Czech Leader Snubs Billionaire's Party Over Finance Minister

(Bloomberg) -- Czech Prime Minister Bohuslav Sobotka rejected a candidate proposed by billionaire Andrej Babis to replace him as finance minister, intensifying a crisis that’s threatening to bring down their coalition government five months before elections.

Sobotka said he couldn’t accept Alena Schillerova, a deputy finance minister, to lead the ministry because of her close links to Babis. The premier said he didn’t trust that Schillerova would objectively investigate what he calls Babis’s “tax problems” and asked the mogul’s ANO party to propose a new candidate. The decision means another delay for solving a political deadlock that’s paralyzed the legislative process in the post-communist European Union nation as the premier tries to bolster flagging support before the ballot slated for October.

“As prime minister, I cannot abandon the responsibility to ensure that the new minister provide guarantees of proper, competent and independent functioning,” Sobotka said in an emailed statement Monday. “Unfortunately, I wouldn’t have such guarantee.”

Long-lasting disputes between Sobotka and Babis escalated into a full-blown government crisis this month after the premier tried to pressure the finance minister to quit over his past business dealings. Babis has said all of his transactions have been legal and has refused to resign, forcing Sobotka to formally demand his replacement. The request is now with President Milos Zeman, who has sided with Babis during the crisis and asked the Constitutional Court whether he is obliged and dismiss him.

The crisis adds to a string of coalition collapses and anti-government protests that have upset politics in central and eastern Europe. Neighboring Austria appears to be headed for early elections in the fall after the conservative People’s Party effectively abandoned the ruling coalition on Friday, while Croatia’s ruling grouping split at the end of April. Administrations in Romania, Poland, Hungary and Slovakia are also facing outcry from demonstrators who disagree with backsliding on rule of law and corruption.

The Czech Social Democrats, in a rare agreement with the center-right opposition, accuse Babis of being in a conflict of interest, even after he formally transferred the ownership of his conglomerate, which includes the country’s largest newspaper, to a trust. The clashes have so far failed to curb ANO’s wide lead in opinion polls and Babis remains the country’s most popular party leader.

A survey conducted by pollster Stem in early April showed ANO would get 28.3 percent if elections were held now and the Social Democrats 16.6 percent. That’s a jump of more than 10 percentage points for ANO since the 2013 elections and a fall of about 4 points for Sobotka’s party despite its push to raise wages and pensions.

Babis, the second-richest Czech, reiterated Monday that he sees no reason to step down but said he understands the president may accept Sobotka’s proposal to dismiss him. He also said the ANO party had no intention to leave the ruling coalition.

“My feeling is that the premier doesn’t want to solve this crisis,” Babis told reporters in a briefing broadcast by public TV. “I understand that the Social Democrats’ popularity has declined, and this is how they’re trying to deal with it. It’s a political fight.”