Brussels freezes reimbursement of CZK 77 million in Agrofert subsidies — Czech budget left holding the risk

The Czech State Agricultural Intervention Fund has already paid out subsidies to the Agrofert holding, but the European Commission has suspended their reimbursement from the EU budget. At stake is €3.18 million, or CZK 76.9 million, from the European Agricultural Fund for Rural Development — and the risk that the money will never be returned now falls squarely on the Czech state budget.

The mechanism works as follows: the intervention fund first pays out the money to the recipient, and only afterwards reports to Brussels and requests partial reimbursement. That means Agrofert didn't have to wait — it's the Czech state that's waiting now. "These are already paid claims, and these expenses are declared to the Commission on a quarterly basis," confirmed the fund's spokeswoman, Eva Češpiva.

The suspension applies only to part of the subsidies — direct area-based payments, which bring Agrofert the most money, continue to be paid without restriction. The fund has also not stopped processing the holding's new applications. "Overall, nothing changes for us," Češpiva said.

What Brussels is deciding

The European Commission suspended reimbursement of expenses for the second quarter of this year and published only the total amount, without a list of specific payments. Neither the Commission nor the agricultural fund has disclosed which companies and subsidies exactly are affected by the measure — even though the fund does have the payment data.

The Commission sent a letter to Czech authorities requesting additional information. The suspension can last up to six months, and by agreement with the Czech Republic, three months longer still. If the Commission ultimately deems the expenses legitimate, the money will be reimbursed; if not, the CZK 77 million will remain an expense borne by the Czech state. Whether the fund would then try to reclaim the money from Agrofert, the spokeswoman would not say: "It's too early to speculate about that."

The fund began processing and paying out Agrofert's applications in late April, relying mainly on a legal opinion from the law firm Portos, which concluded that the transfer of the holding into a trust fund complies with Czech law. However, Portos itself acknowledged that the European Commission might reach the opposite conclusion. "From the very beginning we expected that the European Commission would want to examine the case under European rules as well," said Portos partner Jaroslav Cisař, adding that before a final verdict is reached, the Commission is unlikely to lift the suspension of non-mandatory EU budget subsidy payments.

A similar dispute has happened before

In the past, the fund acted more cautiously. In 2019, when it was headed by the current agriculture minister Martin Šebestyán (for SPD), the fund pre-emptively froze 28 Agrofert investment projects "out of respect for the European Commission's position." The companies challenged the decision in court but never received the money.

In May this year, the European Commission asked Czech authorities not to submit for reimbursement any expenses linked to Babiš's firms until the conflict-of-interest question was clarified. In early June, the Commission specified that the fund must include all already-paid sums in its reporting.

The fate of the mandatory agricultural subsidies the fund paid out to Agrofert companies in May this year — CZK 204 million for agricultural activity in 2025 — turned out differently. Applications for these had been submitted before Babiš's return to the post of prime minister in December. The Commission reimbursed this money without question, since it is granted automatically according to pre-set criteria.

Agrofert itself insists that it acts in full compliance with the laws and rules governing subsidies. Babiš maintains that he does not own the holding, will never own it again, and derives no benefit from it.

Source: novinky.cz