Czech deputy PM cleared ahead of reform debate

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Czech prosecutors dropped a bribery investigation against Deputy Prime Minister Jiri Cunek on Tuesday, giving the government a boost a week before a parliamentary debate on the cabinet's reform plans. Cunek was accused of taking a 500,000 crown ($25,000) bribe from a real estate firm while he was mayor of an eastern town in 2002.

The leader of the centrist Christian Democrat party, a junior partner in Prime Minister Mirek Topolanek's coalition government, denied wrongdoing after the allegations surfaced about eight months ago and had refused to quit.

Arif Salichov, state prosecutor in the eastern town of Jihlava, said he was convinced of Cunek's innocence because police failed to gather convincing evidence and the reliability of a key witness was in question.

"I have never seen a (case) be led in such a biased way. It was aimed to try to come to a conclusion of guilt," Salichov told a news conference.

The scandal has overshadowed Topolanek's centre-right government, which came to power in January after more than seven months of political wrangling which followed a tie between left and centre-right parties in last June's parliamentary election.

Topolanek said he had always given Cunek the benefit of the doubt, which in the end proved to be correct. He had resisted pressure from media to sack Cunek.

"The prime minister is happy that the case has been resolved at last, and the governing coalition will regain its composure and prepare for work," Topolanek's spokeswoman Jana Bartosova said.

Opposition leader Jiri Paroubek, head of the leftist Social Democrats, lambasted the prosecutor's decision, saying it confirmed his fears that Cunek would be exonerated to ensure his party's support for fiscal reforms proposed by the government.

The house will open a second of three required readings of Topolanek's proposals to change taxes and cut bloated welfare spending on Aug. 14, with markets worried that failure to push the reform package through could bring down the government.

The Christian Democrats are important Topolanek allies because the three-party government holds just 100 seats in the 200-seat lower house of parliament.

[PRAGUE/Reuters/Finance.cz]