May 4, 2017 / 9:45 AM / 3 months ago

Billionaire businessman Babis is at heart of Czech political crisis

5 Min Read

Czech Finance Minister Andrej Babis speaks to journalists, as he arrives at Prague Castle, to meet with President Milos Zeman in Prague, Czech Republic May 3, 2017.David W Cerny

PRAGUE (Reuters) - To his supporters Czech Finance Minister Andrej Babis is an efficient, plain-speaking operator who gets the job done, while to his critics he represents the murky power of big business and poses a threat to democracy.

The Czech Republic's second richest man, Babis elicits strong and contrasting reactions among Czechs, but most would agree that the billionaire businessman is now closer than ever to becoming prime minister following a political crisis triggered by his own government's efforts to sideline him.

Czech Prime Minister Bohuslav Sobotka announced on Tuesday the government would resign, less than six months before its term ends, to resolve a long-running dispute over the past financial dealings of Babis, his arch-rival.

Babis, whose centrist ANO movement is far ahead of Sobotka's Social Democrats and other parties in opinion polls, described the move as "a desperate step by a desperate person".

Although ANO and Babis have been part of Sobotka's centre-left coalition since 2013, the Slovak-born businessman has managed to cast himself as an anti-graft crusader battling a remote, self-serving political establishment in Prague.

His message, which echoes that of populist parties across Europe, appeals to Czechs disillusioned with the murky backroom dealings of traditional parties. Opinion polls give ANO - which means Yes in Czech and is also an abbreviation for "Action by Dissatisfied Citizens" - around 30 percent, some 10-15 points more than the Social Democrats.

"Protest Figure"

Babis's oft-repeated pledge is to "manage the state like a company", and he has been compared to other businessmen-turned-politicians, such as U.S. President Donald Trump and former Italian prime minister and media magnate Silvio Berlusconi.

"He can be seen as a man who is able to create a better-functioning state," said political analyst Lubomir Kopecek. "It is a paradox ... Babis is in the government but is seen as a protest figure."

Babis's marketing skills, supported by a presence on social media unrivalled in Czech politics, were on display on Wednesday when ANO ran full-page newspaper adverts of Babis with a duct tape over his mouth.

"Why does the CSSD (Sobotka's party) want to get us out of government and propose resignation?" the advert asked. "What do they fear? That we know too much?"

ANO's programme is vague, and unlike conservative-nationalist leaders like Hungary's Viktor Orban or Poland's Jaroslaw Kaczynski, Babis has no clear-cut ideological profile.

Babis, 62, has spoken in favour of lower taxes and does not want the Czech Republic to join the euro. He has overseen a tightening of tax collection laws and delivered the first budget surplus in two decades last year, helped by economic growth.

Babis's Agrofert group, a conglomerate of more than 250 companies spanning chemicals, agriculture and media and valued by Forbes magazine at $3.4 billion, is the largest private employer in the Czech Republic, with more than 34,000 staff.

Babis transferred his assets to a trust fund this year to comply with new conflict-of-interest legislation.

Czech authorities have been looking into legal loopholes Babis used to buy tax-free bonds from his firm several years ago, and into European Union subsidies awarded to a company ultimately acquired by Babis.

He denies any wrongdoing and says the accusations against him are politically motivated.

Critics

"This entire case ... is just another attempt to chase me out of politics," he said in a letter to parliament last week.

Babis's harshest critics, such as the opposition TOP09 party, say he has authoritarian tendencies and threatens Czech democracy.

Babis has at times appeared impatient with democratic procedures, for example calling parliament a "talking shop".

He is the undisputed boss of ANO, which includes several of his former managers. Richard Brabec, who once ran an Agrofert chemical plant, is environment minister, while former Agrofert board member Jaroslav Faltynek is ANO's first deputy chairman.

His business empire includes two national newspapers and a radio station. Babis's media purchases, made as he was entering politics, sparked an exodus of reporters from those outlets.

Sobotka, whose priority is to keep Babis out of any new cabinet before the October election, was due to discuss the timing of his formal resignation on Thursday with President Milos Zeman. Zeman, who has the power to appoint the next cabinet, has good relations with Babis but not with Sobotka.

Additional reporting by Jason Hovet; Editing by Gareth Jones

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