A Czech Wealthy Magnate Takes PM Post, Promising to Disentangle Commercial Empire

Entrepreneur Andrej Babis has officially become the nation's new premier, with his full cabinet slated to assume their roles in the coming days.

His confirmation came after a fundamental demand from President Petr Pavel – a formal vow by Babis to cede control over his extensive agribusiness and chemical holding company, Agrofert.

"I commit to be a prime minister who defends the interests of the entire populace, domestically and internationally," affirmed Babis after the swearing-in at Prague Castle.

"A leader who will work to establish the Czech Republic the finest location to live on the whole globe."

Lofty Ambitions and a Pervasive Corporate Footprint

These are grandiose goals, but Babis, 71, is used to large-scale thinking.

Agrofert is so thoroughly integrated in the Czech commercial ecosystem that there is even a mobile tool to help shoppers avoid purchasing products made by the group's numerous subsidiaries.

If a product – for example, Viennese-style sausages from Kostelecké uzeniny or packaged bread from Penam – is part of an Agrofert company, a warning symbol shows up.

Babis, who held the role of prime minister for four years until 2021, has adopted more right-leaning positions in recent years and his cabinet will incorporate members of the right-wing SPD party and the Eurosceptic "Drivers for Themselves" party.

The Commitment of Divestment

If he fulfills his promise to withdraw from the company he founded and grew, he will stop gaining from the sale of a single Agrofert product – from frankfurters to fertiliser.

As prime minister, he asserts he will have no information of the conglomerate's economic status, nor any power to affect its prospects.

State decisions on public tenders or subsidies – whether Czech or European – will be made independently of a company he will no longer own or gain financially from, he further notes.

Instead, he says that Agrofert, valued at $4.3bn (£3.3bn), will be transferred to a trust managed by an third-party manager, where it will remain until his death. Upon that event, it will pass to his children.

This arrangement, he commented in a online address, went "far beyond" the stipulations of Czech law.

Unanswered Questions

The legal nature of this trust remains unclear – a domestic trust, or one established overseas? The legal framework of a "fully independent trust" does not exist in Czech statutory law, and an team of legal experts will be needed to craft an structure that works.

Criticism from Anti-Corruption Groups

Critics, including Transparency International, are still skeptical.

"A blind trust is not a solution," argued David Kotora, the head of Transparency International's Czech branch, in an statement.

"There's no separation. He obviously knows the managers. He knows Agrofert's range of businesses. From an high office, even at a EU level, he could possibly act in matters that would impact the industry in which Agrofert is active," Kotora warned.

Extensive Influence Beyond Agrofert

But it's not just food – and it's not just Agrofert.

In the eastern suburbs of Prague, a medical facility towers over the O2 arena. While it is owned by a company called FutureLife a.s, that company is majority-owned by Hartenberg Holding, and Hartenberg Holding is, in turn, majority-owned by Babis.

Hartenberg also manages a chain of reproductive clinics, as well as a flower shop network, Flamengo, and an underwear retailer, Astratex.

The reach of Babis into all corners of Czech life is wide. And as prime minister, for the second time, it is poised to become even wider.