Czech coalition in crisis as PM is hit by flat finance scandal

Leaders of the Czech Republic's ruling coalition have failed to resolve a crisis triggered by a scandal surrounding the financing of Prime Minister Stanislav Gross's luxury flat.

Leaders of the Czech Republic's ruling coalition have failed to resolve a crisis triggered by a scandal surrounding the financing of Prime Minister Stanislav Gross's luxury flat.

"No agreement has been reached today," Mr Gross said after more than three hours of talks yesterday.

The crisis started last month when Mr Gross came under fire for being unable to explain his family's private finances. His wife was also accused of dealing with people suspected of fraud and money laundering.

Miroslav Kalousek, the leader of the Christian Democrats and a senior coalition partner, last week called on Mr Gross to resign to restore the government's credibility. The Prime Minister refused to step down and called on the Christian Democrats to leave the cabinet.

Mr Kalousek has ruled out his party's leaving the coalition, fearing Mr Gross could seek support from the Communists in the 200-seat lower chamber, where the coalition, which also includes the Freedom Union, has a majority of just one vote.

Vaclav Klaus, the President, intervened earlier this week, asking Mr Gross and his coalition partners to find a quick solution to the crisis.

After last night's failed talks Mr Kalousek said: "We stick to our opinion that for the trustworthiness of the coalition, resignation of the Prime Minister is the best solution."

The scandal involves Mr Gross's luxury flat in Prague, which he originally claimed to have paid for with his own money and a mortgage loan. He later said his uncle lent him the money for the down-payment of 1.2m koruna (£30,000), but it was then revealed that his uncle borrowed the cash from a journalist he scarcely knew.

Mr Gross's wife, Sarka, has been criticised for her business activities involving a partner who faces charges of insurance fraud.