First Greece. Now Slovakia.
Slovak officials face allegations of having used European funds to build fake guesthouses that only privileged insiders can stay in.
On paper, the guesthouses were intended to support rural tourism. In reality some have served as luxury villas for officials and their friends — with some even living in them permanently.
The so-called Hacienda case has been in the Slovak spotlight for months, with the opposition calling for answers and accountability and the ruling party trying to ignore it.
At the center of it all sits the national Agricultural Payment Agency (PPA), an official body under the Ministry of Agriculture responsible for distributing payments under the Common Agricultural Policy (CAP), which accounts for a third of the European Union budget. The equivalent agency in Greece was the vehicle for a fraud scandal this year that forced several top officials to resign and resulted in a €400 million EU fine.
Zuzana Šubová, who headed the PPA’s anti-corruption department for several months during Eduard Heger’s 2021-2023 government, is currently one of the agency’s leading critics.
“From the very start of our work, we uncovered fatal systemic failures and a deeply corrupt and opaque environment,” Šubová told POLITICO. The agency, she added, had relied on employees hiding evidence of wrongdoing ever since it was founded in 2003.
“This system, run through these powerful staff networks, which I call an organized criminal group, lasted 20 years, and no one managed to break it. It was our department, under my leadership, that finally did,” she said.
Šubová left the agency amid controversy after she failed to win a tender to keep her job, saying in a Facebook post at the time that the contest had been rigged in order to remove her. She now chairs the Pirate Party — Slovakia, an extra-parliamentary opposition group.
“We simply need to shut the whole thing down and start from scratch — create a clean, transparent agency,” she said.
In a statement to POLITICO, the PPA objected to Šubová’s remarks and said it was taking legal action “to protect its good name.”
“The PPA views the ongoing efforts by a non-parliamentary party together with Ms. Šubová — concerning calls for proposals and projects from over 10 years ago — as an insult to the hundreds of colleagues who work daily to develop Slovak agriculture and ensure the country’s food self-sufficiency,” the PPA said.
A former senior official at the agriculture ministry, who spoke to POLITICO on condition of anonymity, said however that the PPA was “rotten” and “nothing other than a bank for oligarchs.”
The Hacienda case
Nitrianske Hrnčiarovce, a small town in western Slovakia with around 2,000 inhabitants, is home to an opulent villa that cost European taxpayers €550,000.
But booking a stay here requires extra steps: You won’t find it on booking.com or Airbnb, and you can only make a reservation via a form on the villa’s own website. Journalists from the Slovak news outlet 360sk tried and failed to make a reservation. The property is secured behind a locked gate.
Meanwhile, in the southwestern Slovak village of Vrčún, a house that received €220,000 in EU funds to be turned into a tourism facility has instead served as a family residence for the past five years.
In another case, a senior PPA official used EU funds to help their daughter build a family residence, according to an anti-corruption foundation. A whistleblower, who says he was fired for raising the alarm on that case, recently spoke out in Slovak media. The PPA said in response that the whistleblower had retired and his contract couldn’t be extended due to budget cuts.
“The Agricultural Payment Agency strongly refutes several false claims made by a former employee. With these statements, the individual not only misleads the public but also damages the good reputation of the PPA,” the agency said in a statement.
These are just some examples of guesthouses or buildings awarded subsidies intended for rural tourism under dubious circumstances from 2015 to 2016 under Prime Minister Robert Fico’s second government.
Hacienda is a political hot-button issue. Michal Šimečka, leader of Slovakia’s largest opposition party, the liberal Progressive Slovakia, has alleged that tens of millions of euros intended to help people in Slovakia “were misused by Fico’s government and his oligarchs.” Freedom and Solidarity (SaS), another opposition party, has compiled a list of all the guesthouses in question.
The properties share a common pattern: difficult to locate, barely any online presence, challenging to book, gated off, or serving as private residences. Yet according to the rules, recipients of EU subsidies are required to keep such businesses running and open to the public for at least five years after getting the money.
Moreover, several of the projects are connected to allies of Fico’s ruling Smer (Direction) party.
The former senior Slovak official cited above told POLITICO he had encountered several corruption cases during his time at the institution and had filed fraud reports.
He and his colleagues were pushed to leave their jobs by mutual agreement after the department was moved to a city far from where they lived, the official said. He no longer has any information on what happened with the cases he flagged.
“We were already aware of the issues surrounding the haciendas back in 2020 and sounded the alarm. I believe that’s part of the reason we were forced to leave the ministry,” he said, adding that while many of these issues had been reported in the media, the authorities had ignored the matter.
Lack of transparency
Over the years, the PPA has been repeatedly investigated by both local and European authorities.
In March the national Supreme Audit Office found that while the PPA had formally adopted anti-corruption measures, their implementation was “hampered by personnel and professional limits, weak control mechanisms and a low level of transparency.”
Last year, the EU’s OLAF anti-fraud office closed the last of six investigations into the Dobytkár (Stock Breeder) case, one of the largest corruption scandals in Slovakia’s history.
