A Czech Wealthy Magnate Takes Prime Ministerial Office, Vowing to Disentangle Commercial Empire

Wealthy businessman Andrej Babis has been sworn in as the nation's new premier, with his government expected to assume their roles shortly.

His appointment came after a fundamental demand from President Petr Pavel – a public commitment by Babis to give up command over his sprawling food-processing, agriculture and chemicals conglomerate, Agrofert.

"I commit to be a prime minister who upholds the interests of all our citizens, at home and abroad," declared Babis following the event at Prague Castle.

"A leader who will work to make the Czech Republic the finest location to live on the face of the Earth."

Lofty Ambitions and a Vast Corporate Footprint

These are grandiose goals, but Babis, 71, is accustomed to thinking big.

Agrofert is so firmly entrenched in the Czech economic fabric that there is even a mobile tool to help shoppers avoid purchasing products made by the group's numerous subsidiaries.

If a product – for example, frankfurters from Kostelecké uzeniny or sliced bread from Penam – is part of an Agrofert company, a thumbs-down symbol is displayed.

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 incorporate members of the right-wing SPD party and the Eurosceptic "Drivers for Themselves" party.

The Commitment of Withdrawal

If he fulfills his pledge to separate himself from the company he founded and grew, he will cease to profit 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 fiscal condition, nor any ability to influence its prospects.

Governmental 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 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 stated in a Facebook video, went "exceeded" the demands of Czech law.

Outstanding Issues

The legal nature of this trust is still uncertain – a domestic trust, or one in a foreign jurisdiction? The legal framework of a "blind trust" is not recognized in Czech legislation, and an team of legal experts will be necessary to craft an structure that works.

Skepticism from Observers

Watchdog organizations, including Transparency International, continue to doubt.

"A blind trust is not the answer," argued David Kotora, the head of Transparency International's Czech branch, in an interview.

"The divide is insufficient. [Babis] obviously knows the managers. He knows Agrofert's holdings. From an executive position, even at a European level, he could potentially influence in matters that would affect the sector in which Agrofert functions," Kotora advised.

Extensive Influence Beyond Agrofert

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

In the outskirts of Prague, a medical facility stands near the O2 arena. While it is owned by 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 runs a network of reproductive clinics, as well as a florist chain, Flamengo, and an lingerie store chain, Astratex.

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