Czech Republic: Gross Indecency?

The Czech prime minister, Stanislav Gross, slips
further into a hole of his own making as he attempts to explain his
and his wife’s complex financial affairs, according
to Transitions Online.

After months of scandal, the Czech prime minister appears to be
falling further into an ever-deepening hole, but whether that hole
will become his political grave remains deeply unclear. 

The hole initially seemed relatively small. In mid-January, the
country’s largest-selling serious daily Mlada fronta
Dnes asked Prime Minister Stanislav Gross how in 1999, as a
30-year-old man who had in the previous seven years earned 1.7
million crowns (now $73,300) after tax, he had been able to afford
to make a 2.5 million crown ($107,800) down-payment on a luxury
flat worth 4.3 million crowns ($185,300) and then fit it out with a
covered swimming pool that cost 750,000 crowns ($32,300).

Gross had given partial answers before. In 1999, he said he had
used savings and a mortgage; in 2002, he added loans from family
members to that list. But, pressed in January for details, Gross
began to produce a sequence of explanations that is hard to track.
After initially refusing to disclose anything, he then stated that
he had borrowed roughly half the deposit from his uncle. It then
transpired that his uncle had been receiving a disability pension
for 30 years and had sold his main asset (a house) before 1989, for
very little. The uncle then indicated that, to lend to his nephew,
he himself had borrowed money from relatives, saying that he had “a
lot of relatives abroad.”

Gross himself said he knew the names of the relatives but
refused to disclose their names, saying “I don’t want other
relatives to go through what my uncle is going through.” But then
the uncle’s foreign relatives turned out to be one Czech
friend–who had in turn sold his loan to the head of a minor and
now-defunct party. No paper evidence of this long trail has
surfaced.

During the course of these convoluted explanations, Gross sought
to counter his critics by saying that if tax-exempt parliamentary
benefits are included, he had earned 3.5 million crowns ($150,900)
between 1992 and 1999. That attempt at explanation only created
further problems for him: A member of parliament’s allowances are
supposed to cover work expenses rather than pay for luxury housing.
Even if he had (mis)used his expense account, Gross’ expensive
foreign holidays and very generous donations to his own party would
leave him little room to make the considerable savings he would
have needed for the apartment. 

For weeks, this elaborate tale made headlines in Mlada
fronta Dnes but prompted relatively little coverage and few
commentaries in other media. The main opposition party, the Civic
Democrats (ODS), remained quiet, a position some explained by the
earlier reluctance of one of its leading figures, Vlastimil Tlusty,
to explain how he had come to own a pricey villa. Other parties in
the governing coalition were also quiet. The leader of one of the
coalition parties, Miloslav Kalousek of the Christian Democrats,
has faced similar questions in the past. It seemed that, like the
Tlusty and Kalousek affairs and other affairs involving Gross, the
scandal might disappear off the radar screen.

But then one member of the family not featured in the earlier
explanations landed in the spotlight. On 7 February, the
weekly Respekt asked how Gross’s wife had raised
money to buy two large houses in Prague that are now earmarked for
conversion into luxury flats. A less elaborate pattern of evasion
and half-explanations has followed, but the new scandal immediately
prompted questions in parliament and more extensive coverage in the
media. The story was given some extra octane by the identity of an
associate in the deal, a controversial businesswoman currently
facing police charges for insurance fraud. 

Sarka Grossova, the prime minister’s wife, worked in the 1990s
as a primary-school teacher, earning extra money in the evenings as
a waitress in the parliamentary canteen. After marrying Gross in
1996, she had a child with him in 1998. Starting in late 2000, she
supplemented her work as a mother and Amway saleswoman by working
as a show-business manager. 

The problems for the Gross family appear set to become larger
still. In its 14 February edition, Respekt reported
that Grossova and her associate, Libuse Barkova, had bought the
houses for 6 million crowns ($258,600) from a former employee of
Barkova’s. He had bought the properties just three months
before–for 11 million crowns. 

This odd sequence of transactions is now raising suspicions
about money laundering. Respekt asserts that the
official results of Barkova’s five other businesses would not have
generated the cash needed, and the source of a loan is still
unclear. 

The scandal also has another lurid dimension, so far
unconnected. Barkova owns a building that houses a brothel that
advertises itself as the “largest erotic club in Prague.”

In 2003, Gross won a court case against Respekt
when it reported that detectives had, in the course of
investigations into human-trafficking, caught Gross speaking on the
phone with Barkova, whom Respekt said owned the
brothel.

Gross has repeatedly defended his wife’s association with
Barkova. The two went to school together. 

To read the full article, visit the Transitions Online website.