Economy & Trade, Europe, Headlines

CORRUPTION: Czech’s Gross Risking Country’s Credibility – Watchdogs

Pavol Stracansky

PRAGUE, Feb 10 2005 (IPS) - Anti-corruption watchdogs in the Czech Republic have said the credibility of the Czech government is under threat as a scandal deepens over the prime minister’s purchase of a luxury apartment.

Transparency International in the Czech Republic has called on Stanislav Gross to make clear as soon as possible how he financed the purchase five years ago of a flat in Prague after he and his family gave differing explanations to the media in recent weeks on the matter.

They say unless he quickly, fully and clearly accounts for how he managed to pay for the property, both his credibility and the Czech government’s are being risked – with wider implications for its international standing.

”This whole business undermines the trust in the prime minister and the entire government and in our view Mr. Gross has only two options now: either to explain and publish all the details of the case or to resign,” David Ondracka, project manager at Transparency International in Prague told ‘Radio Prague’.

Prime Minister Gross has been under pressure to explain the purchase of the property since mid-January when a respected Czech newspaper, ‘Mlada fronta Dnes’, questioned how he could have made a 50,000 U.S. dollar down payment on an apartment when his income at the time could not support that.

Gross had been asked about the financing of the flat before and had said he used a bank loan. But when questioned by ‘Mlada fronta Dnes’ he said that his uncle, Frantisek Vik, a retired army general, lent him the money.

The newspaper said that the prime minister’s uncle did not have that much money to lend to his nephew and approached Vik over the claims.

Vik at first was reluctant to talk about the money but when pressed said that he had borrowed the money himself from someone else and then lent it to his nephew. But then, he refused to say who the lender was.

Last week a businessman, Rostislav Rod, came forward claiming he had lent Gross’s uncle the money.

But there has been no independent verification of that claim and the Czech media that talked to Rod have claimed he has in the past been treated for a mental illness and have quoted people who know him suggesting he is ‘unsound’ mentally. They have also quoted anonymous sources from the prime minister’s Social Democrats (CSSD) party saying Rod has been paid by people close to Gross to come forward with his claim.

Meanwhile the scandal deepened when it was reported in the investigative weekly journal ‘Respekt’ that The Dena Production firm, whose sole owner is the prime minister’s wife, Sarka, bought an apartment in the Czech capital for 5.9 million Czech crowns (2.53 million U.S. dollars) last March, just two months after she founded the firm.

Michal Sticka, project manager at Transparency International in the Czech Republic, told IPS that the threat to both the credibility of the prime minister and the government could have wider implications beyond the Czech Republic.

”So far this has been an internal Czech Republic matter but any lack of transparency in the Czech government can be detrimental to the Czech Republic’s foreign policy standing in areas such as negotiations in the EU and other international bodies. The importance of this cannot be underestimated,” he said.

And he said the only resolution to the scandal was for the prime minister to make completely clear how he financed the purchase of the flat.

”The prime minister as the head of the executive has to be seen to be as credible as possible. So far though Gross has failed to come out and state clearly how he financed the purchase of his apartment,” he said.

"It is down to the opposition and other MPs to decide on what should happen to Mr Gross if he fails to clearly show how he financed this apartment.

”I can only give my personal opinion on what should happen in cases like this, but my opinion is that if a politician cannot explain how he or she has become an extremely rich person they should consider their position,” he added.

The opposition Civic Democrat Party (ODS) is reportedly considering forcing a vote of no confidence over the issue.

In a bid to thwart criticism, Gross announced that he had asked the National Security Office – of which he is also head – to conduct a full review of the financing of the flat purchase to put an end to the issue. Similarly, he said said the purchase of the property by his wife’s company would also be examined by state financial authorities.

But he has also threatened legal action against ‘Mlada fronta Dnes’ and ‘Respekt’ over their articles that he has described as constructed lies – a move some political observers have labelled as a diversionary tactic.

”In the Czech Republic this is a very good tactic to use. In the past there have been some scandals in which cornered politicians would sue the periodical in question and they would very often win or they would at least be able to go on a counter-offensive and eventually it would all fizzle out,” Czech political analyst Jiri Pehe told ‘Czech Radio’.

”Mr. Gross has very good prospects of turning this scandal into something that is basically a fight between him and a certain daily and the merit of the whole thing will, once again, be forgotten,” added Pehe.

But Transparency International’s Michal Sticka said, however, there was one positive outcome from the affair.

”This scandal and the fact there that has been public questioning of this matter is a positive move towards a society that is more aware of these issues – one that is moving towards becoming more transparent,” he told IPS.