A Czech Billionaire Takes PM Office, Vowing to Cut Corporate Empire

Wealthy businessman Andrej Babis has taken office as the Czech Republic's new head of government, with his complete ministerial team anticipated to take their posts in the coming days.

His selection followed a fundamental condition from President Petr Pavel – a formal commitment by Babis to give up command over his vast agribusiness and chemical conglomerate, Agrofert.

"I commit to be a prime minister who defends the interests of the entire populace, domestically and internationally," affirmed Babis following the swearing-in at Prague Castle.

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

Grand Visions and a Far-Reaching Corporate Footprint

These are high-reaching aspirations, but Babis, 71, is familiar with thinking big.

Agrofert is so thoroughly integrated in the Czech commercial ecosystem that there is even a dedicated app to help shoppers bypass purchasing products made by the group's over two hundred subsidiaries.

If a product – for example, Viennese-style sausages from Kostelecké uzeniny or packaged bread from Penam – is part of an Agrofert company, a warning symbol shows up.

Babis, who held the role of prime minister for four years until 2021, has adopted more right-leaning positions in recent years and his cabinet will include members of the far-right SPD and the Eurosceptic "Drivers for Themselves" party.

The Pledge of Divestment

If he fulfills his promise to divest from the company he established, he will cease to profit from the sale of any Agrofert product – from frankfurters to fertiliser.

As prime minister, he claims he will have no knowledge of the conglomerate's fiscal condition, nor any ability to influence its fortunes.

Administrative decisions on public tenders or subsidies – whether Czech or European – will be made with no consideration for a company he will have relinquished ownership of or gain financially from, he further notes.

Instead, he says that Agrofert, worth an estimated $4.3bn (£3.3bn), will be placed in a trust 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 Facebook video, went "far beyond" the requirements of Czech law.

Unanswered Questions

What kind of trust is still uncertain – a trust under Czech law, or one based abroad? The legal framework of a "fully independent trust" is not recognized in Czech statutory law, and an battalion of attorneys will be required to craft an arrangement that is legally sound.

Criticism from Watchdogs

Critics, including Transparency International, remain unconvinced.

"Such a trust is not a solution," said 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 executive position, even at a EU level, he could potentially influence in matters that would affect the sector in which Agrofert functions," Kotora advised.

Wide-Ranging Interests Beyond Agrofert

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

In the eastern suburbs 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 manages a chain 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 wide. And as prime minister, for the second time, it is about to get even wider.