And the decision – which came after the administration resoundingly lost a vote of confidence a day earlier – has presented Czech President Milos Zeman with yet another headache as he himself prepares to square off against rival Jiri Drahos in an election run-off later this month.
Police are alleging that billionaire Mr Babis, 63, the country’s second-richest person, hid ownership of one of his companies a decade ago to win a two million euro subsidy, mostly from European Union funds, meant for small businesses.
Mr Babis denies wrongdoing – but he facing the prospect of losing his Parliamentary immunity to prosecution, with MPs due to vote on question later this week.
A report leaked from Olaf, the EU’s anti-fraud hit, claims numerous European and Czech laws were breached to win a small business grant for a countryside hotel and conference centre, known as Stork’s Nest, which is owned by Mr Babis’s Agrofert conglomerate.
In a defiant statement yesterday, he claimed the changes were a fabrication, adding: “If I was not in politics, you would never hear about Stork Nest.
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“Of course, we will let parliament [strip us] of immunity. We live in a country where investigative institutions are independent.”
Mr Zeman has promised Mr Babis another chance to form a government, but negotiations could take months, with few if any of the country’s political parties keen on the idea of joining a coalition with forces with his Action of Dissatisfied Citizens (ANO) party, which won 30 per cent of the vote and 78 out of 200 seats in the general election of October 2017.
ANO campaigned on a platform of fighting political corruption, bringing a businessman’s sense to government and raise the country’s profile within the EU.
The Social Democrats and Christian Democrats – ANO’s former ruling partners – are open to talks but say they will not join a government with a prime minister facing a police investigation.
And it is a problem the 73-year-old could presumably do without, given that his own political future largely depends on the outcome of the run-off on January 26 and 27. Mr Zeman took 38.6 per cent of the hope against Mr Drahos’ 26.6 per cent – but given that the other challengers have endorsed his challenger, he has a fight on his hands.
Mr Drahos himself has argued there should be no second chances for ANO.
He said: “If the ANO government does not win a vote of confidence at the first go, a member of another party should be invited to form a government.”