Czech Prime Minister Andrej Babis is facing an investigation of fraud and misuse of EU funds, Chief Prosecutor Pavel Zeman announced on Wednesday. A previous investigation into Babis was halted in September, but Zeman now called that decision "against the law and premature."

The available evidence was wrongly assessed and the investigation did not follow European legislation protocol, according to Zeman. The prosecutor's office in Prague will conduct the investigation and then consider whether the case should be reopened.

Read more: Andrej Babis — The anti-migrant Czech premier and his migrant workers

The case concerns $2 million (€1.8 million) EU subsidies for a spa resort called the Stork's Nest owned by members of Babis' family that Babis green-lit.

"At this point, we don't have enough evidence to press or drop the charges,'' Zeman said on Wednesday. Babis, a populist billionaire, has denied any wrongdoing.

"I am convinced I haven't done anything illegal,'' he repeated on Wednesday. The prosecutor also said that Babis' family would not be further investigated, a decision which Babis called "a relief."

Were the EU subsidies legally awarded?

The subsidies were eligible for medium- and small-sized businesses, but the spa resort would not have been eligible.

The property was held by the Babis-owned Agrofert conglomerate before and after the subsidies were awarded, but at the time of the subsidies being given, its ownership had been transferred to members of Babis' family. It has been suggested that Babis did this to limit suspicions of his own business interests in the venture.

The 65-year-old ANO party leader also denied claims that the money would be reimbursed to the EU.

"It's not true that money will be returned, there's not the slightest reason for that," Babis told lawmakers on Wednesday.

"It's absurd that European auditors interpret Czech law and teach us how to understand it," he added.

It is unclear when the Czech prosecutor will decide whether and when to reopen the investigation. Babis faced criticism this year, after two mass protests urged him to step down as leader.

ed/sms (Reuters, AP)

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