Czech Wealthy Magnate Takes PM Office, Promising to Cut Corporate Interests

Entrepreneur Andrej Babis has officially become the Czech Republic's new head of government, with his complete ministerial team slated to be appointed in the coming days.

His appointment was contingent upon a key demand from President Petr Pavel – a formal assurance 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," affirmed Babis after the ceremony at Prague Castle.

"A leader who will work to transform the Czech Republic the best place to live on the entire planet."

High Aspirations and a Vast Corporate Footprint

These are lofty ambitions, but Babis, 71, is familiar with thinking big.

Agrofert is so deeply embedded in the Czech economic fabric that there is even a dedicated app to help shoppers avoid purchasing products made by the group's more than 200 subsidiaries.

If a product – for example, frankfurters from Kostelecké uzeniny or packaged bread from Penam – belongs to an Agrofert company, a negative symbol appears.

Babis, who previously served as prime minister for four years until 2021, has adopted more right-leaning positions in recent years and his cabinet will incorporate members of the right-wing SPD party and the Eurosceptic "Drivers for Themselves" party.

The Pledge of Divestment

If he upholds his vow to divest from the company he founded and grew, he will no longer benefit from the sale of any Agrofert product – ranging from processed meats to agricultural chemicals.

As prime minister, he claims he will have no information of the conglomerate's fiscal condition, nor any ability to sway its performance.

Administrative decisions on public tenders or subsidies – whether national or EU-funded – will be made without regard to a company he will no longer own or gain financially from, he adds.

Instead, he says that Agrofert, valued at $4.3bn (£3.3bn), will be placed in a fiduciary structure managed by an independent administrator, where it will remain until his death. Then, it will pass to his children.

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

Clarification Needed

What kind of trust is still uncertain – a trust under Czech law, or one in a foreign jurisdiction? The notion of a "blind trust" does not exist in Czech statutory law, and an team of legal experts will be needed to craft an structure that is functional.

Criticism from Anti-Corruption Groups

Watchdog organizations, including Transparency International, are still skeptical.

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

"True separation is absent. He is familiar with the managers. He knows Agrofert's holdings. From an executive position, even at a EU level, he could potentially influence in matters that would impact the sector in which Agrofert is active," Kotora cautioned.

Extensive Influence Extending Past Agrofert

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

In the eastern suburbs of Prague, a private health clinic towers over 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, majority-owned by Babis.

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

The reach of Babis into multiple areas of Czech life is extensive. And as prime minister, for the second time, it is set to grow more extensive.