UPDATE 1-Czech deputy PM Cunek quits, coalition stays

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Czech Deputy Prime Minister Jiri Cunek, facing investigation over corruption allegations, announced his resignation from government on Thursday, but the ruling three-party coalition remained intact.

Cunek, the leader of the junior government partner, the centrist Christian Democrats (KDU-CSL), said he would quit next week in order to let the investigation proceed without the perception of interference.

He has repeatedly denied any wrongdoing.

"I decided, in order for this investigation to be independent in the eyes of the public, to resign at Wednesday's (Nov. 7) government meeting," Cunek told a news conference.

"I am making this decision not only because of this point, but also because I want this coalition to continue, to hold on, for it to avoid constant questioning," he added.

Cunek has been under mounting pressure in recent days to quit over accusations he took welfare payments in the 1990s at a time when he had sizeable savings.

But he linked his resignation to separate issue, a prosecutor's decision to renew the investigation into alleged bribe-taking in the 1990s when he was the mayor of a city in the eastern part of the Czech Republic.

Cunek has repeatedly said he has done nothing illegal in either of the cases, but he has gradually lost the trust of many in his party and Prime Minister Mirek Topolanek.

The centre-right coalition has just 100 seats in the 200-seat lower house, and is vulnerable to any internal discord.

Cunek is a member of the government, but does not hold a seat as a deputy in the lower house. He is, however, a member of the Senate and did not resign that mandate.

The government, which comprises the right-wing Civic Democrats, the Christian Democrats and the Green Party, took power in January after election in 2006, with an agenda aimed at reforming the tax, pension and welfare systems and cutting the budget deficit.

The next election is due in mid-2010.

[PRAGUE/Reuters/Finance.cz]