Czech Wealthy Magnate Secures PM Office, Promising to Disentangle Business Interests

Wealthy businessman Andrej Babis has taken office as the Czech Republic's new head of government, with his government expected to be appointed within days.

His appointment came after a fundamental demand from President Petr Pavel – a public vow by Babis to cede command over his sprawling agribusiness and chemical conglomerate, Agrofert.

"I vow to be a prime minister who upholds the interests of the entire populace, domestically and internationally," declared Babis after the ceremony at Prague Castle.

"A leader who will work to make the Czech Republic the finest location to live on the face of the Earth."

Lofty Ambitions and a Vast Corporate Footprint

These are high-reaching aspirations, but Babis, 71, is familiar with thinking big.

Agrofert is so firmly entrenched in the Czech commercial ecosystem that there is even a mobile tool to help shoppers bypass purchasing products made by the group's more than 200 subsidiaries.

If a product – for example, Viennese-style sausages from Kostelecké uzeniny or sliced bread from Penam – is part of an Agrofert company, a negative symbol appears.

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

The Commitment of Separation

If he upholds his vow to withdraw from the company he built from scratch, he will no longer benefit from the sale of any Agrofert product – from frankfurters to fertiliser.

As prime minister, he states he will have no insight of the conglomerate's financial health, nor any capacity to sway its prospects.

State decisions on state contracts or subsidies – whether national or EU-funded – will be made with no consideration for a company he will have severed ties with or profit from, he emphasizes.

Instead, he proposes that Agrofert, worth an estimated $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 online address, went "well above" the stipulations of Czech law.

Outstanding Issues

The specific type of trust has yet to be clarified – a Czech trust, or one established overseas? The notion of a "blind trust" has no basis in Czech statutory law, and an battalion of attorneys will be necessary to design an structure that is functional.

Criticism from Watchdogs

Watchdog organizations, including Transparency International, remain unconvinced.

"Such a trust is not the answer," stated David Kotora, the head of Transparency International's Czech branch, in an interview.

"The divide is insufficient. He obviously knows the managers. He knows Agrofert's portfolio. From an executive position, even at a EU level, he could potentially influence in matters that would impact the sector in which Agrofert operates," Kotora cautioned.

Wide-Ranging Interests Beyond Agrofert

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

In the outskirts of Prague, a private health clinic 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 chain of reproductive clinics, as well as a florist chain, Flamengo, and an underwear retailer, Astratex.

The reach of Babis into every facet of Czech life is wide. And as prime minister, for the second time, it is about to get broader.