Analysis of steps to be taken against conflict of interests of Andrej Babiš regarding EU budget
Companies of a Prime Minister or of a
Minister subject to a conflict of interest are not allowed to draw subsidies from the EU budget
The entire analysis in PDF is at the end of this document.
EU subsidies are not anonymous gifts. They are a redistribution of money of European taxpayers, including the Czech ones. The use of European taxpayers‘ money for the personal benefit of any person, including a potential Prime Minister or Minister of the Czech Republic in a conflict of interests, could have serious consequences not only for those public officials who fail to address their conflict of interest, but also for the whole Czech Republic.
European legislation, the EU Financial Regulation, which is directly effective in the Czech Republic, sets out five clear rules regarding conflict of interests. These rules are stricter and tougher than those of the Czech Act on Conflict of Interests:
Rule No 1
Obligation to prevent conflict of interests and damage to EU’s financial interests at all levels.
Rule No 2
A conflict of interests occurs when a public official, including a politician, draws funds for himself or for the benefit of his family members and at the same time he or she can influence the setting of the conditions for drawing of those funds.
Rule No 3
If a conflict of interests is suspected to exist, it must be addressed immediately.
Rule No 4
If a conflict of interests arises for a Prime minister or a Minister, subsidies to companies to which they are connected are immediately interrupted.
Rule No 5
If a conflict of interests occurs, criminal liability may arise for anyone who fails to fulfill their obligation to resolve it.
Violations of conflict of interests rules must be addressed by all EU institutions and Member States’ authorities, including the Czech President, the European Council, the European Commission, the European Court of Auditors, and possibly the European Public Prosecutor’s Office (EPPO). The primary consequence of a conflict of interests of a Prime Minister or a Minister should be the immediate suspension of subsidies and contracts from the EU budget to companies with which the Prime Minister or the Minister has a conflict of interests.
If this suspension of subsidies and contracts from the EU budget does not occur by the time the Prime Minister or the Minister is appointed, the European Public Prosecutor’s Office (EPPO) should begin to investigate the situation with regard to all persons who did not prevent the conflict of interest of the Prime Minister or the Minister. A detailed analysis is provided in the Annex.
In Prague, November 24, 2025
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Hana Marvanová
Petr Beneš
Detailed analysis
Rule No 1: Obligation to prevent conflict of interests and damage to EU’s financial interests at all levels
The fight against fraud and threats to Union’s financial interests is one of the fundamental rules of the EU. Measures against threats to EU’s financial interests must have a deterrent effect and provide effective protection in the EU institutions as well as in the EU Member States. EU Member States, including the Czech Republic, must have the same level of protection of EU’s financial interests and their own financial interests in line with Article 325 of the Treaty on the Functioning of the EU.
The ensuing Article 61 of the directly effective Regulation on the use of EU budget (Regulation (EU, Euratom) 2024/2509 of the European Parliament and of the Council of 23 September 2024 on the financial rules applicable to the general budget of the Union) defines conflict of interests in detail. Conflict of interests under this EU Regulation applies to persons responsible for planning, budget implementation, audit or control at all levels in the EU institutions and the Member States. It requires to prevent conflict of interests and damage to EU’s financial interests at all budgetary stages, i.e. both when negotiating the amount or parameters of the EU budget or specific subsidies, and when paying them out.
Furthermore, the EU Financial Regulation does not differentiate among the eligibility conditions in the context of conflict of interest for investment subsidies, direct agricultural payments or other generally used categories of financial support from the EU budget. The prohibition to provide funds from the EU budget for subsidies or supplies of goods or services by companies controlled by a Prime minister or a Minister applies both to so-called investment subsidies and to support for direct agricultural payments and other forms of subsidies under the common agricultural policy.
The ineligibility rules apply not only to the provision of subsidies but also to public procurement, including contracts for services, supplies and works from companies controlled by a Prime Minister or a Minister. Therefore, if any beneficiary of a subsidy co-financed from the general budget of the EU purchases, as part of a funded project, goods or services from a company controlled by a Prime Minister or a Minister, such expenditure is also ineligible and cannot be reimbursed.
The rules on the eligibility of expenditure, or ineligibility of expenditure in the event of a conflict of interest of a Prime Minister or a Minister under the Financial Regulation have no time limit. Similarly, the Czech Conflict of Interests Act defines the obligation to prohibit the payment of subsidies and public procurement supplies to companies controlled by a Minister or a member of the Government without time limit. The time limits of 30 and 60 days apply only to the termination of a business or the operation of radio or television broadcasting, not to subsidies or procurement contacts.
