A Czech Wealthy Magnate Takes PM Post, Pledging to Sever Commercial Interests
Tycoon Andrej Babis has taken office as the nation's new premier, with his full cabinet expected to assume their roles in the coming days.
His confirmation followed a central condition from President Petr Pavel – a official commitment by Babis to cede oversight over his extensive agribusiness and chemical holding company, Agrofert.
"I commit to be a prime minister who defends the interests of every citizen, domestically and internationally," affirmed Babis after the swearing-in at Prague Castle.
"A leader who will work to transform the Czech Republic the finest location to live on the entire planet."
Grand Visions and a Far-Reaching Corporate Footprint
These are lofty ambitions, but Babis, 71, is used to large-scale thinking.
Agrofert is so firmly entrenched in the Czech economic fabric that there is even a specialized application to help shoppers steer clear of purchasing products made by the group's over two hundred subsidiaries.
If a product – for example, frankfurters from Kostelecké uzeniny or packaged bread from Penam – falls under an Agrofert company, a warning symbol is displayed.
Babis, who previously served as prime minister for four years until 2021, has shifted to the right in recent years and his cabinet will include members of the far-right SPD and the Eurosceptic "Drivers for Themselves" party.
The Promise of Withdrawal
If he honors his promise to divest from the company he established, he will cease to profit 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 fiscal condition, nor any power to influence its performance.
State decisions on public tenders or subsidies – whether national or EU-funded – will be made independently of a company he will have severed ties with or gain financially from, he further notes.
Instead, he says that Agrofert, worth an estimated $4.3bn (£3.3bn), will be transferred to a fiduciary structure managed by an autonomous trustee, where it will stay until his death. Then, it will transfer to his children.
This arrangement, he commented in a online address, went "far beyond" the requirements of Czech law.
Outstanding Issues
What kind of trust remains unclear – a trust under Czech law, or one in a foreign jurisdiction? The legal framework of a "blind trust" has no basis in Czech statutory law, and an team of legal experts will be required to design an arrangement that works.
Doubts from Watchdogs
Critics, 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 interview.
"There's no separation. He undoubtedly is acquainted with the managers. He knows Agrofert's range of businesses. From an position of power, even at a European level, he could theoretically intervene in matters that would affect the industry in which Agrofert functions," Kotora advised.
Broad Reach Beyond Agrofert
But it's not just food – and it's not only Agrofert.
In the eastern suburbs of Prague, a private health clinic stands near the O2 arena. While it is owned by 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 operates a chain of fertility centers, as well as a florist chain, Flamengo, and an lingerie store chain, Astratex.
The footprint of Babis into multiple areas of Czech life is extensive. And as prime minister, for the second time, it is poised to become even wider.