Czech Wealthy Magnate Takes PM Post, Promising to Cut Corporate Interests

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

His confirmation was contingent upon a central demand from President Petr Pavel – a official assurance by Babis to relinquish control over his sprawling food-processing, agriculture and chemicals conglomerate, Agrofert.

"I promise to be a prime minister who defends the interests of the entire populace, at home and abroad," declared Babis following the event at Prague Castle.

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

Grand Visions and a Far-Reaching Corporate Footprint

These are lofty ambitions, but Babis, 71, is accustomed to ambitious plans.

Agrofert is so thoroughly integrated in the Czech business landscape that there is even a specialized application to help shoppers steer clear of purchasing products made by the group's more than 200 subsidiaries.

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

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

The Pledge of Separation

If he fulfills his pledge to divest from the company he founded and grew, he will no longer benefit from the sale of a single Agrofert product – from frankfurters to fertiliser.

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

Administrative decisions on state contracts or subsidies – whether Czech or European – will be made without regard to a company he will have severed ties with or profit from, he emphasizes.

Instead, he says that Agrofert, worth an estimated $4.3bn (£3.3bn), will be placed in a trust managed by an third-party manager, where it will stay until his death. At that point, it will transfer to his children.

This arrangement, he stated in a online address, went "well above" the requirements of Czech law.

Clarification Needed

The legal nature of this trust has yet to be clarified – a trust under Czech law, or one established overseas? The legal framework of a "fully independent trust" does not exist in Czech legislation, and an team of legal experts will be needed to design an solution that is functional.

Doubts from Observers

Skeptics, including Transparency International, remain unconvinced.

"A blind trust is not a solution," stated David Kotora, the head of Transparency International's Czech branch, in an comment.

"True separation is absent. [Babis] undoubtedly is acquainted with the managers. He knows Agrofert's holdings. From an executive position, even at a European level, he could potentially influence in matters that would impact the sector in which Agrofert operates," Kotora warned.

Broad Reach 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 towers over 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 runs a network of reproductive clinics, as well as a flower shop network, Flamengo, and an underwear retailer, Astratex.

The influence of Babis into multiple areas of Czech life is broad. And as prime minister, for the second time, it is poised to become even wider.