Slovak PM created slush funds, alleges former intimate

By bne IntelliNews May 20, 2010

Tom Nicholson in Bratislava -

What goes around, comes around, Slovak Prime Minister Robert Fico is discovering. Months after hobbling the opposition with charges of murky financing, the country's irascible leader now faces charges only weeks ahead of the June national elections that he personally accepted millions of euros in undisclosed gifts in return for political favours.

Bohumil Hanzel, who helped Fico found his Smer party in 1999, said in a May 19 interview with the the Sme daily that Fico had boasted to him of reeling in around €3.3m in undisclosed monies for the party's first national election campaign in 2002. Other recruiters secured millions of euros in additional slush funds, Hanzel claimed. "Mr Fico once said he would do anything to become prime minister. With this step he signed a deal with the devil."

Always looking for sponsors, Smer stumbled badly in the 2002 ballot, finishing out of power with just 13% support despite a bombastic campaign. Four years later, Fico won 29% to topple then-PM Mikulas Dzurinda from power. Since then, however, he has been dogged by allegations that his government awarded millions of euros in state tenders to reputed Smer sponsors, including entrepreneur Juraj Siroky, head of the Slovak Ice Hockey Federation and a former Communist spy with Czechoslovakia's embassy in Washington in the 1970s. Under Fico, Siroky's companies have won hundreds of millions of euros worth of state contracts for building freeways and refurbishing cultural monuments and sporting facilities. Hanzel said he had detailed records of each meeting and conversation with Fico, and that he was prepared to defend his charges in court. Fico "was always looking for sponsors to support the party, and he said it was normal that they demand state contracts in the event we won elections," Hanzel said. "He even raised money for the party himself. He told me the name and the sum, and if necessary, I will provide the details in court. But it was not far from [€3m]."

Unprecedented scandal

Fico has called Hanzel a "liar" and a "political failure", and claimed on May 19 that "the Smer party's accounts have been in order since 1999." However, he failed to address Hanzel's central claim that the PM himself engaged in illegal fundraising.

Ironically, in January this year, Fico presented evidence of what he claimed was "money laundering" by his main rival, the opposition SDKU party. After failing to explain millions of euros in financing from Switzerland in the early 2000s, SDKU leader Dzurinda withdrew from the election race, apparently leaving Fico a free run at re-election. Now, Fico finds himself fighting a rearguard action.

Hanzel served as an MP for Fico's Smer party from 2002 to 2006, but in the second half of his term drifted apart from Smer and voted with Dzurinda's government on key reform measures. "I can't say whether this is political revenge, but it's certainly a scandal of unprecedented proportions, and voters should be asking serious questions about the Smer party's accounting," says Martin Butora, head of the Institute for Public Affairs think-tank in Bratislava and a former Slovak ambassador to Washington (1998-2002).

Smer is running at a steady 35% support in polls leading up to the June 12 parliamentary elections, with the SDKU a distant second on 15%. However, several of Dzurinda's closest political allies, the Christian Democrats and the liberal SAS party, also enjoy support in the double figures, making them a potential threat to Fico if the political right can stick together. Fico said he had no doubt Hanzel was playing the opposition's game. "I really feel sorry for him," he said.

PM "knew about every penny"

Hanzel claims Smer spent almost €10m on its aggressive 2002 campaign, far in excess of the €300,000 Smer reported in its official accounting. Apart from off-the-books funds that Fico himself raised, Hanzel said the balance came from sponsors recruited by himself and Fedor Flasik, Smer's 2002 campaign chairman.

The Sme daily on May 17 published a contract between Flasik and Lubomir Blasko, an energy sector entrepreneur who died in 2004. In return for a unreported gift to Smer of €1m, Blasko was allowed to nominate three people to Smer's steering board and its shadow cabinet, as well as three members of parliament. In the event Smer formed the government after 2002, Blasko was also given a deputy minister's post and seats on the boards of state energy and railways companies. "Fico knew all about the party's financing," Hanzel said. "He knew about every crown that went into the party's coffers. He always insisted that only what was absolutely necessary should be recorded in the party's official books."

Hanzel said that the current PM also signed a notarized contract with the party's most influential sponsor. "It involved a lot of money, and concrete spots on the party's list of candidates for election to parliament." He added that he understood why Fico had disowned him. "If he admitted it, there would be a huge political scandal."

Prosecutor General Dobroslav Trnka called on Hanzel to come forward with any evidence of illegal financing. "Our doors are open day and night," he said on May 19.

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