Brussels warns the Czech Republic of a possible suspension of subsidies

Milan Malíček

The European Commission (EC) has warned that it could suspend subsidy payments if the Czech Republic does not control conflicts of interest and subsidies to companies in trust funds. This follows from a letter sent by the Commission last week to the Ministry of Industry and Trade, the Ministry of Finance, and the Ministry of Regional Development. The subject of disputes between the Czech Republic and the EC has recently been the alleged conflict of interest of Prime Minister Andrej Babiš (ANO).

In a six-page letter, Mark Lemaitre, head of the Directorate-General for Regional Policy, and Joost Korte, director of the Directorate-General for Employment, Social Affairs, and Inclusion, call on the Czech authorities to report on measures to improve the functioning of the system for distributing EU subsidies. 

If the Czech Republic fails to enhance control, senior EC officials warn of “possible partial interruption of the payment deadline” for future interim payments. The European Commission could suspend project reimbursements until the Czech authorities have sufficiently dealt with the objections.

The subject of recent disputes between the Czech Republic and the EC is the alleged conflict of interest of Prime Minister Babiš. According to the EC auditors, the Prime Minister has a conflict of interest because he controls trust funds in which he has invested his assets. 

Therefore, according to the auditors’ conclusion, subsidies from the EU structural funds totaling hundreds of millions of crowns received by companies from the Agrofert holding since 1 September 2017 are unjustified. The Prime Minister and Agrofert have repeatedly denied the conflict of interest.