Just days before Slovakia takes over as president of the EU Council, pressure is growing for the resignation of Robert Kaliňák, lynchpin of the ruling Smer party and interior minister. At issue are his links to alleged VAT fraudster Ladislav Bašternák, whose company made payments to Kaliňák’s bank account that the political opposition contends were a bribe.

Just weeks after Prime Minister Robert Fico had heart surgery, and as Foreign Minister Miroslav Lajčák campaigns to be the next UN Secretary General, Kaliňák’s departure would add to questions about the stability of the already uneasy four-party governing coalition, as well as the future of Fico’s long dominant Smer party.

“[Kaliňák’s] political life is more or less over,” says Grigorij Mesežnikov, director of the Institute for Public Affairs, a Bratislava-based think tank. “The longer this whole case continues, the more compromising the documents are.”

Bašternák is under investigation for allegedly fraudulently making VAT repayment claims during his property dealings. Kaliňák has long been accused of stonewalling an investigation into Bašternák’s dealings, and the leaked documents detailing Kaliňák’s bank account show hundreds of thousands of euros in payments from Bašternák’s former firm B.A. Haus.

Filip Rybanič, an assistant to MP Jozef Rajtár of the opposition Freedom and Solidarity (SaS) party, procured documents from his former employer Tatra Banka detailing the payments and made them public. Former transport and finance minister Ján Počiatek, who left politics earlier this year, has also been implicated. Special Prosecutor Dušan Kováčik has tasked the National Crime Agency with investigating.

Kaliňák had previously denied knowing Bašternák, but the leak has forced him to admit that he does. In an effort to defend himself, he held a press conference June 13. “It is a fact that I know Mr Bašternák and it is a fact that I haven’t seen him for years,” Kaliňák said.

Among other things, Kaliňák contended that when he and Počiatek bought shares in B.A. Haus from Bašternák in 2013, they also took on a debt left over from a loan Bašternák had given to the firm. The payments to his bank account, Kaliňák says, represent repayments of this loan by the company. However, the accounting records from B.A. Haus for the year 2013 do not record any such debt, leaving Kaliňák to attribute its absence to a simple bookkeeping mistake.

Few in the opposition or media have accepted the explanation.

“Počiatek bought a stake from Bašternák, who was then allowed to commit tax fraud without punishment. An accident? Oh, of course,” Igor Matovič, leader of the opposition OLaNO party said at a June 14 press conference. “When Bašternák’s fraud was discovered, Kaliňák bought a stake from him and swept everything under the rug. An accident? Oh, of course.”

Carousel fraud

Earlier this year, the Slovak weekly Trend alleged that Kaliňák and Počiatek were the “main actors” in a massive VAT carousel fraud scheme that cost the country some €75 million between 2007 and 2011 and has led to more than 40 people being charged so far. In addition to profiting from such schemes, the reports alleged that Kaliňák and Počiatek took part in covering up the involvement of other players, including Bašternák.

At the time, Trend noted that a witness corroborated transcripts from the phone conversations taped by the country’s intelligence service (the SIS), where people often refer to alleged schemers with code names. Among others, speakers referred to “Robo”,“Strapatý” (Slovak for “Shaggy”), and “Stano”. The witness claimed those are references to Kaliňák, Počiatek and his spiked hair, and Stanislav Kubánek, Smer’s party chief in the eastern Prešov region. None of the three Smer politicians have been charged and all deny any wrongdoing.

The mushrooming scandal looks to have long-term political implications. Though most analysts expect the government to survive, and make it through the six-month EU presidency in the latter half of this year, such disorder weakens an already weak government. A June 14 vote in Slovak parliament on whether to endorse Montenegro’s candidacy to join Nato, a policy largely supported across the political spectrum, passed by just two votes as opposition parties sought to demonstrate their strength. 

Fico and Smer also look weakened and confused, with pressure from inside the party now for Kaliňák to step down.

“What is better for Fico? To give the opposition a chance to target him and the government and de facto weaken his position by insisting that Kaliňák stays,” Mesežnikov said. “Smer MPs are refusing to answer questions about this. It’s not ‘we support Kaliňák.’ They are hesitating, they are waiting for the next developments.”

Transparency advocates would hail the fall of Kaliňák as a triumph of reformist forces, but there remain many elements of the Smer political machine that would have reason to fear they would be left exposed.   

“There is a certain system in the party and state institutions in which there is this selective justice and political support for everybody loyal to the party,” Mesežnikov says. “If Kaliňák leaves, there are some who worry that the system will be destroyed.”

Meanwhile Rybanič, the leaker, has been charged with violating banking secrecy laws. Though he is not being kept in custody, he does face a possible three to eight years in prison. President Andrej Kiska has not issued a statement on the matter, but public debate has already begun about the relative merits of a possible presidential pardon.