A Czech Wealthy Magnate Takes PM Role, Pledging to Disentangle Commercial Empire

Wealthy businessman Andrej Babis has officially become the Czech Republic's new prime minister, with his government anticipated to be appointed shortly.

His confirmation was contingent upon a key demand from President Petr Pavel – a official commitment by Babis to cede command over his extensive food-processing, agriculture and chemicals group, Agrofert.

"I vow to be a prime minister who upholds the interests of the entire populace, domestically and internationally," stated Babis following the swearing-in at Prague Castle.

"A prime minister who will work to make the Czech Republic the finest location to live on the whole globe."

Grand Visions and a Vast Corporate Footprint

These are lofty ambitions, but Babis, 71, is familiar with ambitious plans.

Agrofert is so deeply embedded in the Czech economic fabric that there is even a dedicated app to help shoppers avoid purchasing products made by the group's over two hundred subsidiaries.

If a product – for example, frankfurters from Kostelecké uzeniny or packaged bread from Penam – belongs to 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 include members of the far-right SPD and the EU-skeptical "Drivers for Themselves" party.

The Pledge of Separation

If he honors his pledge to withdraw from the company he founded and grew, he will cease to profit from the sale of a single Agrofert product – ranging from processed meats to agricultural chemicals.

As prime minister, he states he will have no insight of the conglomerate's economic status, nor any power to sway its prospects.

State decisions on public tenders or subsidies – whether national or EU-funded – will be made with no consideration for a company he will no longer own or profit from, he further notes.

Instead, he explains that Agrofert, valued at $4.3bn (£3.3bn), will be placed in a trust managed by an third-party manager, where it will stay until his death. Upon that event, it will transfer to his children.

This arrangement, he stated in a online address, went "exceeded" the requirements of Czech law.

Clarification Needed

What kind of trust is still uncertain – a Czech trust, or one established overseas? The notion of a "fully independent trust" is not recognized in Czech statutory law, and an team of legal experts will be needed to design an arrangement that works.

Criticism from Observers

Skeptics, including Transparency International, are still skeptical.

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

"True separation is absent. He obviously knows the managers. He knows Agrofert's portfolio. From an high office, even at a European level, he could theoretically intervene in matters that would impact the industry in which Agrofert is active," Kotora warned.

Wide-Ranging Interests Beyond Agrofert

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

In the outskirts of Prague, a medical facility towers over the O2 arena. While it is the property of a company called FutureLife a.s, that company is controlled by Hartenberg Holding, and Hartenberg Holding is, in turn, controlled by Babis.

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

The influence of Babis into every facet of Czech life is broad. And as prime minister, for the second time, it is set to grow even wider.