Czech Wealthy Magnate Takes PM Role, Pledging to Cut Commercial Interests

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

His appointment came after a key condition from President Petr Pavel – a official assurance by Babis to give up command over his extensive agribusiness and chemical conglomerate, Agrofert.

"I promise to be a prime minister who upholds the interests of all our citizens, both locally and globally," affirmed Babis after the ceremony at Prague Castle.

"A leader who will work to transform the Czech Republic the finest location to live on the entire planet."

Lofty Ambitions and a Pervasive Corporate Footprint

These are high-reaching aspirations, but Babis, 71, is accustomed to large-scale thinking.

Agrofert is so thoroughly integrated in the Czech economic fabric that there is even a mobile tool to help shoppers avoid purchasing products made by the group's numerous subsidiaries.

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

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

The Promise of Divestment

If he honors his promise to separate himself from the company he founded and grew, he will cease to profit from the sale of any Agrofert product – from frankfurters to fertiliser.

As prime minister, he asserts he will have no knowledge of the conglomerate's fiscal condition, nor any capacity to affect its performance.

State decisions on government procurement or subsidies – whether national or EU-funded – will be made independently of a company he will no longer own or profit from, he adds.

Instead, he explains that Agrofert, valued at $4.3bn (£3.3bn), will be placed in a fiduciary structure managed by an independent administrator, where it will remain until his death. At that point, it will pass to his children.

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

Unanswered Questions

What kind of trust remains unclear – a domestic trust, or one established overseas? The concept of a "blind trust" has no basis in Czech statutory law, and an team of legal experts will be required to design an solution that is functional.

Doubts from Watchdogs

Watchdog organizations, including Transparency International, are still skeptical.

"Such a trust is an inadequate measure," said 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 range of businesses. From an executive position, even at a European level, he could potentially influence in matters that would impact the industry in which Agrofert functions," Kotora advised.

Extensive Influence Extending Past Agrofert

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

In the outskirts 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 controlled by Hartenberg Holding, and Hartenberg Holding is, in turn, majority-owned by Babis.

Hartenberg also runs a chain of reproductive clinics, as well as a flower shop network, Flamengo, and an underwear retailer, Astratex.

The reach of Babis into every facet of Czech life is extensive. And as prime minister, for the second time, it is poised to become more extensive.