Czech Billionaire Takes Prime Ministerial Role, Vowing to Cut Corporate Interests

Entrepreneur Andrej Babis has been sworn in as the nation's new head of government, with his complete ministerial team anticipated to take their posts shortly.

His appointment came after a fundamental condition from President Petr Pavel – a formal assurance by Babis to relinquish control over his sprawling agribusiness and chemical holding company, Agrofert.

"I commit to be a prime minister who upholds the interests of every citizen, domestically and internationally," declared Babis after the swearing-in at Prague Castle.

"A prime minister who will work to transform the Czech Republic the finest location to live on the face of the Earth."

Grand Visions and a Pervasive Corporate Footprint

These are lofty ambitions, but Babis, 71, is familiar with ambitious plans.

Agrofert is so deeply embedded in the Czech business landscape that there is even a specialized application to help shoppers bypass purchasing products made by the group's more than 200 subsidiaries.

If a product – for example, frankfurters from Kostelecké uzeniny or sliced bread from Penam – falls under an Agrofert company, a thumbs-down symbol shows up.

Babis, who held the role of 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 "Motorists for Themselves" party.

The Pledge of Withdrawal

If he fulfills his vow to separate himself from the company he built from scratch, he will stop gaining from the sale of a single Agrofert product – from frankfurters to fertiliser.

As prime minister, he states he will have no knowledge of the conglomerate's fiscal condition, nor any capacity to sway its prospects.

State 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 adds.

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

This arrangement, he remarked in a social media post, went "far beyond" the requirements of Czech law.

Outstanding Issues

The specific type of trust has yet to be clarified – a trust under Czech law, or one in a foreign jurisdiction? The legal framework of a "blind trust" has no basis in Czech legislation, and an army of lawyers will be necessary to devise an arrangement that is legally sound.

Doubts from Watchdogs

Critics, including Transparency International, are still skeptical.

"Such a trust is an inadequate measure," said David Kotora, the head of Transparency International's Czech branch, in an comment.

"True separation is absent. He obviously knows the managers. He knows Agrofert's range of businesses. From an executive position, even at a European level, he could potentially influence in matters that would affect the sector in which Agrofert operates," Kotora advised.

Broad Reach Extending Past Agrofert

But it's not only 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 the property of 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 manages a network of fertility centers, as well as a florist chain, Flamengo, and an underwear retailer, Astratex.

The footprint of Babis into multiple areas of Czech life is wide. And as prime minister, for the second occasion, it is about to get more extensive.