November 5, 2014 / 7:04 AM / in 3 years

Czech billionaire's political rise inspires some, alarms others

Czech Finance Minister Andrej Babis is seen casting his vote in the European Parliament elections at an elementary school in this file photo taken in Prague May 23, 2014. REUTERS/David W Cerny/Files

PRAGUE (Reuters) - In just three years, Czech Finance Minister Andrej Babis has managed to expand smoothly beyond business into politics and now appears poised to be a contender for prime minister.

His decades of experience running successful businesses was always part of his appeal to Czech voters sick of a stale political culture riddled with corruption and graft.

But while many believe he can make a difference in the fight against what he calls “godfathers” and “Palermo”, others see the potential for clashes of interests and even a dangerous concentration of power.

Forbes rates Babis the second richest Czech, worth $2.5 billion, with businesses in his Agrofert group of companies spanning food, chemicals and media employing 28,000 staff. He snapped up two loss-making newspapers and a radio station last year while building his political movement, ANO.

He took on the finance ministry as part of a coalition government after ANO came in second in a parliamentary election late last year. As well as running the budget and EU subsidies, the ministry manages the state’s holdings in firms from airlines to pipelines.

The Slovak-born 60-year-old can now claim to be by far the most popular politician in the Czech Republic. A nationwide opinion poll last week gave ANO 31 percent support, ahead of Prime Minister Bohuslav Sobotka’s Social Democrats with 22.2 percent.

In local elections in October, ANO claimed the top spot in the capital Prague and won in eight out of 12 other major cities, giving the party a big footprint around the country and putting Babis on track to vie for the premiership when the next election is held by 2017.

His platform is simple. Campaign posters focus on the professionalism of ANO’s candidates and their clean records in a country plagued since the end of communism by scandals over the abuse of public funds.

Graft watcher Transparency International ranks the Czech Republic among the most corrupt countries in Europe at 25th among 31 nations.

“What is winning is my program and that is terribly simple: I don’t lie, I don’t steal and I work,” Babis said in an online video interview in October.

But his combination of far-flung businesses and political power frequently invites comparisons in the media to former Italian prime minister and media mogul Silvio Berlusconi, who also faced criticism for the overlap of business and political interests before he was forced out of parliament last year over a tax fraud case.

It is a comparison Babis rejects.

“He had sex scandals, evaded tax and cheated the state. I do not and will not do things like that,” Babis volunteered in a Reuters interview last year, even before he was asked about it.

Babis did not reply to several requests for comment for this story, sent through his spokesperson. The finance ministry also did not respond to requests for comment.

BUSINESS AND POLITICS

Babis has complied with Czech law governing conflicts of interest and, in accordance with the law, stepped down as the executive chief of his empire, but retained ownership.

What some commentators ask is whether the overlapping of economic, media and political interests is in keeping with the democratic ideals of a member of the European Union.

ANO’s head of the parliamentary caucus is on Agrofert’s board, the environment minister used to lead one of Agrofert’s chemical firms and the nation’s highway department is led by a former head of Agrofert’s strategic communications.

“It is a diversion from democracy in the Western sense of the word,” said former anti-communist dissident Bohumil Dolezal, now a political science lecturer and commentator.

“There has been a crisis here that needs reflection ... but Babis definitely is not the right way out.”

The issue has also come up with the Czech Republic’s European neighbours. A German member of the European Parliament, Ingeborg Graessle, expressed concern in March about the potential for conflicts of interest stemming from Babis’s role in supervising EU funds while his firms were also getting EU subsidies.

The case Graessle -- head of the EP’s committee on budgetary control since July -- mentioned involved 2.6 million euros, a fraction of Agrofert’s 2013 turnover of $6.9 billion, equivalent to 3.7 percent of the country’s gross domestic product.

The ministry criticised her remarks as out of line.

“Given that (Babis) gave up all executive positions in all companies and his mandate as a minister came from democratic election in the Czech Republic, such comment goes against the principles of parliamentary democracy,” it said in a statement.

The editors and some other staff at Babis’s two newspapers quit after he took over.

“It was a direct reaction to the ownership change,” Robert Casensky, who left as the editor-in-chief of Mlada fronta Dnes, the biggest Czech mainstream daily, told Reuters.

“I was and I am still convinced that with this ownership setup I could not do my work as I wish.”

The paper’s new leadership says Babis does not get involved.

MANAGERIAL MODEL

Babis trained as an economist and was a Communist Party member in the 1980s, working in foreign trade - an elite job under communism - with contacts with the secret police. A court ruled in his favor that there was no proof that he was a collaborator after he challenged public accusations.

He has repeatedly called parliamentary debates a waste of time, and expanded on a wish to run the country like a company.

Lubomir Kopecek, political scientist at Masaryk University, said this “managerial and technocrat model” carried risks.

“This is intertwining business and politics par excellence. We have never seen anything like that to date,” he said.

His positions on specific issues are tough to pin down. He has cracked down on the overgrown gaming industry and wants tight budgets but says he is in favor of government spending on infrastructure and agreed with the Social Democrats to raise public wages rather than cut deficits.

Petr Honzejk, commentator at daily Hospodarske Noviny, contends many Czechs, looking first and foremost for a better standard of living, are open to a new style of leadership after being failed by parties with traditional political agendas.

“It is the fault of the traditional parties and not Babis that there is a perception in the country that ideology is jumbled,” he wrote. “Babis just entered this space.”

Editing by Ruth Pitchford and Sonya Hepinstall

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