Czech Cabinet Feuds Over Bill Seen as Helping Tycoon Premier

(Bloomberg) -- The Czech government approved a draft law that critics say may help obscure ties between the country's billionaire prime minister and his business empire as he faces a conflict-of-interest probe.

The allegations are the biggest political burden for Andrej Babis and have complicated ruling of his minority administration since he won the 2017 election. While Babis last year faced the largest protests since the fall of communism, his party is the most popular in polls and his supporters credit him with one of Europe's best records in handling the coronavirus crisis.

The cabinet endorsed the bill on Monday despite opposition from the junior coalition member, the Social Democrats. Anti-corruption watchdogs said the draft law included a clause that would effectively prevent identifying Babis as the owner of the company Agrofert, which he placed in trusts before taking office.

A European Union audit concluded last year that Babis maintained control over Agrofert while also helping decide over the EU budget. The enterprise is one of the Czech Republic's largest, with assets in the chemical, farming and media industries. It's also a recipient of millions of euros in funds from the bloc.

Babis has repeatedly rejected the allegations as a political attack, and the government has vowed to fight the findings of the audit.

“Simply put, if this clause is approved, Andrej Babis would be registered as the owner of the trusts but wouldn't be registered as the owner of Agrofert,” Lukas Kraus, an analyst at the non-government organization called the Reconstruction of State, said by phone.

The Social Democrats said the part about the trusts wasn't needed to bring the Czech legislation in line with EU requirements. The junior coalition member won't support the controversial clause in parliament, according to Deputy Chairman Tomas Petricek.

Justice Minister Marie Benesova defended the bill, saying it's designed to adopt EU rules against money laundering and financing terrorism. She said the disputed clause was only a legal clarification and wasn't meant to help Babis.

“It's our expert opinion and we stand by it,” Benesova told reporters. “Even if parliament removes this clarification, nothing will change and the effect will be the same.”

The government is ruling with tacit support from the hard-line leftist Communist Party and Babis has in the past also pushed through his agenda with the help from a far-right nationalist group.