Prosecutors clear Czech PM of EU subsidy fraud

Czech prosecutors said Friday they had cleared billionaire Prime Minister Andrej Babis of any wrongdoing in an alleged two-million-euro case of EU subsidy fraud involving one of his farms.

Police recommended in April that Babis be indicted in the case in which he and several others, including family members, risked five to 10 years behind bars. Babis flatly denied any wrongdoing.

The 65-year-old agro-chemicals mogul, pegged by Forbes as the second-wealthiest Czech, was suspected of abusing special EU small business subsidies to create his luxury Stork Nest resort and farm near Prague in 2007.

Police alleged that Babis had only temporarily removed the farm from Agrofert, his sprawling food, chemicals and media holding, so as to make it eligible for the EU small business subsidy.

Prosecutors said Friday the police allegation was unsubstantiated.

"The evidence we have made us conclude the Stork Nest farm met the definition of a small- and medium-sized company," Prague prosecutor Martin Erazim said in a statement.

"The Stork Nest farm was correctly identified as an independent company," he said, adding that his decision would be submitted to the chief prosecutor who will have the final say in the matter.

Babis's centrist populist ANO movement leads a minority coalition government with the leftwing Social Democrats while relying on the Communists for a parliamentary majority.

A Slovak-born entrepreneur-turned-politician, Babis faced a wave of protests earlier this year, including one in Prague that drew some 250,000 people -- the largest since communism fell in 1989.

He has been targeted by opponents over his alleged role as a communist secret police agent in the 1980s.

The EU is meanwhile looking into his dual role as a politician and entrepreneur in a possible conflict of interest probe.

Despite its leader's woes, ANO boasts stable voter popularity, scoring about 30-percent support in polls, way ahead of its rivals.