A Czech Billionaire Takes PM Office, Vowing to Disentangle Corporate Interests

Entrepreneur Andrej Babis has officially become the Czech Republic's new premier, with his full cabinet expected to assume their roles within days.

His selection was contingent upon a fundamental stipulation from President Petr Pavel – a public commitment by Babis to cede control over his vast food-processing, agriculture and chemicals holding company, Agrofert.

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

"A prime minister who will work to make the Czech Republic the top destination to live on the whole globe."

Grand Visions and a Vast Corporate Footprint

These are high-reaching aspirations, but Babis, 71, is accustomed to thinking big.

Agrofert is so deeply embedded in the Czech economic fabric that there is even a specialized application to help shoppers steer clear of 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 thumbs-down symbol shows up.

Babis, who was formerly 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 "Motorists for Themselves" party.

The Promise of Withdrawal

If he honors his promise to withdraw from the company he built from scratch, 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 information of the conglomerate's economic status, nor any power to sway its performance.

State decisions on government procurement or subsidies – whether national or EU-funded – will be made with no consideration for a company he will have severed ties with or profit from, he adds.

Instead, he says that Agrofert, worth an estimated $4.3bn (£3.3bn), will be transferred to a fiduciary structure managed by an third-party manager, where it will remain until his death. Upon that event, it will transfer to his children.

This arrangement, he remarked in a Facebook video, went "far beyond" the requirements of Czech law.

Clarification Needed

What kind of trust remains unclear – a domestic trust, or one in a foreign jurisdiction? The notion of a "blind trust" does not exist in Czech statutory law, and an battalion of attorneys will be required to devise an structure that is legally sound.

Skepticism from Watchdogs

Skeptics, including Transparency International, remain unconvinced.

"A blind trust is not a solution," argued 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 range of businesses. From an executive position, even at a European level, he could theoretically intervene in matters that would impact the industry 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 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, controlled by Babis.

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

The reach of Babis into all corners of Czech life is wide. And as prime minister, for the second time, it is poised to become more extensive.