Rule No 2: A conflict of interests occurs when a public official, including a politician, draws funds for himself/herself or for the benefit of his/her family members and at the same time he or she can influence the setting of the conditions for drawing of those funds.
According to EU rules, a conflict of interests occurs whenever the impartial and objective performance of public official’s duties is compromised, for example, due to family or emotional ties. A conflict of interests does not have to really exist, but it is sufficient if there is a situation which can be objectively perceived as a conflict of interests.
European Commission’s communication on the prevention and management of conflict of interests (2021/C 121/01, „the EC Guidelines on conflict of interests“), which interprets in detail the Article 61 of the EU Financial Regulation, sets out, among other things, the following three guidelines for assessing conflicts of interest:
First, the mere risk or possibility of providing advantage or disadvantage for family reasons is sufficient to constitute a conflict of interests.
Second, objective circumstances affecting confidence in the independence and impartiality of a person or entity can also be perceived as a conflict of interests, even if the conflict of interests does not occur or even if the person in question does not actually benefit from the situation: for example, it suffices that there is a factual evidence that there are links between the functions and the interest in question, such as the power to act or give instructions, links through a third party, continuing links to previous positions, links to future positions or hierarchical and/or functional links.
Third, the higher the responsibility or the greater the interest or the greater the stake in budget execution, the greater the likelihood of a perception of a conflict of interests.
As regards family ties and emotional ties, which may give rise to a conflict of interests, the EC Guidelines on conflict of interests are very clear and explicit.
Emotional ties between family members are not required for a person’s impartiality to be compromised for family reasons. The term „family“ should also include relationships between the person concerned and the interested party that would normally give rise reasonable suspicion of possible undue family influence on the performance of official duties. The conflict of interests should apply at least to the immediate family.
„Immediate family“ should include at least the following relationships, even if they arise through adoption: spouse (including a partner with whom the person is in a (non)registered non-marital relationship), children and parents, (great)grandparents and (great)grandchildren, (half)brothers and sisters (including those from blended families), uncles and aunts, nieces and nephews, first cousins, father-in-law, mother-in-law, son-in-law, daughter-in-law, brother-in-law, sister-in-aw, stepparents and stepchildren. The existence of any of these family relationships between the person concerned and the interested party should, except in exceptional objectively plausible circumstances, at least be considered a situation that can be objectively perceived as a conflict of interests.
In addition to the concept of „immediate family“, the concept of the so-called „extended family“ may also give rise to a conflict of interests, in particular under the rules and regulations or according to social perception in the country concerned or with regard to other circumstances such as emotional or economic ties. Public trust in the proper implementation of the EU budget is in principle indivisible. Citizens in country A must have confidence in the integrity of the implementation of the budget in country B. Therefore, there is only a very limited scope for deviations in individual EU countries.
Similarly, a personal friendship (or a relationship between a godfather/godmother and a godchild), which may involve a closer bond than with immediate family, could give rise to a situation where the person concerned, through his or her special relationship with that friend, could compromise his or her impartiality and objectivity. Anyone who permanently lives in the household of the person concerned is at least in a situation that can objectively be perceived as a conflict of interests, unless this conclusion is rebutted by an objectively acceptable counterargument.
Rule No 3: If a conflict of interests is suspected to exist, it must be addressed immediately.
According to the aforementioned EU Financial Regulation, institutions at all levels in the EU and in the Member States must take appropriate measures to prevent conflicts of interest arising in the functions within their responsibility. The European Commission’s interpretative communication on conflicts of interest provides examples of how to address conflicts of interest that arise.
If there is a situation that can objectively be perceived as a conflict of interests, it must be assessed and resolved in such a way that it can no longer be objectively perceived as a conflict of interests. No influence may be exercised on the adoption of decisions related to the EU budget, including in the case of so-called entitlement-based direct agricultural payments.
For example, a person affected by a conflict of interest must refrain from taking decisions that could affect the allocation of funds to their own entities (or to those of their immediate family). This person should therefore sever all ties with the entity concerned, should not participate in any decision-making concerning the allocation of EU funds to such entity (including by withdrawing if abstention would not sufficiently address the situation) or the entity could withdraw its application for EU funds.
In addition, the European Commission interpretation states what the relevant line manager or the relevant authorising officer by delegation should do when approving or appointing a person who would be in a conflict of interests by such appointment or approval. The person affected by the conflict of interests should not bring the matter to the attention of his or her line manager until he or she has decided to do so. The line manager should exercise his or her judgment and carefully consider whether someone with knowledge of the relevant facts would be likely to conclude that the integrity of the organisation is compromised by the unresolved conflict of interest. The line manager should assess the need to replace the person who has declared that he or she may be in a conflict of interests.