The case came to light in connection with the 2018 murder of investigative journalist Ján Kuciak, who had been working on a story related to agricultural fraud. In its final probe, OLAF found that farmers had paid around €10 million in bribes to Slovak officials to secure illegitimate access to EU rural development funds distributed under the CAP. OLAF, which has no prosecutorial powers, recommended that the money be recovered and reported specific criminal acts by people involved in the scam to the Slovak authorities.
A separate Dobytkár investigation found evidence of fraud in Slovakia and resulted in criminal charges. Several individuals now on trial previously held senior positions at the PPA, including former director Juraj Kožuch. Like others in the case he stands accused of accepting bribes for approving subsidies and laundering the illicit proceeds. Kožuch, who has been released on bail, denies the charges.
Back in 2020 the European Commission froze 25 percent of reimbursements to the PPA over earlier fraud issues, demanding an external audit, a management overhaul and improved transparency. Although the agency later regained its accreditation, Šubová argues these reforms were only implemented on paper, not in practice, echoing the assessment of Slovakia’s Supreme Audit Office.
Asked for comment, the European Commission said the PPA had been the subject of several audits over the past five years.
“Those audits identified deficiencies in the proper functioning of its CAP governance systems. Therefore, DG AGRI applied financial corrections for the financial years 2019 to 2021 to protect the Union’s financial interests. DG AGRI also asked the Slovak authorities to address the root causes of those deficiencies and continues to follow the situation closely,” it said in a statement.
European interest
Tomáš Zdechovský, a Czech member of the European Parliament who led a Committee on Budgetary Control mission to Bratislava in May and spent months gathering evidence on suspicious cases, said the embezzlement of EU funds in Slovakia was “systematic.”
“We’ve collected over 300 examples from Slovakia that show how, over the past 10 years, EU money has been consistently funneled to certain groups of people. These groups inflate the prices of all the contracts to enrich themselves,” the conservative lawmaker said, adding he had reported those 300 cases to the European Public Prosecutor’s Office (EPPO), OLAF and the European Commission.
“They draw the funds not for public benefit, but for private use. Like renovating their own homes or buying trucks and other things that have nothing to do with what the money was meant for,” Zdechovský said.
The PPA responded that it has “established control mechanisms” and that the right of every current or former employee to report corruption “is in no way restricted and can be exercised with full confidence.”
“PPA guarantees that any beneficiary who does not comply with the conditions of any project will be obliged to return the financial resources,” the agency added. EPPO, which spearheaded the probe into the Greek farm fraud, said it was “in the process of verifying numerous allegations with a view to determine if it can exercise its competence in these cases under the applicable legal framework.” It added that it was “still too soon to share any more information.” EPPO’s prosecutor for Slovakia, Juraj Novocký, told the Denník N daily paper last month that the office has been investigating dozens of cases related to the PPA and that in some cases, criminal prosecutions are already underway.“In specific cases, charges have already been brought against certain individuals. I firmly believe that we will be able to review and investigate the package of several dozen cases we received within a reasonable timeframe, and once we have our findings, we will certainly inform the public,” Novocký said.
What does the government say?
Fico’s government, faced with accusations from the opposition and the media, has attempted to downplay the saga.
Agriculture Minister Richard Takáč has called the Hacienda case a “made-up scandal” and insisted that all internal controls at the PPA are working properly. He accused the opposition of trying to topple the government and harm Slovakia’s image in a way that risks depriving it of access to EU funds.
Fico, now serving his fourth term as prime minister, has called Zdechovský, the Czech MEP, “a hired killer doing dirty opposition work.” He denied that his government was corrupt, and has blocked an opposition attempt to hold an extraordinary session of parliament to debate the matter.
Local journalists reporting on the scandal complain that the government won’t take their findings seriously.
“You can’t shake off the feeling that things aren’t being properly investigated. The problem lies in the leadership heading key departments, who remain in high-level positions [at the PPA],” said Xenia Makarová from the Zastavme korupciu (Let’s Stop Corruption) NGO.
According to Makarová, people who follow the rules and work to expose shady practices are systematically removed through internal restructuring, keeping the wheels of grift oiled.
“Meanwhile, the minister, and also other members of the government and parliament, attack those who are uncovering these scandals, particularly journalists,” she added.
Attacks against journalists and attempts to control independent media have sparked concern in Brussels over democratic backsliding in Slovakia.
Since Fico returned to power in October 2023 his ruling coalition has taken a leaf out of Hungarian premier Viktor Orbán’s illiberal playbook.
It has abolished the special prosecutor’s office and disbanded the national crime agency atop the police force — both of which had been at the forefront of major corruption investigations and previously handled cases linked to officials from Fico’s ruling Smer party.
The agriculture ministry did not respond to a request for a comment.
The post Not another farm fraud? Slovaks face heat over EU funds for fake guesthouses. appeared first on Politico.
