UPDATE 6-Czech leader clings on after close aide charged with graft
* Prosecutor says seven people charged after police raids
* PM's aide at centre of corruption web: prosecutors
* Country dogged by sleaze since 1989 collapse of Communism
* Czech leader says he did nothing wrong, will not resign
* Junior coalition partner says losing faith in PM
By Jana Mlcochova and Jan Korselt
PRAGUE, June 14 (Reuters) - Czech Prime Minister Petr Necas was clinging to office on Friday after prosecutors accused a close aide of being at the centre of a corrupt web of political favours and secret surveillance.
The leader of a junior partner in the governing coalition told Reuters she had little confidence left in the prime minister, but that her party had not yet decided whether to withdraw its support.
Police raids on government offices on Thursday signalled the most significant action against corruption in two decades in a country that has been mired in sleaze since its "Velvet Revolution" overthrew Communism in 1989.
In a defiant speech to lawmakers, the conservative prime minister dismissed the allegations and said he would stay on.
His fate now depends on whether on whether the smaller parties in his coalition stand by him.
The biggest opposition party, the Social Democrats, said it would hold a no-confidence vote in parliament, possibly on Tuesday. The opposition do not have enough votes to get this through, but they will if some lawmakers from the governing coalition turn against Necas.
"My confidence in him (Necas) is falling below freezing point," Karolina Peake, head of the LIDEM party, smaller of the two junior coalition partners, told Reuters late on Friday.
"However new information is still coming out and the issue is quite complicated ... We have at least the weekend to make an informed decision."
A day earlier hundreds of police with the organised crime unit, some in balaclavas to conceal their identity, swept through the government headquarters, the defence ministry, a bank and private homes, detaining several Necas associates.
Police said they confiscated Czech currency worth at least $6 million in the raids, as well as tens of kilograms of gold.
Necas was drawn even deeper into the affair on Friday when prosecutors, giving details of their investigation for the first time, alleged the existence of corrupt dealings that intersected with Necas's personal and political life.
Tomas Sokol, a lawyer for one of the people charged, the former head of military intelligence, said prosecutors had accused his client of instructing agents to run surveillance on Necas's wife, Radka.
Necas and his wife, his college sweetheart, announced this week they were divorcing.
"Love, hate, secret agents, godfathers, tens of kilograms of gold in bank safe deposits, untouchable policemen, corrupt politicians. It would make for a nice Hollywood script if it weren't a Czech reality show," Jeronym Tejc, an opposition member of parliament, said on his Facebook profile.
END TO IMPUNITY?
Corruption was rife under communism but it has grown exponentially in many eastern European countries since they made the transition to a market economy. Graft is a part of everyday life in much of the region, but convictions are rare.
The Czech investigation was unusual because of its scale, and the ambition of taking on a political establishment which previously seemed to be immune from prosecution.
Prosecutors have charged seven people, including the head of Necas's office, two military intelligence service members, and two former members of parliament, high state attorney Ivo Istvan told a news conference.
They said their suspicions focused on two areas: allegations that officials used the intelligence services for inappropriate purposes, and that corrupt favours were given to politicians.
The prosecutors said the common factor in both sets of allegations was Jana Nagyova, who heads Necas's office.
A government spokesman refused to comment on the charges against Nagyova, who was born in 1965. Her lawyer Eduard Bruna, declined to comment on the charges against her. Necas said on Thursday he did not believe she did anything dishonest.
Nagyova has worked with Necas since 2006, and was often seen at the prime minister's side on official engagements. Archive footage broadcast on Czech television showed her standing next to Prince Charles, heir to the British throne, at a reception.
On Friday, Czech news agency CTK circulated a grainy photograph of Nagyova after her detention. She was wearing sunglasses, her blonde hair hanging down to her shoulders.
Three police officers in balaclavas stood next to her. An article of clothing was draped over her wrists, so it was impossible to see if she was handcuffed.
In an appearance in parliament, 48-year-old Necas hit back at the prosecutor's investigations.
He said that as far as the allegations of favours to politicians were concerned, this was normal political activity and not a criminal act. On the allegations of misusing intelligence services, he said they may stem from misunderstandings, or over-zealous actions by security officials.
"This is my opinion that I have no reason to back off from, and it is an opinion that leads me not to heed calls ... to resign," Necas said.
His difficulties may, in part, be the result of a reform Necas himself set in motion. Under his watch, the government tried to break with past habits of sweeping corruption under the carpet by appointing prosecutors with a free hand to go after sleaze.
The mood on the streets of Prague was impatient. Czechs are confronted daily with evidence of what they believe is pervasive corruption, including well-connected businessmen living in plush villas, and a steady stream of media reports about kickbacks and padded government procurement deals.
"I think he should (resign)," said Nina Bechynova, 67, a teacher at a university in Prague, when asked about the prime minister. "But I'm worried that everyone is friends with everyone and that they will brush it under the rug."