A Czech Wealthy Magnate Assumes Prime Ministerial Role, Pledging to Cut Business Empire

Tycoon Andrej Babis has taken office as the Czech Republic's new prime minister, with his full cabinet expected to be appointed shortly.

His appointment followed a key condition from President Petr Pavel – a public commitment by Babis to cede command over his vast food-processing, agriculture and chemicals group, Agrofert.

"I commit to be a prime minister who defends the interests of all our citizens, both locally and globally," declared Babis after the event at Prague Castle.

"A prime minister who will work to transform the Czech Republic the best place to live on the entire planet."

Grand Visions and a Vast Business Presence

These are high-reaching aspirations, but Babis, 71, is accustomed to ambitious plans.

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 numerous subsidiaries.

If a product – for example, frankfurters from Kostelecké uzeniny or packaged bread from Penam – is part of an Agrofert company, a thumbs-down symbol appears.

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

The Promise of Withdrawal

If he fulfills his pledge to divest from the company he established, he will stop gaining from the sale of any Agrofert product – ranging from processed meats to agricultural chemicals.

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

State decisions on public tenders or subsidies – whether Czech or European – will be made without regard to a company he will have severed ties with or profit from, he further notes.

Instead, he explains that Agrofert, worth an estimated $4.3bn (£3.3bn), will be transferred to a fiduciary structure managed by an independent administrator, where it will stay until his death. Then, it will transfer to his children.

This arrangement, he commented in a social media post, went "well above" the requirements of Czech law.

Unanswered Questions

The legal nature of this trust is still uncertain – a Czech trust, or one established overseas? The concept of a "fully independent trust" has no basis in Czech legislation, and an team of legal experts will be necessary to devise an arrangement that is functional.

Doubts from Observers

Watchdog organizations, including Transparency International, are still skeptical.

"A blind trust is an inadequate measure," argued David Kotora, the head of Transparency International's Czech branch, in an statement.

"There's no separation. [Babis] obviously knows the managers. He knows Agrofert's holdings. From an executive position, even at a EU level, he could potentially influence in matters that would affect the industry in which Agrofert operates," Kotora warned.

Wide-Ranging Interests Beyond Agrofert

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

In the eastern suburbs of Prague, a medical facility stands near the O2 arena. While it is the property of 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 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 time, it is about to get broader.