Czech government considering its options in face of EU fine for clash of interest

There is increased tension in the Czech coalition government over the EC’s announcement that it will fine the Czech Republic 800,000 euros over a clash of interest in the distribution of farming subsidies. The irregularity concerns members of all three ruling parties and Prague has already filed a request for the launch of conciliation proceedings in Brussels.

Photo: Filip Jandourek

The EC has threatened to levy a fine of 800,000 euros on the Czech Republic in connection with the distribution of EU faming subsidies to the tune of 1.5 billion crowns to the chemical, agricultural and food holding Agrofert, owned by finance minister and ANO chief Andrej Babiš in 2014 and 2015. The deputy chairman of ANO, Jaroslav Faltýnek, was a member of the board of Agrofert at the time while also being involved in the awarding of subsidies as a member of the supervisory board of the State Agricultural Intervention Fund (SZIF). The EC says that apart from Faltýnek, a clash of interest was also faced by SZIF supervisory board chairman Ladislav Velebný from the Social Democratic Party, and SZIF member and MP Petr Kudela from the Christioan Democrats. The European Commission says all three board members had a blatant conflict of interest and is demanding the return of 22 million crowns from the Czech Republic in addition to the proposed fine.

The three parties in government are due to meet over the matter and agree on how to best proceed under the circumstances. Prime Minister Bohuslav Sobotka has asked the agriculture minister, Marian Jurečka, to assess the country’s chances in the event of legal action and to propose ways to minimize the impact of the fine if it proves unavoidable. He has also requested a proposal for changes to the criteria for membership on the board of the State Agricultural Intervention Fund in order to prevent possible conflict of interest in the future.

Meanwhile, Finance Minister and former Agrofert owner Andrej Babiš is taking a more radical view of the matter. He insists that no clash of interest occurred and says the Czech Republic should consider taking the matter to the European Court of Justice. The EC’s decision to impose a fine has not yet taken effect. The Czech Republic has thus submitted a request for the launch of conciliation proceedings in Brussels and is awaiting a response.