A Czech Wealthy Magnate Secures Prime Ministerial Post, Vowing to Disentangle Commercial Interests

Entrepreneur Andrej Babis has been sworn in as the Czech Republic's new head of government, with his complete ministerial team expected to be appointed within days.

His confirmation was contingent upon a central condition from President Petr Pavel – a public assurance by Babis to give up command over his sprawling agribusiness and chemical holding company, Agrofert.

"I vow to be a prime minister who champions the interests of the entire populace, both locally and globally," affirmed Babis after the event at Prague Castle.

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

Grand Visions and a Vast Business Presence

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

Agrofert is so deeply embedded in the Czech business landscape that there is even a dedicated app to help shoppers avoid 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 thumbs-down symbol is displayed.

Babis, who held the role of prime minister for four years until 2021, has moved rightward in recent years and his cabinet will feature members of the right-wing SPD party and the EU-skeptical "Motorists for Themselves" party.

The Commitment of Divestment

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

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

State decisions on public tenders or subsidies – whether national or EU-funded – will be made without regard to a company he will no longer own 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 autonomous trustee, where it will remain until his death. Upon that event, it will transfer to his children.

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

Outstanding Issues

The specific type of trust remains unclear – a domestic trust, or one based abroad? The concept of a "fully independent trust" has no basis in Czech statutory law, and an battalion of attorneys will be needed to design an structure that is legally sound.

Doubts from Watchdogs

Skeptics, including Transparency International, continue to doubt.

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

"There's no separation. He is familiar with the managers. He knows Agrofert's holdings. From an position of power, even at a European level, he could theoretically intervene in matters that would impact the industry in which Agrofert operates," Kotora advised.

Extensive Influence Extending Past Agrofert

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

In the eastern suburbs of Prague, a private health clinic 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 operates a network of reproductive clinics, as well as a flower shop network, Flamengo, and an underwear retailer, Astratex.

The footprint of Babis into every facet of Czech life is broad. And as prime minister, for the second occasion, it is poised to become even wider.