Czech PM accepts new finance minister to end government dispute

PRAGUE (Reuters) - Czech Prime Minister Bohuslav Sobotka accepted the nomination of former Microsoft executive Ivan Pilny as new finance minister on Wednesday, calming a dispute straining the government months before an election.

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Pilny, a leading parliamentarian for the centrist ANO party, was proposed by ANO founder and current finance minister Andrej Babis, a billionaire that the Social Democrat Sobotka wants dismissed due to suspicion he may have dodged taxes.

Babis denies any wrongdoing and has refused to leave voluntarily. Agreement on Pilny means the center-left coalition could stay in power until the October election.

Pilny, 72, was the head of Microsoft’s Czech operations in the 1990s and now leads the economic affairs committee in the lower house of parliament.

The crisis has also pitted Sobotka against President Milos Zeman, who under the constitution is responsible for the replacement of cabinet ministers. He has so far refused Sobotka’s request to dismiss Babis, asking the prime minister, among other things, to first nominate a replacement.

“I expect the president to dismiss the current minister once he returns form a trip to China (on Thursday) and then appoint the new minister,” Sobotka said.

“In my opinion this ... will end the row in the government coalition,” he told reporters after meeting Pilny.

Babis said earlier on Wednesday he had insisted on Pilny’s appointment as a condition for leaving the cabinet. “Mainly we want to end this episode,” he said.

The row has shaken the three-party coalition government, which came to power in 2014 and was seen as the most stable of any cabinet in the last 15 years.

Its time in power has been marked by economic growth and record low unemployment that helped turn the budget into a surplus last year for the first time in two decades.

Sobotka rejected ANO’s earlier nomination of Deputy Finance Minister Alena Schillerova on Monday, saying she was too close to Babis.

He has raised questions about whether Babis may have broken the law in previous years by buying tax-exempt bonds from what was then his company, Agrofert, the country’s largest private employer active in agriculture, food, chemicals and media.

Sobotka has said any new minister must be independent enough from Babis to allow for an impartial probe of the tax issue.

Babis has called the scandal a political ploy by Sobotka, whose Social Democrats trail ANO in popularity by a wide margin.

Babis came under more pressure in recent weeks after anonymously released tapes appeared to show him coordinating the coverage of opponents with a reporter at a newspaper that is part of Agrofert group. Babis denied influencing news content.

Thousands of people protested against Babis and the president in Prague and other cities last week, and fresh demonstrations were called for Wednesday evening.

Reporting by Petra Vodstrcilova; Writing by Jan Lopatka; Editing by Tom Heneghan