Tycoon's Party Warns Czech Cabinet May Fall Over Ownership Law

  • Babis's party says relations in ruling coalition are tense
  • Prime minister sees need to tighten conflict-of-interest rules

The ANO party of Czech Finance Minister Andrej Babis warned its ruling partners may torpedo their coalition if they back legislation penalizing cabinet members who don’t give up control of their companies.

Babis, the Czech Republic’s second-richest man and most popular politician, is facing increasing pressure from the Social Democrats and Christian Democrats over his ownership of one of the country’s largest companies, which deals in activities ranging from chemicals and agriculture to newspapers.

The dispute has grown into the worst standoff between Babis’s pro-business party and his coalition partners, who focus more on social spending, since they took power two years ago. Prime Minister Bohuslav Sobotka’s Social Democrats are pushing for a law aimed at imposing strict penalties on ministers and their companies if they don’t surrender control over corporations or media outlets after taking cabinet posts. Babis’s ANO party said the proposal violated the coalition agreement.

“Traditional parties want to prevent successful people from entering politics and keep it only for professional politicians,” ANO said in a statement on CTK news service late on Monday. “If the coalition partners continue like this, they could be responsible for the end of coalition cooperation.”

Tense Relations

The parties have clashed over spending and taxes. Still, economic growth, at 4 percent in the fourth quarter from a year earlier, has helped the government raise pensions and expand highway construction without increasing borrowing. The yield on the Czech Republic’s 10-year government bond was unchanged at 0.361 percent on Tuesday, near a record-low 0.306 percent reached on March 10.

Sobotka said on Sunday the new conflict-of-interest law won’t bring the government down and the tighter rules would apply only to future ministers. ANO said that while government had succeeded in unlocking growth and cutting state debt, relations in the ruling pact were tense, and the party was facing increasing negative campaigning from his partners.

The lower house of parliament is scheduled debate the bill on Tuesday. Lawmakers will also hold a special session on Wednesday to discuss whether one of companies belonging to Babis’s Agrofert Holding AS violated rules while obtaining subsidies from the European Union.

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