Conflict of interest bill risks all out war in Czech coalition

Conflict of interest bill risks all out war in Czech coalition
Babis' conflicts of interest have long threatened to destabilize the Czech coalition.
By Tim Gosling in Prague February 29, 2016

The Social Democrat Party (CSSD), the senior partner in the Czech governing coalition, will support a planned bill that will ban ministers from controlling companies, local media reports.

The legislation specifically targets powerful Finance Minister Andrej Babis, head of coalition partner Ano, who also owns Agrofert, the country's biggest employer. The left-leaning CSSD's support for the bill threatens to split the coalition.

The new bill, or an amendment to current legislation, is being drafted by minor conservative party Top 09, reports left-leaning daily Pravo. It seeks to prevent anyone holding 40% or more in a company from serving in the cabinet. On top of the sprawling list of hundreds of companies inside the Agrofert group, Babis also owns major media assets.

Somewhat surprisingly, Prime Minister Bohuslav Sobotka from the CSSD has come out strongly in support of the plan. "We consider the proposal, which would bind government members to transfer their firms so that they could not control them any more, undisputable from the legislative point of view," he told the newspaper. Support for the bill has also been expressed by the Christian Democrats (KDU-CSL), the smallest of the three partners in the coalition.

Should the proposed legislation pass, Babis would have to give up his control of Agrofert and media group Mafra if he wants to join the next government. The company would need to be sold, or transferred to a trust fund, according to Pravo.

Unsurprisingly, Babis has reacted with fury. With his eye fixed firmly on his electorate, he claims the bill is an effort to break Ano's disruption of the Czech political elite. The new party shocked when it came second in elections in late 2013 on the same wave that has seen political outsiders and novices heading polls around Europe.

"I'm mainly amazed at the conduct of our coalition partners," Babis wrote to Pravo. "When we signed the coalition agreement, based on which we have been cooperating and passing bills for two years now, they knew well that I owned a company and newspapers. All of a sudden, they mind it so much that they have sided with the opposition against their coalition partner to push a bill together?"

The CSSD's highly public support for such a frontal attack on Babis is surprising. While the coalition leader has long enjoyed prodding Ano's Achilles' heel, it has been careful not to make any actual move to attack the finance minister's conflict of interest. That's despite the myriad points of potential scandal. Agrofert was the biggest Czech corporate recipient of EU funds in the 2007-2013 programme period, receiving CZK4.9bn, according to a report published by weekly Dotyk in September.


The CSSD-Ano-Christian Democrat (KDU-CSL) coalition has proved remarkably stable since taking office in January 2014, despite almost constant low-level sniping between the two major parties. They recently clubbed together to push through a bill on electronic registration of sales that the opposition had blocked, insisting that it would hand Babis inside information on Agrofert's competitors.

However, much of the Czech political establishment remains highly wary of Babis. His personal wealth, ownership of key media like the newspapers Lidove Noviny and Mlada Fronta Dnes, and extensive business holdings in the agricultural and chemical sectors saw Sobotka, among others, note that Babis’ power in the Czech Republic is “unprecedented since 1989” and that it represents “a permanent risk of a conflict of interest”.

Labelling the government inefficient and highlighting persistent internal political rivalries, the finance minister told bne IntelliNews in November: “I can’t manage my own time. I am sitting in parliament listening to stupidities of corrupt people.”

Still, the common view is that without a robust lead in opinion polls, CSSD and Ano have little choice but to continue in a spikey marriage of convenience. Ano has led opinion polls for the past couple of years, although ratings remain below 30%. Babis is consistently viewed as one of the most trusted politicians in a country rife with scepticsim over the political class. Meanwhile, the established right-wing opposition parties ODS and Top 09 remain stranded, with approval ratings in single digits.

That makes the CSSD's support for the draft bill curious. The finance minister's conflict of interest is a regular point of criticism raised by Sobotka and his party, but a direct attack risks all out war within the coalition.

That suggests the CSSD sees the stakes rising inside the coalition. With Ano continuing to lead opinion polls, Babis looks to be ready to try to push the issue. He is now trying to engineer changes in the coalition agreement, while he constantly complains that, although he's not ready to bring it down, the government is corrupt and wasteful.

Meanwhile, Babis appears to be increasingly aligning his stance with that of President Milos Zeman. The controversial head of state, who has seen his approval ratings jump in recent months, is a bitter enemy of the PM, and has openly spoken of ejecting him from government.

On the other hand, it may be that the mild-mannered Sobotka senses an opportunity. The EU said last month that it is eyeing a probe into Babis' conflicts of interest. Any finding against would hit Ano hard, given that it's surprisingly successful campaign for the October 2013 election was based on an anti-corruption platform.

Babis is utterly dominant in Ano. Should he be prevented from leading the party, its ratings would likely plummet. Meanwhile, Sobotka may be thinking the CSSD could live with an even broader coalition should it join up with the likes of Top 09.