Documents detailing the financial dealings of world leaders in tax havens include the revelation that Babis used a convoluted structure of offshore companies when purchasing property in France worth tens of millions of euros in 2009.
He is accused of passing money through three separate companies in order to buy luxury properties including a £13m chateau on the French Riviera.
With Czech parliamentary elections taking place on October 8-9, Babis now risks becoming the first victim of the Pandora Papers’ revelations.
The latest polls have shown a tightening in the Czech election race. Babis’s ANO party is now projected to win 25.2 per cent of the vote, ahead of the SPOLU opposition coalition on 20.9 per cent.
Furious reactions to the Pandora Papers could further weaken Babis’s position.
“How intensively Czech officials try to investigate the Pandora Papers will show to what extent the Czech state has been occupied by Babis and his people,” said the chief editor of a leading anti-Babis news portal. A Slovak newspaper, meanwhile, said “the scheme, as he used it, is one of the most popular among terrorists, drug and arms smugglers, and corrupt politicians”.
Speaking to The Independent, opposition Pirate party MEP Mikulas Peksa claimed “the Pandora Papers show why Andrej Babis was never supportive of efforts to fight for transparency and against corruption and tax evasion”.
Populist Babis used a television debate last night to protest his innocence, saying the allegations are part of a conspiracy to remove him from power, and that the events in question took place long before he entered politics.
But one financial crime expert said “no normal business dealing would look anything like this”, noting traits of money laundering practices in Babis’s suspicious series of transactions.
Although it is thought the complex payment method did not bring Babis any significant benefits in terms of avoiding tax, he did not declare the existence of his foreign companies to the Czech authorities.
The ANO party leader may therefore be hit with a fine for having failed to mention foreign assets. But it is thought he could also face more serious punishment, including being stripped of his properties by the French authorities or being investigated in the US, where one of the companies was based.
Indeed, if Czech police find the nature of Babis’s business dealings to be particularly suspicious, he could also be the subject of a domestic investigation. The Czech National Organised Crime Centre has already said it will examine the information about Babis contained in the Pandora Papers.
This would not be a new experience for the controversial Czech leader. Babis is already the subject of a long-running police investigation over the “Stork’s Nest” affair of alleged EU subsidy fraud. He is accused of transferring a company out of his Agrofert conglomerate to make it eligible to receive substantial EU funds in 2008.
Babis’s own son has testified to the police against him in the Stork’s Nest case, also claiming his father had him kidnapped and sent to the Crimean peninsula to stop him testifying during the first round of police investigations into the affair.
Babis denied his son’s allegations, claiming he suffers from schizophrenia and that his evidence cannot be trusted – something which the junior Babis denies.
The Czech leader’s current relationship with the huge Agrofert conglomerate has meanwhile come under intense scrutiny. Babis’s former business empire was transferred into trust funds just before he became prime minister in 2017.
But an independent EU audit earlier this year said he “definitely” has a conflict of interest due to his continued "direct" and "indirect" influence over the company, which contains some of the Czech Republic’s biggest media companies as well as significant agriculture, real estate and chemical industry assets.
As a result of the audit, the EU declared that all subsidies granted to Agrofert since Babis took power in 2017 were given in violation of a law against conflicts of interest.
Babis’s opponents find many reasons to distrust the Slovak-born billionaire and fifth-richest man in the Czech Republic. Among them is also his rumoured membership of the StB, the Czechoslovak secret police, prior to the fall of communism in the country in 1989.
Babis has always vehemently denied any involvement with the StB. Yet along with the nation’s current president Milos Zeman, he is seen by many as a hangover of a 20th-century past in which western democratic values were held in low regard.
“These elections will decide whether the state capture led by the oligarch Andrej Babis and pro-Kremlin president Milos Zeman will go any further,” Benjamin Roll, chair of the Million Moments for Democracy campaigning organisation, told The Independent.
“More and more important institutions are being controlled by Agrofert, which must be stopped. Our country is standing at a crossroads,” he added.
Last weekend, Mr Roll’s organisation pulled off a stunt in which various important public buildings and monuments in the Czech Republic were cordoned off with mock police tape bearing the words “confiscated by ANO-Fert” – a play on the names of Babis’s political party and business conglomerate.
Indeed, for the Czech opposition, Babis’s greatest crime is treating the Czech state like another part of his business empire.
Czech Pirate party leader Ivan Bartos recently characterised Babis as “a business predator who went into politics”, an “entrepreneur who decided to treat the state like a company”.
And the ultimate irony of Babis’s controversies – including allegations about his foreign property ownership – is that his ANO party was originally formed as an anti-corruption outfit.
This apparent hypocrisy is again in evidence in the Pandora Papers affair, with Babis having repeatedly criticised the practice of Czechs using offshore tax havens in the past.
“When the Pirates suggested that tax havens should be tackled systematically on the European level, Andrej Babis became furious and called us traitors. Now, it is crystal clear why. He only fights for his own interests,” Pirate MEP Marcel Kolaja told The Independent.
Public opinion may be entrenched along party lines ahead of the coming Czech elections, but the publication of the Pandora Papers has provided a timely reminder of long-held concerns about Babis’s leadership.
Czech voters are now left to ask themselves once again whether they can stomach another four years of controversy around their elected leader.
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