Before doing so, and without prejudice to the relevant legal provisions, the institution or the direct superior should first discuss the situation with the person concerned in order to better assess the risk of biased performance of his or her duties. Where a conflict of interests is established, the competent national authority or appointing authority shall ensure that the person concerned by the conflict of interests ceases to carry out all relevant activities related to the implementation of the budget, including the preparation for such activities. In this context, the institution or the relevant authorising officer by delegation may, in accordance with the relevant legal provisions, request the opinion or intervention of other competent authorities.
On the one hand, situations such as a persistent unresolved objectively perceived conflict of interests or emergence of a conflict of interests, e.g. in the case of an employee or a person effectively using his/her position to favour or intentionally enrich an economic entity owned by a member of his/her immediate family, should be examined in terms of their impact on the implementation of the EU budget, also with a view to identify appropriate corrective measures (e.g. cancellation and re-evaluation of the award procedure, termination of contracts or agreements, suspension of payments, implementation of financial corrections and recovery of funds). Moreover, such situations could generally be considered as unlawful acts under administrative or criminal law and should be sanctioned accordingly.
In the current Czech context, a potential Prime Minister or a Minister should therefore resolve his/her conflict of interests publicly and well in advance of his/her possible appointment by the President and should not present the public and the President with a fait accompli. On the contrary, if the President were to appoint a Prime Minister or a Minister with a conflict of interest with respect to the EU budget, he/she could be in breach of his/her obligations under the Treaty on the Functioning of the EU and under the conflict of interests’ provisions of the EU Financial Regulation. This could make the President jointly liable for Prime Minister’s or the Minister’s conflict of interests with respect to the European Union.
Rule No 4: If a conflict of interests arises for a Prime minister or a Minister, payments to the subsidies to companies to which they are connected are immediately interrupted .
As to the administrative consequences of a conflict of interests, it is mainly about the question of eligibility of beneficiaries and eligibility of expenditure from the EU budget. Expenditure in the form of a subsidy to a person who has a conflict of interests is ineligible for reimbursement from the EU and/or national budget. If such a subsidy were to be granted, EU’s financial interests would be at risk within the meaning of the EU Directive on the protection of the Union’s financial interests (No 2017/1371/EU).
In the existing Czech perspective, the ineligibility of expenditure from the EU budget arises at the moment of appointment of a Prime Minister or a Minister who is in a conflict of interests. Therefore, if the Minister or the Prime Minister is, at the time of his or her appointment, the controlling person of companies receiving subsidies or providing services under contracts co-financed from the general budget of the EU or from the state budget, or has a family or emotional relationship with a person who would control such a company, then from that moment all expenditure provided to these companies is ineligible and shall not continue to be reimbursed by the granting authority. In the case of repeated conscious or negligent reimbursement of a subsidy or supply under a public contract by companies controlled by the Prime Minister or the Minister, this would represent a systemic failure of responsible Czech authorities. The European Commission, or the Office for the Detection and Fight against Fraud or the European Court of Auditors should have the power to audit and investigate these systemic failures.
Rule No 5: If a conflict of interests occurs, criminal liability may arise for anyone who fails to fulfill their obligation to resolve it.
As regards possible criminal law aspects, the aforementioned Directive on the protection of the EU’s financial interests imposes on each relevant State the obligation to take appropriate measures to implement the rules for preventing the reimbursement of ineligible expenditure in its national criminal law, so that the acts referred to therein constitute criminal offences. In the context of a conflict of interests that threatens EU’s financial interests, the following criminal offences are described in this Directive as transposed into the Czech Criminal Code:
– „Fraud affecting the financial interests of the Union“, i.e. subsidy fraud, in respect of procurement and/or non-procurement-related expenditure, at least when committed in order to make an unlawful gain for the perpetrator or another by causing a loss to the Union’s financial interests, it means any act or omission relating to the misapplication of such funds or assets for purposes other than those for which they were originally granted, which damages the Union’s financial interests (Article 3(2)(a) and (b) of the Directive);
– „Passive corruption“, which means the action of a public official who, directly or through an intermediary, requests or receives advantages of any kind, for himself or for a third party, or accepts a promise of such an advantage, to act or to refrain from acting in accordance with his duty or in the exercise of his functions in a way which damages or is likely to damage the Union’s financial interests (Article 4(2)(a) of the Directive);
– „Active corruption“, which means the action of a person who promises, offers or gives, directly or through an intermediary, an advantage of any kind to a public official for himself or for a third party for him to act or to refrain from acting in accordance with his duty or in the exercise of his functions in a way which damages or is likely to damage the Union’s financial interests (Article 4(2)(b) of the Directive);
– „Misappropriation“, which means ‘misappropriation’ means the action of a public official who is directly or indirectly entrusted with the management of funds or assets to commit or disburse funds or appropriate or use assets contrary to the purpose for which they were intended in any way which damages the Union’s financial interests (Article 4(3) of the Directive).
