Czech Billionaire Takes PM Post, Vowing to Disentangle Corporate Interests

Entrepreneur Andrej Babis has taken office as the nation's new prime minister, with his full cabinet anticipated to be appointed shortly.

His appointment came after a central condition from President Petr Pavel – a formal vow by Babis to give up oversight over his extensive agribusiness and chemical holding company, Agrofert.

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

"A leader who will work to make the Czech Republic the top destination to live on the entire planet."

Lofty Ambitions and a Far-Reaching Business Presence

These are high-reaching aspirations, but Babis, 71, is used to thinking big.

Agrofert is so deeply embedded in the Czech economic fabric that there is even a dedicated app to help shoppers steer clear of 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 negative symbol appears.

Babis, who previously served as 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 EU-skeptical "Motorists for Themselves" party.

The Pledge of Separation

If he upholds his vow to withdraw from the company he built from scratch, he will no longer benefit from the sale of a single Agrofert product – ranging from processed meats to agricultural chemicals.

As prime minister, he states he will have no knowledge of the conglomerate's economic status, nor any power to sway its fortunes.

Governmental decisions on state contracts or subsidies – whether national or EU-funded – will be made with no consideration for a company he will have severed ties with or profit from, he further notes.

Instead, he proposes that Agrofert, worth an estimated $4.3bn (£3.3bn), will be placed in a trust managed by an autonomous trustee, where it will remain until his death. At that point, it will transfer to his children.

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

Clarification Needed

What kind of trust has yet to be clarified – a trust under Czech law, or one established overseas? The concept of a "fully independent trust" does not exist in Czech statutory law, and an army of lawyers will be required to craft an structure that is legally sound.

Criticism from Observers

Skeptics, including Transparency International, continue to doubt.

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

"There's no separation. He obviously knows the managers. He knows Agrofert's portfolio. From an position of power, even at a European level, he could theoretically intervene in matters that would impact the sector in which Agrofert operates," Kotora advised.

Wide-Ranging Interests Extending Past Agrofert

But it's not only 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 the property of a company called FutureLife a.s, that company is majority-owned 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 footprint of Babis into all corners of Czech life is wide. And as prime minister, for the second time, it is poised to become broader.