European Commission: Babiš’s trust does not end conflict of interest

The European Commission has confirmed that the trust into which Prime Minister Andrej Babiš placed his Agrofert shares does not resolve the conflict of interest in managing EU agricultural and cohesion funds. A Commission spokeswoman said so in response to a query from Novinky.

“The Commission believes that the trust fund set up by Mr Babiš is not a sufficient solution to this situation,” said Commission spokeswoman Louise Bogeyová. According to her, Brussels sees the prime minister as a person in a potential conflict of interest in managing funds that, among other things, go toward regional development. The Commission also set out its objections in a letter whose contents were published by Transparency International.

What Brussels said

The Commission reminded that under EU law the Czech prime minister must refrain from any action that could put his own interests in conflict with those of the EU. Czech authorities must take measures to prevent a conflict of interest and deal with situations that can objectively be perceived as one. The Commission is continuing to assess the situation and is exchanging letters with the Czech authorities, including on further steps.

Assets for the family

Babiš placed the Agrofert shares in RSVP Trust in February this year; since then the assets have been managed by a trustee under independent management. As Seznam Zprávy found in the fund’s statute, independent management will not last forever: as soon as Babiš leaves the government or resigns, three of his children will gain influence over the fund. They will be able to receive money and other assets from it. According to Transparency International’s lawyers, they could then allow Babiš himself to become the trustee, and he would effectively return to running Agrofert without owning its shares again. In its September letter to Czech authorities, the Commission already pointed to the future benefit for his descendants and to the fact that the prime minister knows what assets the fund holds.

Babiš consistently rejects the criticism. “It will never come back to me, and I have no profit from it,” he said on Wednesday about the company he says he has got rid of for good. He did, however, keep another part of his business, concentrated in the company SynBiol.

The fund did not explain

The State Agricultural and Intervention Fund, which pays out the sector’s subsidies, refused to tell Novinky which specific measures it has taken or what the analysis of the situation it promised looks like. “We will not comment on information published by third parties or on its interpretation in the media,” its spokeswoman Eva Češpiva replied. The fund referred to its statement for the Czech News Agency (ČTK): on 12 October it sent the Commission documents and its position. But even that does not say whether it continues to pay support to Agrofert, or how it prevents a conflict of interest.

Back in September, the Commission suspended for six months the deadline for reimbursing Czechia roughly 77 million crowns from the European Agricultural Fund for Rural Development. Agriculture Minister Martin Šebestyán (SPD) called the step procedural and said the State Agricultural Fund cannot stop payments on its own.

Elsewhere in Europe, conflicts of interest have already led to limits on European funding or to a minister’s resignation. In Hungary, the EU restricted money for foundations that manage, among other things, universities, in whose leadership senior politicians could serve. On 30 September this year, the EU General Court dismissed the lawsuits of six universities against this measure: in the court’s view, there was a systemic failure to prevent conflicts of interest.

Around Prague, based on reporting by novinky.cz