A Czech Billionaire Secures PM Office, Promising to Disentangle Corporate Interests

Tycoon Andrej Babis has taken office as the Czech Republic's new head of government, with his full cabinet expected to be appointed within days.

His selection was contingent upon a fundamental stipulation from President Petr Pavel – a public assurance by Babis to give up command over his sprawling food-processing, agriculture and chemicals group, Agrofert.

"I promise to be a prime minister who upholds the interests of every citizen, both locally and globally," stated Babis after the ceremony at Prague Castle.

"A leader who will work to make the Czech Republic the finest location to live on the whole globe."

High Aspirations and a Pervasive Business Presence

These are lofty ambitions, but Babis, 71, is familiar with large-scale thinking.

Agrofert is so deeply embedded in the Czech business landscape that there is even a specialized application to help shoppers avoid purchasing products made by the group's over two hundred subsidiaries.

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

Babis, who previously served as prime minister for four years until 2021, has moved rightward in recent years and his cabinet will include members of the right-wing SPD party and the Eurosceptic "Motorists for Themselves" party.

The Pledge of Separation

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

As prime minister, he claims he will have no insight of the conglomerate's fiscal condition, nor any capacity to affect its prospects.

Governmental decisions on government procurement or subsidies – whether national or EU-funded – will be made without regard to a company he will have relinquished ownership of or profit from, he further notes.

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 pass to his children.

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

Clarification Needed

What kind of trust has yet to be clarified – a domestic trust, or one in a foreign jurisdiction? The concept of a "blind trust" has no basis in Czech legislation, and an army of lawyers will be necessary to design an structure that is legally sound.

Skepticism from Anti-Corruption Groups

Critics, including Transparency International, remain unconvinced.

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

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

Wide-Ranging Interests Beyond Agrofert

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

In the outskirts of Prague, a private health clinic towers over 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, majority-owned by Babis.

Hartenberg also operates a network 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 extensive. And as prime minister, for the second occasion, it is about to get even wider.