A Czech Billionaire Takes PM Role, Pledging to Cut Commercial Interests

Tycoon Andrej Babis has been sworn in as the Czech Republic's new prime minister, with his government expected to be appointed within days.

His confirmation came after a central stipulation from President Petr Pavel – a official assurance by Babis to relinquish oversight over his sprawling food-processing, agriculture and chemicals group, Agrofert.

"I promise 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 prime minister who will work to make the Czech Republic the best place to live on the whole globe."

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 business landscape that there is even a mobile tool to help shoppers avoid purchasing products made by the group's over two hundred 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 shows up.

Babis, who previously served as 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 Withdrawal

If he honors his promise to separate himself from the company he founded and grew, he will cease to profit from the sale of any Agrofert product – from frankfurters to fertiliser.

As prime minister, he states he will have no insight of the conglomerate's financial health, nor any capacity to sway its fortunes.

Governmental decisions on public tenders or subsidies – whether Czech or European – will be made with no consideration for a company he will no longer own or gain financially from, he further notes.

Instead, he says that Agrofert, worth an estimated $4.3bn (£3.3bn), will be placed in a fiduciary structure managed by an independent administrator, where it will stay until his death. Upon that event, it will be inherited by his children.

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

Unanswered Questions

The specific type of trust has yet to be clarified – a Czech trust, or one established overseas? The notion of a "fully independent trust" does not exist in Czech legislation, and an army of lawyers will be needed to design an solution that is functional.

Skepticism from Observers

Critics, including Transparency International, remain unconvinced.

"A blind trust is an inadequate measure," stated David Kotora, the head of Transparency International's Czech branch, in an comment.

"True separation is absent. [Babis] undoubtedly is acquainted with the managers. He knows Agrofert's portfolio. From an position of power, even at a EU level, he could potentially influence in matters that would affect the sector in which Agrofert operates," Kotora warned.

Extensive Influence Extending Past Agrofert

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

In the eastern suburbs 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, majority-owned by Babis.

Hartenberg also runs a network of reproductive clinics, as well as a florist chain, Flamengo, and an underwear retailer, Astratex.

The influence of Babis into every facet of Czech life is wide. And as prime minister, for the second time, it is set to grow broader.