Czech Republic's Prime Minister Andrej Babis leaves at the end of an EU summit in Brussels, May 25, 2021. (JOHANNA GERON / POOL VIA AP)

PRAGUE - Czech Prime Minister Andrej Babis and his business empire may be among the first cases investigated by the European Union's new joint prosecution after a referral from national authorities, a top Czech prosecutor said on Wednesday.

Babis is a billionaire who has transferred his Agrofert conglomerate of firms in farming, chemicals, food and other sectors - many receiving EU subsidies - to trust funds, but an EU audit has concluded he was still in control of the property.

An investigaton by the European Public Prosecutor's Office would be another headache for Czech PM Andrej Babis, who faces a separate protracted criminal investigation at home for alleged EU subsidy fraud

The European Public Prosecutor's Office (EPPO) launched its operation on June 1, led by Romania's former anti-corruption chief prosecutor Laura Koevesi, and is due to take over serious cases which involve EU funds.

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An investigaton by EPPO would be another headache for Babis who faces a tough election campaign over the summer and a separate protracted criminal investigation at home for alleged EU subsidy fraud.

High Public Prosecutor Lenka Bradacova confirmed to Reuters the case, overseen by her office, was being referred to EPPO.

"The criminal case... generally referred to as a conflict of interests of the prime minister, falls under the sphere of action of the newly established office (EPPO) due to the description of the act and its legal classification," she said.

Babis has vigorously denied any wrongdoing and said he had met all legal requirements by moving Agrofert to the trust funds. He has blamed the opposition Pirate Party, which filed the original complaint, for pushing the case for political benefit.

A Czech representative to EPPO also confirmed to Reuters that the case was flagged by the Czech prosecutors for referral.

A spokeswoman for Babis did not have a comment available.

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Agrofert was the biggest single recipient of EU's common agricultural policy (CAP) funds in 2018 and 2019, paid per hectare or per animal, at over 29 million euros (US$35.4 million) each year, according to an analysis by the CEPS think tank.

Babis's firms have also received development subsidies from EU-backed project financing, which are normally approved by national authorities and later claimed for reimbursement from Brussels.

A European Commission audit released in April focusing on projects, not CAP payments, concluded he was in conflict of interest and should not have received the funds. The funds under scrutiny, worth millions of euros, had not yet been reimbursed from the EU budget.

Babis also faces a separate criminal investigation at home for allegedly hiding the ownership of a firm that developed a conference centre outside Prague so it would get a 2 million euro EU subsidy meant for small businesses.