Will the Czech Republic’s next Prime Minister end up facing charges?



By Petr Honzejk

The Czech Republic may soon become a unique case in Europe. Its next Prime Minister may actually face a prison sentence. The front-runner in the upcoming elections to the lower house, the country’s second-richest person and the chair of the populist ANO movement, Andrej Babiš, is suspected by police of having committed extensive public subsidy fraud. Last week, after an eight-hour-long, tempestuous series of negotiations, Czech MPs stripped Babiš of his immunity as a member of the lower house and made it possible for him to be prosecuted. Along with Babiš, police are also investigating the first vice-chair of the ANO movement, Jaroslav Faltýnek. That means that after the October elections, a very disturbing situation might arise:  A medium-size country in the European Union will be led by a formation whose top representatives are suspected of abusing EU subsidies. What is this complex case about? How is it possible that this prosecution has not destroyed the political career of Babiš? What impact can be expected from this scandal? Let’s examine each aspect of the case.

The case: “Stork’s Nest Farm”

The essence of what police are accusing Babiš of is brutally simple. Andrej Babiš, the founder of the gigantic Agrofert holding company, is suspected of having unscrupulously won a European subsidy in the amount of CZK 52 million (EUR 2 million) to build a recreation area near Prague called “Čapí hnízdo” (“The Stork’s Nest”) at a time before he entered politics. While the area itself is publicly accessible, Babiš has used it as an informal headquarters, among other things, getting married to his longtime partner Monika there in August. At the time around 2008 when the European subsidy was being decided, the criterion was that only small and medium-sized enterprises were entitled to apply, a condition that Agrofert logically could not fulfil. In collaboration with Faltýnek, Babiš severed ties to a particular firm in the Agrofert holding, renamed it “Farma Čapí hnízdo” (“Stork’s Nest Farm”), and issued anonymous shares for it so that it would not be apparent who owns it. He then used it to apply for the European subsidy, succeeded, and cashed in the millions. Six years later, the firm returned to the Agrofert fold. The police assessment is that all of this was just an intentional, de facto fraudulent operation, the aim of which was to acquire the European subsidy. The police version of events is supported by the obfuscation Babiš has engaged in to date. For a long time he did not want to say who was holding stock in “Farma Čapí hnízdo”. This year, under pressure, Babiš was forced to admit that his relatives were the shareholders: His daughter, his son-in-law, and Monika, now his wife. The police believe that they could all have participated in fraud.

The prosecution of a politician

The criminal prosecution of a politician is always a complex matter, but of course when elections are on the horizon, the dramatic nature of the prosecution is usually even more intensified. That is now being confirmed, in an exaggerated form, by the case of Andrej Babiš. For example, the chair of the ANO movement is not showing the slightest respect for the police. On the contrary, the accused is alleging that the entire scandal has been artificially constructed and that his political opponents are attempting, with the aid of the police, to annihilate him. Babiš bases those allegations mainly on the fact that police have been investigating the case for several years but the facilitation of his prosecution was not sought until two months before these crucial elections. “This is a political trial, it’s like during the 1950s, they want to get rid of me,” Babiš has repeatedly alleged. He also argues that, unlike his case, the police are paying no attention to many other corruption cases in which the state has lost dozens and hundreds of billions of crowns. His allegations of a “political trial” are, naturally, unfounded, and it is pretty rich to hear them coming from Babiš, who was a prominent figure of the communist regime during the 1970s and 1980s. Be that as it may, the entire ANO movement is united behind him and his version of events is believed, according to polls, by more than 40 % of Czech voters.

Why do people still believe Babiš?

To explain why so many people in the Czech Republic still believe Babiš, we must return to before 2013, when he entered politics. During the past two decades the conviction has intensified in the Czech Republic that the country is permeated with corruption. The Czech Republic has fallen behind on the Transparency International index, newspapers are full of information about corruption scandals, and that sense culminated in 2013 with a law enforcement raid directly on the Office of the Government, where police arrived to arrest the then-mistress (and today, the wife) of Czech Prime Minister Petr Nečas. There was a strong societal demand for change, further bolstered by the lingering impact of the economic crisis. In that atmosphere, Andrej Babiš, a multibillionaire of Slovak origin and owner of the grocery and chemical holding company Agrofert, literally burst onto the political scene. He established the ANO movement and, even though he himself was a problematic businessperson who had managed to make it through the much-criticized environment of corruption better than anybody else, he promised to change those conditions. Babiš enjoyed political success. In the 2013 elections he won 18 % of the vote, his formation came in second behind the Czech Social Democratic Party (ČSSD), and he himself became Finance Minister. His popularity gradually grew. An economic upturn played into his hands, as did his informal political style and the exhaustion and lack of imagination of his political competitors. Now his ANO movement has 30 % voter preference and is the favourite to win the upcoming elections, and he is the most popular politician in the country. Many people believe that if he becomes Prime Minister, the “anti-corruption revolution” will end when the elections do. Babiš depicts these elections as a fateful clash between himself and the “corrupt hydra that has been strangling Czechia for 25 years”. The ANO campaign slogan is “Now or never”. In that context, Babiš has also given various explanations for why the police want to investigate him. He hints that the police are governed by his political competitors who fear losing their access to financial resources and therefore have no hesitation about using the apparatus of power against him. Many people believe this undocumented, wild construct despite the fact that Babiš himself is an extremely controversial figure. Among other matters, he makes no secret of the fact that the very mechanisms of parliamentary democracy are disagreeable to him. 

