Czech Wealthy Magnate Assumes PM Office, Vowing to Sever Business Interests

Entrepreneur Andrej Babis has been sworn in as the Czech Republic's new prime minister, with his complete ministerial team anticipated to take their posts within days.

His confirmation was contingent upon a fundamental condition from President Petr Pavel – a public vow by Babis to cede control over his extensive agribusiness and chemical group, Agrofert.

"I vow to be a prime minister who upholds the interests of all our citizens, at home and abroad," stated Babis after the ceremony at Prague Castle.

"A leader who will work to transform the Czech Republic the finest location to live on the whole globe."

High Aspirations and a Vast Business Presence

These are lofty ambitions, but Babis, 71, is used to large-scale thinking.

Agrofert is so firmly entrenched in the Czech business landscape 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, frankfurters from Kostelecké uzeniny or packaged bread from Penam – is part of an Agrofert company, a warning symbol shows up.

Babis, who previously served as prime minister for four years until 2021, has shifted to the right in recent years and his cabinet will incorporate members of the right-wing SPD party and the EU-skeptical "Motorists for Themselves" party.

The Promise of Separation

If he honors his promise to separate himself 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 knowledge of the conglomerate's fiscal condition, nor any capacity to affect its performance.

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

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

This arrangement, he commented in a social media post, went "well above" the demands of Czech law.

Outstanding Issues

The legal nature of this trust has yet to be clarified – a trust under Czech law, or one based abroad? The legal framework of a "fully independent trust" has no basis in Czech legislation, and an team of legal experts will be needed to craft an arrangement that works.

Criticism from Anti-Corruption Groups

Critics, including Transparency International, continue to doubt.

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

"True separation is absent. [Babis] undoubtedly is acquainted with the managers. He knows Agrofert's holdings. From an position of power, even at a European level, he could potentially influence in matters that would impact the industry in which Agrofert operates," Kotora warned.

Broad Reach Beyond Agrofert

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

In the outskirts 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 controlled by Hartenberg Holding, and Hartenberg Holding is, in turn, majority-owned by Babis.

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

The footprint of Babis into every facet of Czech life is broad. And as prime minister, for the second time, it is poised to become even wider.