A Czech Wealthy Magnate Takes Prime Ministerial Office, Promising to Sever Commercial Holdings

Entrepreneur Andrej Babis has officially become the nation's new premier, with his government slated to be appointed shortly.

His appointment was contingent upon a key condition from President Petr Pavel – a formal commitment by Babis to give up control over his vast food-processing, agriculture and chemicals group, Agrofert.

"I commit to be a prime minister who defends the interests of the entire populace, domestically and internationally," declared Babis after the event at Prague Castle.

"A prime minister who will work to establish the Czech Republic the finest location to live on the whole globe."

Lofty Ambitions and a Vast Business Presence

These are grandiose goals, but Babis, 71, is accustomed to ambitious plans.

Agrofert is so deeply embedded in the Czech economic fabric that there is even a dedicated app to help shoppers bypass purchasing products made by the group's numerous subsidiaries.

If a product – for example, Viennese-style sausages from Kostelecké uzeniny or packaged bread from Penam – is part of an Agrofert company, a negative symbol is displayed.

Babis, who held the role of prime minister for four years until 2021, has shifted to the right in recent years and his cabinet will incorporate members of the far-right SPD and the Eurosceptic "Motorists for Themselves" party.

The Promise of Withdrawal

If he honors his promise to separate himself 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 states he will have no knowledge of the conglomerate's financial health, nor any capacity to sway its performance.

State decisions on government procurement or subsidies – whether Czech or European – will be made with no consideration for a company he will have relinquished ownership of or profit from, he adds.

Instead, he explains that Agrofert, worth an estimated $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 be inherited by his children.

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

Unanswered Questions

What kind of trust is still uncertain – a trust under Czech law, or one established overseas? The notion of a "fully independent trust" does not exist in Czech legislation, and an army of lawyers will be required to craft an structure that is functional.

Criticism 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.

"True separation is absent. [Babis] obviously knows the managers. He knows Agrofert's range of businesses. From an executive position, even at a European level, he could theoretically intervene in matters that would impact the sector in which Agrofert is active," Kotora advised.

Wide-Ranging Interests Beyond Agrofert

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

In the outskirts 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, controlled by Babis.

Hartenberg also operates a chain of fertility centers, as well as a flower shop network, Flamengo, and an underwear retailer, Astratex.

The influence of Babis into all corners of Czech life is broad. And as prime minister, for the second occasion, it is about to get even wider.