Czech finance minister defends business as government spat grows before elections

By Robert Muller

By Robert Muller

PRAGUE (Reuters) - Czech Finance Minister Andrej Babis fought back against the country's prime minister on Friday for raising questions over his past business, a row threatening the government six months before elections.

Babis, a billionaire, has come under fire from Prime Minister Bohuslav Sobotka and opponents questioning his Agrofert conglomerate and tax savings through bond issues worth hundreds of millions of crowns.

Sobotka's criticism of Babis is seen in Prague as part of an increasing campaign fight before parliamentary elections in October, in which polls predict a sound victory for Babis's ANO movement.

Sobotka, head of the Social Democratic Party, may try to sack Babis, a dismissal that could lead to a government collapse, political analysts said.

The prime minister said he would decide further steps next week, after he studies a written explanation Babis submitted to lawmakers on Friday in response to questions parliamentarians had presented.

Babis, after providing the requested response, said he had already explained everything.

"I think the prime minister hurts the government," he told reporters. "Changing a finance minister half a year before elections ... I think that endangers the government's functioning, the budget and it actually affects everybody in our country."

Sobotka and Babis took power together in 2014 after a decade-long period in which a string of governments collapsed early. They have governed relatively smoothly together while the economy has grown, helping the government balance the budget for the first time in two decades.

But they have clashed over taxes, spending and police reform and now face a tough election fight.

Babis, who has fought off accusations of conflicts of interest since entering politics in 2011, dismissed the doubts about his prior business.

"To demand information from me, after the prime minister has sat with me in the government for three-and-a-half years, information on (my business in) 1995, that's ridiculous," he said.

He shifted his Agrofert group, spanning chemicals and agriculture to food and newspapers, to a trust fund this year in response to a law, supported by the Sobotka's Social Democrats, banning future ministers from owning media or stakes in companies that get subsidies or state contracts.

"It seems that Social Democrats are heading for a disgraceful election defeat. Therefore Sobotka, or his advisers, may think that things can't get any worse, and a strong action could only help," Petr Honzejk, a commentator for daily Hospodarske Noviny, wrote on Friday.

(Editing by Tom Heneghan)

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