The Czech Criminal Code does not forget the possible criminal level of providing funds for ineligible expenses (including in connection with a conflict of interest of a Prime Minister or a Minister) both on the side of the recipient of the subsidy and on the side of the provider of the subsidy, and that both on the level of conscious intent or on the level of negligence. Failure to recover unduly paid funds is a systemic failure at the Czech level, which was already witnessed before.
In the past, an illegal procedure of circumventing the rules for the eligibility of expenditures from the general budget in the conflict of interests of the Prime Minister occured, when a purpose-built structure was created to control his companies through trust funds. Such a procedure was qualified as circumvention. The same was applied to the transfer of companies controlled by one of the government ministers to his relatives. These examples of circumvention of the rules for preventing conflicts of interests in the context of reimbursement of ineligible expenditures are illegal and do not solve the problem. The only factually correct solution is to terminate the reimbursement of ineligible expenditures to companies in relation to which the Czech Prime Minister or a Minister is in the conflict of interests at the moment of his or her appointment to the function of Prime Minister or Minister.
Who, besides the President, should resolve the conflict of interests of a potential or possibly appointed Prime Minister or Minister?
Before the Czech Prime Minister or a Minister is appointed, the President could, according to the above-mentioned European Commission communication, request the opinion of the European Commission: the Czech President could ask for opinion on whether, at the time of the possible appointment of a Prime Minister or a Minister with a conflict of interests, payments to his subsidies from the EU budget will be suspended specifically only for the companies in respect of which the potential Czech Prime Minister is in conflict of interest, or for the entire Czech Republic, until it is precisely determined which types of subsidies and public contracts financed from the EU budget such companies receive.
In response to a direct question from a German Member of the European Parliament in this regard in the European Parliament on 20 November 2025, Luxembourgish EU Commissioner for Agriculture Hansen replied that the European Commission does not know at this time the exact amount of subsidies of various types for the Agrofert group companies and has yet to find it out. However, in response to a question from the same MEP in October this year regarding the conflict of interests of a possible future Czech Prime Minister, the Polish EU Commissioner for Budget Serafin responded that the European Commission will look into the conflict of interests of the Czech Prime Minister. Therefore, in response to a possible question from the Czech President, the European Commission should give a binding opinion on whether a possible future Czech Prime Minister is in conflict of interests with regard to the EU budget and what this will mean for him and the Czech Republic.
At the same time, before appointing the Czech Prime Minister, the Czech President could ask the Council or the European Council whether the Czech Prime Minister with a conflict of interests, once appointed by him, will be allowed to attend the European Council meetings, where the future EU budget, in particular the multiannual financial framework for 2028-2035, will be discussed, or whether the Czech Prime Minister with a conflict of interest with regard to the EU budget will have to be replaced by the Czech President at the European Council meetings. The Treaty on European Union, specifically Article 15, states that the European Council is composed of the Heads of State or Government of the EU Member States. In the case of Czechia, thanks to the explicit constitutional authority of the President to represent Czech State externally, there is no problem for the President, as the head of the Czech Republic, who is not in a conflict of interests, to attend the European Council meeting instead of the Prime Minister with a conflict of interests.
Given the provision of the EU Financial Regulation on conflicts of interests, the Czech President – as the person responsible for preventing and resolving conflict of interests of persons he has the power to appoint – could be co-responsible for appointing a Prime Minister with a conflict of interests. This could jeopardize not only Czech Republic’s position in the European Council when negotiating the future EU multiannual financial framework for 2028-2035, but also the drawing of European subsidies for all entities in the Czech Republic, as described above.
The European Commission and the Council, including the European Council, should also be interested in clarifying the issue of the Czech Prime Minister’s conflict of interest, as if members of the European Council or members of the European Commission were to discuss the budget with him, they too could potentially commit criminal offences under the Directive on the protection of the EU’s financial interests mentioned above. The European Public Prosecutor’s Office (EPPO) would have the power to investigate such potential offences.
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