Credit: Vlada.cz 2023

Court Acquits Babis and His Aide For Second Time In Capi Hnizdo Subsidy Trial

The Prague Municipal Court yesterday acquitted ANO leader and former Prime Minister Andrej Babis and his former adviser Jana Nagyova for the second time in the so-called Capi Hnizdo case, which relates to a CZK 50 million subsidy for the construction of a conference centre in Central Bohemia.

The verdict is not final.

The public prosecutor and Babis and Nagyova’s defence lawyers have retained a deadline for a possible appeal against the acquittal.

Both Babis and Nagyova have denied guilt since the outset. The former prime minister has long sought to characterise the case as politically motivated.

It has not been proven beyond reasonable doubt that the defendants committed a crime, judge Jan Sott, chairman of the criminal court panel, told journalists today after the announcement of the verdict.

Sott rejected the notion that this was a political prosecution. He said the police and prosecutors had done a thorough job.

The Municipal Court took up the case for the second time yesterday, the original acquittal having been overturned by the court of appeal. 

The prosecutors alleged that Babis arranged for Farma Capi Hnizdo to be taken out of Agrofert at the end of 2007 and beginning of 2008, and sold shares to his children and partner. According to investigators, he did so in order for the company to appear to meet the conditions for subsidies for small and medium-sized enterprises. Nagyova successfully applied for the subsidy. According to the indictment, the payment of the subsidy caused a CZK 49.9 million loss for the Regional Council of Central Bohemia. 

Public prosecutor Jaroslav Saroch proposed that both defendants be given a three-year suspended sentence with five years of probation. He said the court should also impose a fine of CZK 10 million on Babis and CZK 500,000 on Nagyova.

According to Saroch, Farma Capi Hnizdo was personally and economically linked to the Agrofert holding, and was definitely not a small, independent enterprise, as Nagyova claimed in her application for the subsidy. He argued that the company was also operating in the same or an adjacent market as Agrofert. 

Ales Cimbala, the spokesperson for the Metropolitan Prosecutor’s Office, said that in the case of an acquittal, the prosecutors would probably appeal, but would wait for a written decision. The case would then be heard by the appeals High Court.

Judge Jan Sott said the Municipal Court was bound by the court of appeal’s instructions and therefore added some evidence. Yesterday’s proceedings thus dealt with, for example, the transformation of Farma Capi Hnizdo into a joint-stock company and whether the change was related to the company’s withdrawal from Agrofert and the subsequent acquisition of a subsidy. Sott said the testimony of the witness heard yesterday showed that this was a common practice in the holding.

According to the judge, it is beyond doubt that Capi Hnizdo would not have obtained loans without Agrofert’s help, would not have had advertising funding, and could not have implemented the project, but this does not automatically mean that a subsidy fraud was committed. On the contrary, he said, the project’s profitability shows that it was originally intended to be a family business.

“They didn’t risk anything,” he said, referring to the Babis family members who owned shares in the company. Moreover, according to the judge, the company did not conceal its cooperation with Agrofert. Even after the extra evidence was included, the judge said there was insufficient evidence of the guilt of the two defendants.

According to the defence counsels of both defendants, today’s addition of evidence with the testimony of a witness and two experts did not change anything in the case. They suggested that the Prague Municipal Court should rule as it did last January and acquit both defendants. The fact that Farma Capi Hnizdo was economically linked to Agrofert was, according to the defence counsels, known to the provider of the subsidy. If they considered it illegal, they should not have granted the subsidy, the lawyers argued.

In his closing speech, Babis called the indictment false and denied committing any crime. He and Nagyova asked not to attend the announcement of the verdict.

Capi Hnizdo is now owned by Imoba, a company of the Agrofert holding, which Babis put into trust funds in 2017 to meet an amended conflict of interest law. He also noted yesterday that the company returned the disputed subsidy in 2018.

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