A Slovak ministry said billionaire Czech ex-premier Andrej Babis should not have been on a list of communist police agents, with experts and opponents questioning the move on Tuesday.
Babis, a billionaire businessman born in the Slovak capital Bratislava, was a Communist Party member in the 1980s when former Czechoslovakia was under Moscow's control.
But secret police (StB) files from that era also list him as an agent under the cover name of "Bures", a common surname in Czechoslovakia, which split into the Czech Republic and Slovakia in 1993.
Babis, who denies having been an agent, filed several lawsuits against the Slovak institute overseeing his StB file, with the Supreme Court ruling last year he instead should sue the Slovak interior ministry.
The ministry said Tuesday Babis himself had proposed a settlement "in a libel suit concerning his unauthorised registration in former secret police files".
"The interior ministry has acknowledged that... Andrej Babis was unlawfully registered as an StB agent," reads the statement.
Babis, a centrist populist who served as Czech premier in 2017-2021, hailed the settlement on X: "It has taken 12 years, but truth and justice have finally prevailed."
But his opponents and analysts said the settlement was a political deal between Babis and the Slovak government led by Robert Fico, also a former communist.
Rightwing Czech Prime Minister Petr Fiala called the settlement "unbelievable".
"The decision of an independent court has been replaced with a plain bargain," he said on X.
New York University Prague analyst Jiri Pehe said it was a "political deal".
"Such matters should be decided by a court," he added.
Babis looks set to return to the premier's seat after a general election next autumn as his ANO movement tops the polls with 35-percent support.