Czech Wealthy Magnate Assumes PM Post, Vowing to Sever Corporate Interests

Wealthy businessman Andrej Babis has taken office as the nation's new premier, with his complete ministerial team expected to be appointed in the coming days.

His appointment came after a key condition from President Petr Pavel – a formal vow by Babis to relinquish control over his sprawling agribusiness and chemical group, Agrofert.

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

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

Grand Visions and a Far-Reaching Business Presence

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

Agrofert is so firmly entrenched in the Czech business landscape that there is even a specialized application to help shoppers avoid 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 right-wing SPD party and the Eurosceptic "Motorists for Themselves" party.

The Promise of Withdrawal

If he fulfills his vow to withdraw from the company he founded and grew, he will stop gaining from the sale of any Agrofert product – ranging from processed meats to agricultural chemicals.

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

Administrative decisions on government procurement or subsidies – whether Czech or European – will be made with no consideration for a company he will no longer own or gain financially from, he adds.

Instead, he says that Agrofert, worth an estimated $4.3bn (£3.3bn), will be transferred to a trust 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 "exceeded" the demands of Czech law.

Outstanding Issues

The specific type of trust remains unclear – a Czech trust, or one in a foreign jurisdiction? 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 arrangement that is functional.

Doubts from Observers

Skeptics, including Transparency International, are still skeptical.

"Such a trust is an inadequate measure," stated David Kotora, the head of Transparency International's Czech branch, in an comment.

"There's no separation. [Babis] undoubtedly is acquainted with the managers. He knows Agrofert's portfolio. From an executive position, even at a European level, he could theoretically intervene in matters that would impact the sector in which Agrofert functions," Kotora advised.

Extensive Influence Beyond Agrofert

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

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

Hartenberg also manages a network of reproductive clinics, as well as a florist chain, Flamengo, and an underwear retailer, Astratex.

The footprint of Babis into multiple areas of Czech life is broad. And as prime minister, for the second time, it is set to grow broader.