Babiš wants to “run the state like a company”

The possible consequences of the entire “Čapí hnízdo” affair and the prosecution of Babiš must be assessed in that light. It is possible that the affair will not harm him during the October elections. His voters have so far been resistant to all the affairs that have appeared around him, and there have been quite a few of them. Here we can mention, for example, the suspicions that he collaborated with the communist secret police (a court has ruled that he did not collaborate consciously), the serious suspicions that he has used his media companies against his political competitors, and the case of the strong tax optimisation that he personally committed even after becoming Finance Minister and announcing a war on tax evasion. For now, Andrej Babiš has withstood all of this in the eyes of his voters by arguing that everything is just an intentional campaign against him. It is possible that this will continue to be the case and that he will win the elections overwhelmingly. On the other hand, however, it does appear that his prosecution could shave a couple of percentage points off of his support. More than half of those surveyed recently rejected the characterisation of the Czech Republic in 2017 as a police state where it is possible to destroy one’s opponents with the aid of false allegations as was possible during the communist regime. Most voters comprehend that the subsidy scandal in which Babiš is involved is not the consequence of the work of just one police officer – the case is supervised by an independent state prosecutor who has not objected to the police procedure so far. The case, therefore, may again draw attention to the problems of the ANO chair’s political engagement, especially to his conflicts of interest and the risk that he will abuse power to benefit his own business. Babiš himself says he wants to “run the state like a company”, meaning he will run it efficiently. His opponents, however, allege that such claims are just a pretext and that Babiš actually does want the Czech state to be subordinated to the interests of the firms that he owns. In addition to the “Čapí hnízdo” scandal, hints have appeared (not yet confirmed by investigation) that when Babiš was Finance Minister he took advantage of his control over the tax administration to destroy companies that were bothering Agrofert. All of these motifs are currently coming to the fore in connection with the suspected subsidy fraud, and support for Andrej Babiš may have already passed its zenith.

Nothing is excluded from possibility

Of course, even so, few doubt that he will win the October elections. He is significantly aided not just by the weakness of what the competing parties are offering, but also by his alliance with Czech President Miloš Zeman, who has declared that he believes the version of all these events as presented by Babiš, namely, that his prosecution is being conducted for political purposes. Zeman is emphasizing that if Babiš wins the elections, he will appoint him Prime Minister irrespective of his prosecution, and has also said that he will name him to office even if he is in custody. In order to comprehend the reason for this alliance between Zeman and Babiš, it is necessary to realize that there will be presidential elections in the Czech Republic at the beginning of next year. Miloš Zeman is defending his post and needs to bind Babiš to him so that he will not send out his own candidate to complicate Zeman’s re-election. Back to our main topic, though: Even if Babiš is still the unequivocal front-runner of the October elections, it does not seem too probable that he could win by such a margin as to manage to put together a one-party Government. The question is how the other political parties will behave after the elections. The democratic ones are saying for now that they will not join a Government led by a Babiš under prosecution. It is, therefore, possible that the Czech Republic eventually awaits the Polish model of governance, where the country will have a puppet Prime Minister and the Government will be controlled by Babiš remotely – just as the Polish Government of Beata Szydło is actually controlled by Jarosław Kaczyński. Nothing is excluded from possibility, including the fact that Babiš could technically win the elections but ultimately end up in the opposition. In any event, the Czech Republic now awaits the most dramatic elections since the fall of communism in 1989. Developments once they are over will be similarly dramatic – this autumn will be one big political drama with an unclear ending. The only thing certain is that the main role will be played by an Andrej Babiš who is undergoing criminal prosecution.



Translation into English from the Czech original: Gwendolyn Albert