A Czech Wealthy Magnate Takes PM Role, Promising to Sever Business Holdings

Wealthy businessman Andrej Babis has been sworn in as the nation's new premier, with his full cabinet expected to be appointed within days.

His confirmation was contingent upon a key condition from President Petr Pavel – a official commitment by Babis to give up oversight over his extensive agribusiness and chemical group, Agrofert.

"I vow to be a prime minister who defends the interests of every citizen, at home and abroad," affirmed Babis following 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 lofty ambitions, but Babis, 71, is accustomed to large-scale thinking.

Agrofert is so deeply embedded in the Czech commercial ecosystem that there is even a dedicated app to help shoppers bypass purchasing products made by the group's more than 200 subsidiaries.

If a product – for example, Viennese-style sausages from Kostelecké uzeniny or sliced bread from Penam – belongs to an Agrofert company, a warning symbol appears.

Babis, who was formerly prime minister for four years until 2021, has moved rightward in recent years and his cabinet will incorporate members of the right-wing SPD party and the EU-skeptical "Drivers for Themselves" party.

The Pledge of Separation

If he honors his pledge to withdraw from the company he built from scratch, he will cease to profit from the sale of a single Agrofert product – from frankfurters to fertiliser.

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

Governmental decisions on state contracts or subsidies – whether national or EU-funded – will be made independently of a company he will have relinquished ownership of or profit from, he adds.

Instead, he says that Agrofert, valued at $4.3bn (£3.3bn), will be placed in a fiduciary structure managed by an third-party manager, where it will stay until his death. Upon that event, it will be inherited by his children.

This arrangement, he commented in a social media post, went "well above" the demands of Czech law.

Outstanding Issues

What kind of trust has yet to be clarified – a Czech trust, or one established overseas? The legal framework of a "blind trust" is not recognized in Czech legislation, and an battalion of attorneys will be necessary to craft an structure that works.

Criticism from Watchdogs

Skeptics, including Transparency International, are still skeptical.

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

"There's no separation. He undoubtedly is acquainted with the managers. He knows Agrofert's portfolio. From an high office, even at a European level, he could potentially influence in matters that would affect the industry in which Agrofert functions," Kotora warned.

Wide-Ranging Interests Beyond Agrofert

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

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

Hartenberg also runs a chain of reproductive clinics, as well as a flower shop network, 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 occasion, it is poised to become more extensive.