A Czech Wealthy Magnate Assumes PM Post, Pledging to Cut Corporate Interests

Wealthy businessman Andrej Babis has been sworn in as the nation's new prime minister, with his full cabinet slated to assume their roles in the coming days.

His selection followed a central stipulation from President Petr Pavel – a public assurance by Babis to cede command over his sprawling agribusiness and chemical holding company, Agrofert.

"I vow to be a prime minister who upholds the interests of all our citizens, domestically and internationally," declared Babis following the ceremony at Prague Castle.

"A leader who will work to establish the Czech Republic the top destination to live on the face of the Earth."

Lofty Ambitions and a Vast Business Presence

These are lofty ambitions, but Babis, 71, is familiar with thinking big.

Agrofert is so firmly entrenched in the Czech economic fabric that there is even a dedicated app to help shoppers avoid purchasing products made by the group's more than 200 subsidiaries.

If a product – for example, frankfurters from Kostelecké uzeniny or packaged bread from Penam – falls under an Agrofert company, a warning symbol appears.

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

The Pledge of Withdrawal

If he upholds his pledge to divest from the company he founded and grew, he will no longer benefit from the sale of any Agrofert product – from frankfurters to fertiliser.

As prime minister, he claims he will have no information of the conglomerate's economic status, nor any capacity to affect its fortunes.

Governmental decisions on state contracts or subsidies – whether Czech or European – will be made independently of a company he will no longer own or profit from, he further notes.

Instead, he proposes 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. Then, it will be inherited by his children.

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

Clarification Needed

What kind of trust remains unclear – a Czech trust, or one in a foreign jurisdiction? The concept of a "fully independent trust" does not exist in Czech legislation, and an team of legal experts will be necessary to design an structure that is legally sound.

Criticism from Anti-Corruption Groups

Watchdog organizations, including Transparency International, are still skeptical.

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

"There's no separation. [Babis] 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 affect the industry in which Agrofert is active," Kotora advised.

Wide-Ranging Interests Extending Past Agrofert

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

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

Hartenberg also manages a network of reproductive clinics, as well as a flower shop network, Flamengo, and an underwear retailer, Astratex.

The reach of Babis into multiple areas of Czech life is wide. And as prime minister, for the second time, it is set to grow even wider.