A group of coalition MPs has proposed a relaxation of conflict of interest rules preventing ministers from benefiting from public contracts, subsidies and incentives. Under the proposals, firms owned by members of the cabinet would not be allowed to receive subsidies from their own ministry, but would be able to profit from funding allocated by other ministries.
The same would apply to public contracts. Based on the draft amendment to the conflict of interest law known as ‘Lex Babis’, the contracting authority should exclude such a company from the tender process.
The opposition Mayors and Independents (STAN) and the Pirates are protesting against the proposed changes.
Companies in which cabinet members hold at least a 25% stake currently have no access to public contracts, subsidies or investment incentives. The bill submitted by coalition MPs, led by Radek Vondracek (ANO) and also signed by David Prazak (ANO), Marie Posarova (SPD) and Filip Turek (Motorists), transfers restrictions on the awarding of public contracts from the conflict of interest law to the public procurement law.
According to the bill’s proposers, the current ban is a blanket ban, which affects even the lowest levels, including small municipalities and their subsidised organisations. “Not only does such a broad concept fail to correspond to the original meaning and purpose for which these prohibitions were enshrined in the conflict of interest law, but above all, it exceeds the standard framework of rules adopted by European Union member states to prevent the risk of conflicts of interest,” they wrote in the explanatory memorandum.
The proposers argue that it is “unclear how a member of the government could influence the decisions of a ministry they do not lead, or of regions or municipalities.”
“The [amended] law would no longer prevent Agrofert from drawing billions of crowns from subsidies and contracts, even if Andrej Babis (ANO) remained prime minister,” wrote Pirate MP Ivan Bartos in a press release about the planned amendment. Agrofert is a giant chemical, agricultural and food holding linked to PM Babis, which has long been accused of improperly receiving public subsidies.
According to MP Karel Dvorak (STAN), it would no longer be a problem for the prime minister to draw subsidies from the Ministry of Agriculture. “This government does not work for the citizens, but for the interests of its prime minister. Yet again, another expedient change. Simply all power to Agrofert,” Dvorak wrote on social media.
Under the draft amendment, restrictions on the awarding of contracts, subsidies and investment incentives would now also apply to companies whose owners are regional or municipal representatives. In these cases also, the restrictions would apply only to the specific region or municipality.
In the explanatory memorandum, the proposers highlight several new measures they say will prevent conflicts of interest. Providers of subsidies would be required to obtain a sworn statement from the officials reviewing applications, confirming that they are not in a conflict of interest. They would have to publish the proposed subsidies on the official notice board to allow objections to be raised. Members of the government who are beneficial owners of companies would have to submit reports of public contracts, subsidies and investment incentives awarded to these firms.
On the other hand, the bill would shorten to four years the statute of limitations to impose a fine for breaches of budgetary discipline.
The original law came into effect in 2017 and also concerns restrictions on media ownership. It was named Lex Babis after the then-finance minister and current prime minister, Andrej Babis, who responded to the law by placing his companies into trust funds.
Currently, the Agrofert group is placed in the RSVP Trust. Babis claims he has resolved the conflict of interest in an exemplary manner, though some experts and opposition politicians dispute this, and the opposition has called for a special lower house session on Thursday to address the matter.
