China accused of buying influence after Czech billionaire funds PR push

Robert Tait
Photograph: Katerina Sulova/CTK/Alamy

The Czech Republic’s richest man is at the centre of a suspected foreign influence campaign by the Chinese government after one of his businesses financed an attempt to boost China’s image in the central European country.

In a development that has taken even seasoned sinologists aback, Home Credit – a domestic loans company owned by Petr Kellner that has lent an estimated £10bn to Chinese consumers – paid a PR firm to place articles in the local media giving a more positive picture of a country widely associated with political repression and human rights abuses.

Home Credit also funded a newly formed thinktank – headed by a translator for the Czech Republic’s pro-Chinese president, Miloš Zeman – to counteract the more sceptical line taken by a longer-established China-watching body, Sinopsis, linked with Prague’s Charles University, one of Europe’s oldest seats of learning.

Experts say the moves have the hallmarks of a foreign influence campaign by China that highlights its aggressive attempts to gain access to former communist central and eastern European countries through its ambitious “belt and road” initiative, under which it offers to fund infrastructure projects in those states.

The first goal is to normalise China, presenting it not as a dictatorship but as a country like any other

Martin Hala, sinologist

According to analysts, the Czech Republic has been more open to Chinese influence than most other European countries, a situation that has coincided with the burgeoning commercial relationship between China and Kellner’s sprawling PPF group, which boasts an estimated £40bn in assets, including Home Credit. PPF began accumulating its vast wealth in the mass privatisation of state assets that followed the fall of communism in the former Czechoslovakia in 1989.

Critics accuse Home Credit of currying favour with the Chinese regime in an effort to protect its interests after a series of political disputes between China and the Czechs that cooled previously warm bilateral relations.

Home Credit has acknowledged paying the PR firm, C&B Reputation Management, and backing Sinoskop, the thinktank, to try to bring “greater balance” to debate about China.

“Discussion of China in the Czech Republic had become one-sided, relentlessly negative and poorly informed,” Home Credit’s spokesman, Milan Tomanek, told the Observer. “Home Credit simply sought to add greater balance to the discussion by enabling different viewpoints to be heard … We want open, informed conversations on every country, including China, particularly where distorted conversations are hurting our image and reputation.”

Martin Hala, a lecturer at Charles University’s Sinology department and director of Sinopsis, said: “The bottom line is that Home Credit hired this company not to defend their own corporate interests per se, but rather to promote the narrative coming from the People’s Republic of China and the Chinese communist party.

“The first goal is to normalise China, presenting it not as a dictatorship but as a country, like any other, that is opening up to reforms. I don’t think that’s an accurate picture.”

Czech president Miloš Zeman meets China’s president Xi Jinping in Beijing in April last year.
Photograph: Reuters

The revelations coincide with a recent warning by the Czech intelligence service, BIS, that Chinese influence campaigns pose a greater threat to national security than alleged meddling by the Russian government of Vladimir Putin.

“The BIS considers primarily the increase in the activities of Chinese intelligence officers as the fundamental security problem,” the report says. “These activities can be clearly assessed as searching for and contacting potential cooperators and agents among Czech citizens.”

Czech ties with Beijing grew closer after 2014 when the regime granted Home Credit a nationwide licence to offer domestic loans, the first foreign company to be given the right.

Experts say this would only have happened on the understanding that Home Credit would work to ensure favourable coverage of China in the Czech media and political discourse. It heralded several trips to China by Zeman, who is close to Kellner, and culminated in a state visit in 2016 by the Chinese leader Xi Jinping to Prague.

The rapprochement – which also saw the purchase of a Czech brewery, television station and Slavia Prague football club by a Chinese energy company, CEFC – reversed the policy adopted by the late Václav Havel, the Czech Republic’s first post-communist president who had championed human rights, and the Dalai Lama, the exiled spiritual leader of Tibet.

But relations began to sour last year when the Czech government of prime minister Andrej Babiš, acting on advice from the country’s cybersecurity agency, banned Huawei phones from ministerial buildings, prompting Chinese protests and a rebuke from Zeman, who accused the security services of “dirty tricks”.

They took a further turn for the worse when Prague’s liberal mayor, Zdeněk Hřib, refused to abide by the One China policy – recognising China’s territorial claim to Taiwan – accepted by his predecessor as part of a twinning arrangement between the Czech capital and Beijing. In retaliation, China scrapped the agreement and cancelled a planned tour of the country by the Prague Philharmonia.

Amid the rows, criticism began to appear in Chinese state media of Home Credit’s lending practices, accompanied by several failures in court to fully recover unpaid debts. That has fuelled speculation that the company began to fear for the future of its interests in China.

When Sinopsis reported the Chinese media criticism on its website, it received a “cease and desist” legal warning from Home Credit which threatened to sue unless in the absence of an apology. The company accuses Sinopsis of failing to correct “misleading or incorrect statements”.

Home Credit had earlier abandoned a £50,000 sponsorship deal with Charles University – which foreswore each institution from damaging the other’s good name – after a backlash from academics, who feared it would muzzle any criticism of China.

Now critics see a new threat, from PPF’s recent £1.62bn purchase from AT&T of Central European Media Enterprises (CME), a company which includes the Czech Republic’s most-watched commercial TV station, Nova, as well as channels in neighbouring countries. PPF has dismissed warnings about potential political interference in the station’s output but some are sceptical.

“PPF negotiated this deal saying that they would never meddle in politics,” said Petr Kutilek, a Czech political analyst and human rights activist. “But from the Home Credit affair, you actually see them meddling in politics.”