12 September 2019, Czech Republic, Prague: Czech Prime Minister Andrej Babis waits to receive his counterparts, ahead of the heads of government of the Visegrad Group of countries (V4) from the Western Balkans meeting. Photo: Michal Kamaryt/CTK/dpa
Prague’s municipal prosecutor concluded that when an EU subsidy was given to Stork's Nest, which was owned by Andrej Babis's Agrofert conglomerate before being transferred to members of his family and then back to Agrofert, it fulfilled the conditions for the grant © Michal Kamaryt/CTK/dpa

Prague prosecutors have decided not to press criminal charges against Czech prime minister Andrej Babis, heralding the end of a long-running and high-profile fraud investigation that has dogged the billionaire’s premiership.

The case has hung over Mr Babis for four years, complicating his attempts to form a government after his Ano party won elections in 2017, and triggering the biggest street protests in the Czech Republic’s post-communist history.

In April, Czech police recommended charging Mr Babis with fraud and damaging the EU’s financial interests over the affair, which centred on the alleged misuse of a €2m EU subsidy received by the Stork’s Nest, a conference centre outside Prague.

However, prosecutors said on Friday that they had decided not to press charges against Mr Babis, who built up a business empire stretching from agriculture to the media via the Agrofert conglomerate he founded before going into politics in 2013.

The case centred on whether the Stork’s Nest, which was owned by Agrofert before being transferred to members of Mr Babis’s family and then back to Agrofert, had wrongly received the EU subsidy, for which only small and midsized businesses were eligible.

In a statement on Friday Martin Erazim, Prague’s municipal prosecutor, said that while the case had initially appeared to be a “simple fraudulent act”, he had concluded that when the subsidy was given, the Stork’s Nest fulfilled the conditions for the grant.

“The evidence collected led to the conclusion that the Stork’s Nest farm met the definition of a small or medium-sized business,” he said.

Mr Erazim’s decision could yet be overturned by the Czech Republic’s Supreme State Attorney, Pavel Zeman.

Mr Babis, who has repeatedly denied any wrongdoing, said that the affair was “invented . . . to harm me and remove me from politics”.

“This 12 year-old-thing has nothing to do with my political carrier and [the] subsidy to the company was accorded according to EU rules and Czech laws. Finally the money was returned under the huge three and a half [year-long] organised campaign by activist Czech journalists linked to traditional so-called democratic parties,” he told the FT.

Analysts said that while the decision not to proceed with the case, if confirmed by Mr Zeman, would take some legal pressure off Mr Babis, it was unlikely to ease pressure from protesters, who turned out against Mr Babis in huge numbers this year.

The protests began in April, after the then justice minister unexpectedly stepped down after police recommended charging Mr Babis. The minister was replaced by a Babis ally, prompting fears among protesters that this could portend political interference in the Stork’s Nest case.

Public ire was fuelled further after it emerged that a separate EU audit had preliminarily concluded that Mr Babis had a conflict of interest as Czech prime minister because of his business interests. Further protests have been called for this autumn.

“I don’t think this will change things in the parliament . . . But I expect protests to take place even earlier now [than planned]. This [decision by prosecutors] will raise concerns and suspicions that this is politically motivated,” said Milan Nic, from the German Council on Foreign Relations (DGAP).

Opposition politicians gave a guarded response to the decision not to press charges against Mr Babis. “I respect the decision, but the whole case leaves behind a [bad] taste and a divided society,” Petr Fiala, head of the ODS party, the Czech Republic’s largest opposition group, wrote on Twitter.

This story was updated on September 14 to include a comment provided by Mr Babis.

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