Czech lawmakers pass “lex Babis”

Czech lawmakers pass “lex Babis”
Czech Finance Minister Andrej Babis.
By Tim Gosling in Prague November 30, 2016

The Czech parliament passed an amended version of the bill on conflicts of interest on November 29. The legislation, returned to the government by the Senate with some minor amendments last month, was put on the schedule by the prime minister following a stormy coalition meeting last week.

The new Conflict of Interest Act is more commonly known as “lex Babis”. Pushed by the coalition-leading Social Democrat Party (CSSD), it targets billionaire Finance Minister Andrej Babis – a likely PM after elections next year.

Babis’ Ano party voted against the bill, but faced a lower house in which his coalition partners and the opposition were united, resulting in 125 votes in favour to just 42 against. The legislation is the latest shot in a tussle between Ano and the CSSD that has persisted throughout their shared time in office.

The antagonism appears to be mounting with elections less than a year away. Ano says it will challenge the legislation in the Constitutional Court.

The bill would ban government members of holding more than 40% in a company, as well as prevent companies in which ministers own more than 25% from partaking in public contracts or state aid. It will also ban ministers from owning stakes in media outlets. Babis owns the country’s biggest private employer – agricultural and chemicals conglomerate Agrofert - as well as several newspapers and TV channels.

The Ano chief, whose party has opened up a significant lead over the CSSD in recent polls, has persistently pledged a legal challenge against a bill he insists is aimed solely at pushing him out of politics. However, his efforts to derail the vote were turned down by the CSSD and the Christian Democrat junior coalition partner.

The lower house of parliament originally passed the bill in June with a huge majority. However, the Senate returned the legislation with an amendment postponing its effect from January 2017 to September – just one month before scheduled elections.

Babis complained on November 23 that the bill should not be on the lower house’s agenda because the coalition promised to consult experts on errors he says are included in the bill. The coalition, he claims, had also promised the bill would not apply to current ministers.

“It was agreed that our experts would meet and [the error would] be addressed,” he said, according to CTK. “To our surprise, that was followed by another dirty trick by the Social Democratic Party.”

Prime Minister Bohuslav Sobotka, under pressure in his role as CSSD chairman due to falling support, dismissed the complaint out of hand. “There is no problem, I think that this law may be approved in the Senate or in the Chamber of Deputies version,” he remarked when asked about possible errors in the law. 

With the upper house having had its amendments passed, the bill should quickly be handed to President Milos Zeman – a bitter enemy of Sobotka who has met several times with Babis in recent weeks – for him to sign. Zeman has said he is unlikely to veto the legislation, although the populist head of state has also said laws should not be aimed at one man.

‘Lex Babis’ puts the spotlight on Babis’ numerous clear conflicts of interest. It was put forward by the rightwing opposition, but heartily supported by the left-leaning CSSD against its own coalition partner. Analysis released by the server claims Babis’ holding Agrofert has received public orders worth CZK35bn over the past 10 years. That report only increased the pressure in some quarters for the bill to be passed.

Despite worries expressed by Babis’ political rivals and those in industry and the media, the wider public appears less concerned by his numerous conflicts of interest. Opinion polls show he is the most trusted politician in the country.

The bill, however, will mean that Babis will have to reduce his stake in Agrofert to below 40% and sell his media business if he wants to be a part of the next government. However, critics note the law does not apply to businesses held by relatives of officials.

The legislation was initially sparked by a scandal centred on EU subsidies claimed by the high-end resort, Stork’s Nest, that is owned by Agrofert. Babis allegedly enabled the resort to qualify for EU aid designed for small and medium-sized enterprises by transferring ownership temporarily to his lawyer and family members.