Babis’ fraud case to be reopened after state prosecutor appeals January acquittal

Babis’ fraud case to be reopened after state prosecutor appeals January acquittal
Jana Nagyova and Andrej Babis campaigning in the 2022 Senate elections. / bne IntelliNews
By Albin Sybera April 13, 2023

Czech state prosecutor Jaroslav Saroch has appealed the court decision that acquitted billionaire Czech opposition leader Andrej Babis and his former manager Jana Nagyova of fraud charges in January. Babis and Nagyova were accused of fraudulently obtaining a €2mn EU subsidy for the conference centre Stork’s Nest linked to Babis.

“I can confirm I have formally filed the appeal,” state prosecutor Jaroslav Saroch was quoted as saying by Czech Radio after the public broadcaster reached out to Saroch for comment. Czech Radio also quoted the city prosecution’s office spokesperson in Prague, Ales Cimbal, who said the appeal would be completed before the May 5 deadline.

“Considering the size of the written ruling, its structure and the complexity of the case, the state prosecutor is now studying the delivered ruling in detail,” Cimbal told Czech Radio, and explained that Saroch is considering “which argumentation he will use” and where his appeal will challenge the ruling. The appeal will be examined by the Supreme Court in Prague.

Babis’ lawyer Michael Bartoncik told the Czech Press Agency (CTK) there are no viable grounds for the appeal. “The examination of evidence was done in an exhausting way. I don’t know of any new evidence which could be examined,” Bartoncik was quoted as saying by CTK. Populist ANO party leader Babis referred to his lawyer’s statement when approached for comment by CTK.

Nagyova, who ran in the Senate elections for ANO last autumn before losing to the Senate President Milos Vystrcil in his home district of Jihlava, told Czech Radio she is not surprised about the appeal given the position Babis wields in Czech politics. The steps of the state prosecutor “are a great disappointment to me, on the other hand given the political dimension I understand it”, Nagyova was quoted as saying by Czech Radio.

Babis lost a highly watched presidential race to Petr Pavel just a few weeks after being cleared but pledged to “not give up fighting” on behalf of the people against centre-right cabinet of Petr Fiala. Although ANO was established as a pro-business anti-corruption platform, Babis has in recent months styled himself as the “people’s” candidate and is criticising the cabinet for mishandling the energy and costs of living crisis.

In the Stork’s Nest case, Babis and his former manager Nagyova were accused of trying to conceal the conference centre’s ties to Babis’ large food, chemical, and agricultural conglomerate Agrofert in order to claim an EU subsidy designed for small and medium-sized enterprises.

Anti-corruption NGOs such as Transparency International have been ringing alarm bells about the case since Babis entered politics at the national elections in 2013. The centre had originally been owned by Agrofert but was then transferred to a new company, owned by Babis' family members, with his estranged son testifying that he was never the owner and his signature was most likely forged. The judge accepted that the signature of Babis' sons was probably forged but said this had no bearing on Babis' guilt or otherwise over the subsidy. 

UK bank HSBC also provided a loan to this new unknown company because of its links to Agrofert, and Agrofert advertised heavily at the conference centre. In 2015 Babis was even caught on camera boasting that Stork’s Nest was his idea and was one of his best projects. Babis refused to answer police or the court's questions over the case.

The judge concluded that the state had failed to prove intent to defraud, even though the transactions surrounding Stork's Nest had allowed the billionaire to claim subsidies his conglomerate was not entitled to.

The case was embarrassing for the billionaire as his main pitch when he entered politics was as an anti-corruption tribune against the country's traditional parties. But once in office Babis and his party did little to fight corruption and have also been plagued by their own series of  scandals.

Babis has already repaid the EU subsidy for Stork's Nest to try to defuse the contoversy; however he is currently refusing to repay other EU subsidies that Brussels has refused to reimburse the country for because of the conflict of interest between his political and business interests while he was premier and before that finance minister. Babis denies any conflict of interest, claiming he has no involvement in a trust in which he put his corporate holdings.

The billionaire is also being investigated for alleged money laundering in a separate case in France, in which he bought luxury properties through a chain of offshore companies. This case was brought to light in the Pandora Papers, and Babis – who denies any wrongdoing – has blamed it for his parliamentary election defeat in October 2021.