Czech president vetoes 'Lex Babis'

Czech president vetoes 'Lex Babis'
President Milos Zeman has long been a bitter enemy of Prime Minister Bohuslav Sobotka.
By bne IntelliNews December 19, 2016

Czech President Milos Zeman has vetoed a conflict of interests bill, popularly known as the "Lex Babis", which targets billionaire Finance Minister Andrej Babis, leader of the centrist Ano party in the ruling coalition.

The president's unexpected veto of the bill means parliament will have to pass the legislation for a third time, after its earlier amendment by the senate. The law is expected to pass with the support of the ruling Social Democrats and rightwing opposition parties, but in that event, Zeman has now pledged to send the bill to the Constitutional Court.

Babis has also threatened legal action against the bill, and with Zeman's support, the billionaire may now hope to delay the bill taking effect until after next autumn's general election.

The conflict of interests bill is the latest shot in a tussle between the Social Democrats and Ano that has persisted throughout their shared time in office. The antagonism now appears to be mounting with elections less than a year away, and with Ano establishing an apparently robust lead in polls.

Zeman's veto demonstrates the growing closeness between the two populist leaders: Zeman, the one-time Social Democrat leader, and Babis, the up and coming billionaire, who is likely to be the prime minister after the general election.  Zeman has long been a bitter enemy of Prime Minister Bohuslav Sobotka, current leader of the Social Democrats, and has met several times with Babis in recent weeks.

Zeman had said that he would not stand in the way of the legislation, though he also said laws aimed at one man should not be adopted.

However, his office said in a statement that after studying the bill, which was passed by the lower house in late November, he has decided it is in conflict with the constitution.The bill breaches the principle of open competition between political parties, his office said.

The conflict of interests bill would ban companies in which government members own 25% from winning public contracts, as well as forbidding ministers from controlling media outlets.

Lex Babis’ puts the spotlight on the finance minister’s clear conflicts of interest. The finance minster owns the country’s biggest private employer, Agrofert, as well as several newspapers and the most widely listened to radio station.

According to an analysis released by the server recently, 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 enacted.

The bill was put forward by the rightwing opposition, but heartily supported by the left-leaning CSSD against its own coalition partner. The lower house of parliament originally passed a version of 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.

The lower house is expected to vote on the bill for a third time in January, where 101 votes would override the veto. The November vote on the bill garnered 125 votes from the 200-seat house. 

Despite worries expressed by his political rivals and those in industry and the media, the wider public appears less concerned by Babis’ conflicts of interest. Opinion polls show the finance minister, whose party runs on a populist anti-corruption platform, is the most trusted politician in the country.

Babis now looks set to take the prime minister’s chair at elections scheduled for October. Ano has opened up a 10pp lead over the CSSD in recent months, according to polls.

However, should the bill enter into law, Babis would be forced to reduce his stake in his media business if he wants to be a part of the next government, and Agrofert would be cut off from public contracts. However, critics note the legislation does not apply to businesses held by relatives of officials.

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