Czech govt in crisis as police swoop on ministries

By bne IntelliNews June 13, 2013

Nicholas Watson in Prague -

Offering fresh evidence of the deep-rooted and widespread corruption in the Czech Republic's political system, Prague was rocked on June 12 by a series of raids by the police's organised crime unit on several government offices, including the cabinet office, the defence ministry and the agriculture ministry. The news puts the wobbling government in the midst of yet another crisis.

The first reports began emerging as Interior Minister Jan Kubice made a statement to parliament mid-morning that the head of the police unit and two prosecutors had visited Prime Minister Petr Necas "in relation to a criminal procedure." Added spice was provided by reports that Jana Nagyova, the head of Necas' office - and widely rumoured to be the lover of the PM, who announced this week that he is to be divorced - was arrested.

A sense of crisis quickly permeated the Czech capital, as the ongoing parliamentary session was adjourned until the next morning. Legislators headed off to the bars and coffee houses to watch the unfolding events on rolling news. That told them of nationwide raids that took in the defense ministry, government headquarters and City Hall in Prague. Police are also reported to have searched safe deposit boxes at a branch of Komercni bank in the capital.

By the time the police unit in question held a press conference in mid-afternoon, the focus of the raids had widened past the prime minister to include a swathe of officials from the Civic Democratic Party (ODS), which heads the coalition, and had extended outside Prague to the regions of Central and Eastern Bohemian. As well as Nagyova and Lubomir Poul - head of the cabinet office and CEZ board member - others pulled in for questioning include former head of the ODS parliamentary faction Petr Tluchor and former agriculture minister Ivan Fuksa.

Assorted lobbyists and ODS cronies, such as entrepreneur Ivo Rittig and Roman Janousek - whose unhealthily close ties with the former ODS mayor of Prague, Pavel Bem, were revealed last year in wiretaps - have also been detained. The unprecedented size and scale of the operation was reflected by a drop for the crown, even as other emerging market currencies saw some recovery; investors are usually almost impervious to Czech political shenanigans.

At a hastily arranged press conference, Necas insisted that neither he nor any of his close aides had done anything wrong, and that he would not resign. He said he would hold a meeting with his coalition allies and ODS senior party members on June 14 before deciding on the government's next steps. President Milos Zeman, who will enjoy twisting the knife, has summoned the PM to meet with him the same day.

According to Reuters, Necas said that the people from his office were apparently detained in relation to the award of jobs at state companies to two ODS backbenchers. The pair were part of a small group which led a rebellion against the PM last year, before quitting the ODS.

That helped fuel speculation in Prague that the raids are likely part of a gathering campaign by the judicial authorities, and not necessarily a move against Necas' government. Since entering office in 2010, the PM has given prosecutors a freer hand to deal with the corruption that pervades the ODS and wider political system. Corruption in the Czech Republic is regarded as an equal opportunity employer.

Whatever details emerge over the next few days, few believe the current centre-right coalition - featuring the ODS and TOP09 - an ODS splinter group headed by Finance Minister Miroslav Kalousek and Foreign Minister Karel Schwarzenberg - along with a handful of independents, can last much longer.

The administration has been dying a slow death practically since it came to office. Its popularity collapsed under a steady drip of corruption scandals, and was made even worse by painfully harsh austerity measures that have mired the economy in recession. Snap elections ahead of the next scheduled vote in May 2014 now look a certainty.

The opposition Social Democratic Party (CSSD) has already said it is very likely to bring a motion of no confidence over the latest events. Party chief Bohuslav Sobotka said: "The Social Democrats demand an immediate resignation of the prime minister." He added that the party will discuss the issue with the president - a former CSSD prime minister, who has been pushing to expand the powers of his current post since he took office.

While the coalition survived several no-confidence votes last year, its majority has now been whittled down to just one seat in the parliament, and this scandal is likely to put paid to even that. The coalition parties, and especially the ODS, are expected to be severely punished at the polls, with the CSSD set to win by a landslide. Today's raids may, ironically, provide the lasting legacy of Necas' failed government.

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