A Czech Billionaire Takes Prime Ministerial Post, Vowing to Cut Business Interests

Tycoon Andrej Babis has taken office as the nation's new head of government, with his complete ministerial team slated to be appointed in the coming days.

His selection was contingent upon a key demand from President Petr Pavel – a formal assurance by Babis to cede control over his vast agribusiness and chemical conglomerate, Agrofert.

"I promise to be a prime minister who defends the interests of every citizen, at home and abroad," declared Babis after the event 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 specialized application to help shoppers avoid purchasing products made by the group's numerous subsidiaries.

If a product – for example, frankfurters from Kostelecké uzeniny or packaged bread from Penam – is part of an Agrofert company, a warning symbol is displayed.

Babis, who previously served as prime minister for four years until 2021, has shifted to the right in recent years and his cabinet will feature members of the right-wing SPD party and the Eurosceptic "Motorists for Themselves" party.

The Promise of Separation

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

As prime minister, he claims he will have no information of the conglomerate's financial health, nor any power to affect its performance.

Governmental decisions on government procurement or subsidies – whether Czech or European – will be made without regard to a company he will have relinquished ownership of or profit from, he adds.

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

This arrangement, he remarked in a Facebook video, went "exceeded" the stipulations of Czech law.

Outstanding Issues

What kind of trust has yet to be clarified – a trust under Czech law, or one established overseas? The concept of a "fully independent trust" is not recognized in Czech statutory law, and an team of legal experts will be required to craft an structure that is functional.

Criticism from Observers

Watchdog organizations, including Transparency International, remain unconvinced.

"Such a trust is an inadequate measure," stated David Kotora, the head of Transparency International's Czech branch, in an interview.

"The divide is insufficient. [Babis] undoubtedly is acquainted with the managers. He knows Agrofert's portfolio. From an executive position, even at a European level, he could possibly act in matters that would impact the sector in which Agrofert operates," Kotora warned.

Broad Reach Extending Past Agrofert

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

In the eastern suburbs of Prague, a medical facility stands near 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, controlled by Babis.

Hartenberg also runs a network of fertility centers, as well as a florist chain, Flamengo, and an lingerie store chain, Astratex.

The footprint of Babis into every facet of Czech life is extensive. And as prime minister, for the second occasion, it is about to get more extensive.