Czech Wealthy Magnate Assumes Prime Ministerial Post, Pledging to Cut Corporate Empire

Tycoon Andrej Babis has officially become the Czech Republic's new head of government, with his government expected to be appointed shortly.

His appointment came after a central demand from President Petr Pavel – a official assurance by Babis to cede oversight over his vast food-processing, agriculture and chemicals holding company, Agrofert.

"I promise to be a prime minister who champions the interests of the entire populace, at home and abroad," declared Babis following the ceremony at Prague Castle.

"A prime minister who will work to transform the Czech Republic the best place to live on the whole globe."

Lofty Ambitions and a Pervasive Business Presence

These are lofty ambitions, but Babis, 71, is accustomed to ambitious plans.

Agrofert is so thoroughly integrated in the Czech economic fabric that there is even a specialized application 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 sliced bread from Penam – is part of an Agrofert company, a thumbs-down symbol is displayed.

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 feature members of the far-right SPD and the EU-skeptical "Motorists for Themselves" party.

The Commitment of Separation

If he honors his vow to separate himself from the company he established, he will cease to profit from the sale of any Agrofert product – ranging from processed meats to agricultural chemicals.

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

Governmental decisions on public tenders or subsidies – whether national or EU-funded – will be made independently of a company he will no longer own or gain financially from, he emphasizes.

Instead, he proposes that Agrofert, valued at $4.3bn (£3.3bn), will be transferred to a trust managed by an independent administrator, where it will remain until his death. Upon that event, it will transfer to his children.

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

Unanswered Questions

The legal nature of this trust has yet to be clarified – a Czech trust, or one in a foreign jurisdiction? The concept of a "blind trust" has no basis in Czech statutory law, and an battalion of attorneys will be needed to craft an structure that works.

Doubts from Watchdogs

Critics, including Transparency International, remain unconvinced.

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

"True separation is absent. [Babis] is familiar with the managers. He knows Agrofert's holdings. From an high office, even at a European level, he could possibly act in matters that would affect the sector in which Agrofert functions," Kotora advised.

Broad Reach Beyond Agrofert

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

In the eastern suburbs of Prague, a medical facility 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 reproductive clinics, as well as a flower shop network, Flamengo, and an lingerie store chain, Astratex.

The reach of Babis into every facet of Czech life is extensive. And as prime minister, for the second time, it is about to get more extensive.