A Czech Wealthy Magnate Takes PM Post, Promising to Disentangle Commercial Empire

Wealthy businessman Andrej Babis has been sworn in as the nation's new head of government, with his government anticipated to be appointed in the coming days.

His appointment came after a central demand from President Petr Pavel – a official assurance by Babis to give up command over his vast food-processing, agriculture and chemicals conglomerate, Agrofert.

"I commit to be a prime minister who champions the interests of all our citizens, both locally and globally," declared Babis after the ceremony at Prague Castle.

"A leader who will work to make the Czech Republic the top destination to live on the entire planet."

Lofty Ambitions and a Pervasive Business Presence

These are grandiose goals, but Babis, 71, is used to thinking big.

Agrofert is so deeply embedded in the Czech business landscape that there is even a dedicated app 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 packaged bread from Penam – belongs to an Agrofert company, a warning symbol shows up.

Babis, who held the role of prime minister for four years until 2021, has shifted to the right in recent years and his cabinet will include members of the far-right SPD and the EU-skeptical "Motorists for Themselves" party.

The Commitment of Divestment

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

As prime minister, he claims he will have no insight of the conglomerate's economic status, nor any capacity to influence its fortunes.

Governmental decisions on government procurement or subsidies – whether Czech or European – will be made with no consideration for a company he will have relinquished ownership of or profit from, he adds.

Instead, he explains that Agrofert, worth an estimated $4.3bn (£3.3bn), will be transferred to a trust managed by an independent administrator, where it will remain until his death. At that point, it will be inherited by his children.

This arrangement, he remarked in a online address, went "exceeded" the requirements of Czech law.

Clarification Needed

The specific type of trust is still uncertain – a domestic trust, or one based abroad? The concept of a "blind trust" does not exist in Czech statutory law, and an battalion of attorneys will be necessary to craft an arrangement that works.

Criticism from Watchdogs

Watchdog organizations, including Transparency International, are still skeptical.

"Such a trust is not the answer," stated 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 high office, even at a EU level, he could theoretically intervene in matters that would affect the sector in which Agrofert is active," Kotora warned.

Extensive Influence Extending Past 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 majority-owned by Hartenberg Holding, and Hartenberg Holding is, in turn, majority-owned by Babis.

Hartenberg also manages a network of fertility centers, as well as a flower shop network, Flamengo, and an lingerie store chain, Astratex.

The influence of Babis into all corners of Czech life is wide. And as prime minister, for the second occasion, it is set to grow more extensive.