A Czech Wealthy Magnate Takes PM Post, Vowing to Sever Commercial Holdings

Entrepreneur 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 confirmation came after a key demand from President Petr Pavel – a official assurance by Babis to relinquish command over his vast food-processing, agriculture and chemicals conglomerate, Agrofert.

"I vow to be a prime minister who champions the interests of every citizen, domestically and internationally," affirmed Babis following the ceremony at Prague Castle.

"A prime minister who will work to transform the Czech Republic the top destination to live on the face of the Earth."

Lofty Ambitions and a Pervasive Business Presence

These are high-reaching aspirations, but Babis, 71, is familiar with thinking big.

Agrofert is so thoroughly integrated in the Czech business landscape that there is even a dedicated app to help shoppers bypass purchasing products made by the group's numerous subsidiaries.

If a product – for example, Viennese-style sausages from Kostelecké uzeniny or sliced bread from Penam – falls under an Agrofert company, a thumbs-down symbol is displayed.

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

The Commitment of Separation

If he fulfills his promise to divest from the company he established, he will stop gaining from the sale of a single Agrofert product – from frankfurters to fertiliser.

As prime minister, he states he will have no insight of the conglomerate's fiscal condition, nor any power to affect its fortunes.

State decisions on state contracts or subsidies – whether Czech or European – will be made without regard to a company he will have relinquished ownership of or gain financially from, he further notes.

Instead, he explains that Agrofert, valued at $4.3bn (£3.3bn), will be transferred to a fiduciary structure managed by an autonomous trustee, where it will remain until his death. Upon that event, it will be inherited by his children.

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

Clarification Needed

The specific type of trust is still uncertain – a Czech trust, or one in a foreign jurisdiction? The legal framework of a "blind trust" is not recognized in Czech statutory law, and an team of legal experts will be required to craft an solution that is legally sound.

Doubts 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 statement.

"There's no separation. [Babis] is familiar with the managers. He knows Agrofert's range of businesses. From an position of power, even at a EU level, he could theoretically intervene in matters that would impact the industry 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 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 manages a chain of reproductive clinics, as well as a flower shop network, Flamengo, and an lingerie store chain, Astratex.

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