The Czech police’s organised crime unit (NCOZ) announced it would look into the recently published Pandora Papers information linked to the Czech populist Prime Minister Andrej Babis and other Czechs included in the document, a police spokesperson said on October 4, the Czech News Agency reported.
The documents claim that Babis failed to declare an offshore investment company in the British Virgin Islands (BVI) and used it to purchase two villas for €14.04mn in the south of France in 2009. There were secret loans of €15mn to other shell companies he owned in the US and Monaco. The money was eventually invested in the luxury French real estate assets.
Babis has not declared the purchase in Czechia, the asset declaration forms show that the new real estate assets and the companies involved in its ownership are missing in documents the Czech PM submitted according to Czech law.
The police investigation is the second the Czech premier is facing, following the ongoing five-year-old probe into his allegedly fraudulent claim for EU subsidies for the Stork's Nest conference centre he build south of Prague.
Babis claims the Pandora Papers worldwide leak is designed to embarrass him before the Czech elections next week. The disclosure is a grave embarrassment for the premier, who has claimed to be an anti-corruption champion, stressing that his businesses pay taxes in the Czech Republic, unlike those owned by other oligarchs, and who in government has cracked down on tax evasion by small businesses.
Babis says the amount spent on the acquisition was properly taxed in Czechia and thus there is no money laundering, claiming he can provide an audit carried out by EY and PricewaterhouseCoopers. He stressed that these allegations that he used offshore companies to buy luxury property in France have been perfectly timed just before the general elections next week to influence the election outcomes and to damage his reputation.
"I can easily prove that the money left the Czech bank and returned back to the Czech bank," said Babis.
However, as the Czech News Agency reported, both audit companies warned that the audit reports which confirmed Babis´ total revenues of CZK2.4bn between 1996 and 2015 are not an audit under international auditing standards.
Moreover, the analysts said that the reports were not an audit in the true sense of the word. "These are really just reports. Their legal significance is lower than that of a full-fledged audit," explained Lukas Kovanda, an analyst at Cyrrus.
"I doubt that [the money] left the Czech bank and returned to the Czech bank, because we know that the offshore companies had accounts in Monaco. That means that it might be possible that it left the Czech bank, but there is also some indication in the contract that it probably also left Geneva," the journalist and founder of Investigace.cz Pavla Holcova who participated in investigations told Radiozurnal.
Also her colleague Hana Capova said it is clear that the money returned to the Czech bank. "The money was used to buy real estate owned by SCP Bigaud, which became part of SynBiol in 2018. In the annual report, this is listed as an acquisition. So I don't even know what kind of money that should be returned to the Czech bank the prime minister is talking about," she said to Czech Radio Plus.