Czech mogul faces tough cabinet talks after election triumph

(Bloomberg) Czech billionaire Andrej Babis hit his first obstacle to forming a new cabinet after dominating the country’s parliamentary elections, with potential coalition partners rejecting joining him in government as long as he’s facing criminal fraud charges.

After promising to run the state like a business, fight Muslim immigration and oppose deeper integration with the European Union, Babis’s ANO party won 29.6% of ballots on Saturday. The euro-skeptic Civic Democrats were second with 11.3%, followed by two anti-establishment parties, the Pirates and the anti-Muslim SPD. Other traditional political forces suffered big losses.

As the second richest Czech, Babis has drawn comparisons to Donald Trump and Silvio Berlusconi. He took credit for one of the fastest economic expansions in the EU and the bloc’s lowest unemployment, but his opponents have accused him of conflicts of interest tied to his agriculture and media businesses. A month before the vote, he was charged with fraud. He has rejected the allegations, but his current coalition partners, the Social Democrats and the Christian Democrats, rejected joining him in power as long as the case remains open.

"He may not reach an agreement in the first round of talks, but later some of the parties may reconsider their stances," said Pavel Saradin, a professor of political science at Masaryk University in Brno. "It depends on what he offers them in exchange for letting him stay in the government and keep his immunity. And if all attempts fail, he can certainly form a minority government with SPD and Communist support."

Anti-refugee campaign

During the campaign, ANO criticised the EU for overreach and vowed to keep Muslim refugees out of what has been one of the least affected countries in Europe’s worst migration crisis since World War II. After the election victory, Babis called ANO a pro-European party, while reiterating his opposition against deeper integration within the bloc.

His positions helped shatter the middle-ground of Czech politics, with traditional forces like the Social Democrats, which leads the outgoing government, plunging to a fifth-place finish. The Pirate Party, which supports digital freedom and streamlining the state through technology, was third with 10.8%. The SPD, whose full name is Freedom and Direct Democracy and which resembles Germany’s far-right AfD, was close behind with 10.6%. It was the first time either won seats in the lower house.

Babis told reporters he invited leaders of the other eight parliamentary parties for talks. He said there was no proof to support the fraud charge and called for it to end. He also repeated a vow not to create a coalition with the Communists and the SPD. President Milos Zeman has said he will meet party leaders after October 28 and give the coalition-forming mandate to the ballot’s winner.

"I hope that our government will be set up quickly," Babis said. "I’ve invited all parties for talks with us. I hope they want to negotiate."

Fired from the finance minister’s post in May, Babis, 63, has boasted of streamlining government operations and pushing through a law requiring retailers to link cash registers to the Finance Ministry to boost budget revenue and crack down on tax evasion. At the same time, he’s railed against "meddling" from Brussels and refuses deeper economic integration with the EU, a stance that resonated with voters in the bloc’s most euroskeptic member.