A Czech Billionaire Secures PM Role, Vowing to Cut Commercial Interests

Entrepreneur Andrej Babis has taken office as the Czech Republic's new premier, with his full cabinet anticipated to be appointed shortly.

His appointment was contingent upon a central stipulation from President Petr Pavel – a official vow by Babis to cede oversight over his vast food-processing, agriculture and chemicals conglomerate, Agrofert.

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

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

High Aspirations and a Pervasive Corporate Footprint

These are grandiose goals, but Babis, 71, is used to large-scale thinking.

Agrofert is so thoroughly integrated in the Czech business landscape that there is even a dedicated app to help shoppers bypass purchasing products made by the group's numerous subsidiaries.

If a product – for example, frankfurters from Kostelecké uzeniny or packaged bread from Penam – falls under an Agrofert company, a thumbs-down 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 fulfills his pledge 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 asserts he will have no knowledge of the conglomerate's economic status, nor any ability to influence its fortunes.

Administrative decisions on government procurement or subsidies – whether national or EU-funded – will be made with no consideration for a company he will have relinquished ownership of or profit 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 commented in a Facebook video, went "well above" the stipulations of Czech law.

Outstanding Issues

What kind of trust remains unclear – a domestic trust, or one based abroad? The concept of a "blind trust" does not exist in Czech legislation, and an army of lawyers will be needed to craft an arrangement that is legally sound.

Skepticism from Watchdogs

Critics, including Transparency International, remain unconvinced.

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

"The divide is insufficient. [Babis] undoubtedly is acquainted with the managers. He knows Agrofert's range of businesses. From an executive position, even at a European level, he could possibly act in matters that would impact the sector in which Agrofert operates," Kotora warned.

Broad Reach Beyond 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 majority-owned by Hartenberg Holding, and Hartenberg Holding is, in turn, majority-owned by Babis.

Hartenberg also operates a chain of reproductive clinics, 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 broader.