agrofert says it has no reason to return the money as it says there was no conflict of interest under a Czech law passed while the billionaire was finance minister.

Most recently, Jana Vildumetzova of ANO stepped down as vice-spokesperson of the Chamber of Deputies after a video from her wedding emerged that showed that Zakaria Nemrah, one of the businessmen taken into the police custody as part of the investigation into the “Dozimetr” kickback scheme at the Prague Transportation Company,  was her husband’s best man.

The courts hearings are scheduled for September 12, 16, 26 and 30, and for October 17 and 21 and have drawn huge interest from the public and the media.

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