A Czech Billionaire Takes PM Office, Pledging to Sever Business Holdings

Entrepreneur Andrej Babis has taken office as the nation's new prime minister, with his full cabinet expected to take their posts within days.

His selection followed a central demand from President Petr Pavel – a public commitment by Babis to give up command over his extensive food-processing, agriculture and chemicals holding company, Agrofert.

"I promise to be a prime minister who defends the interests of every citizen, both locally and globally," declared Babis following the event at Prague Castle.

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

High Aspirations and a Far-Reaching Corporate Footprint

These are lofty ambitions, but Babis, 71, is familiar with ambitious plans.

Agrofert is so firmly entrenched in the Czech commercial ecosystem that there is even a specialized application to help shoppers steer clear of purchasing products made by the group's more than 200 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 shows up.

Babis, who was formerly prime minister for four years until 2021, has moved rightward in recent years and his cabinet will incorporate members of the right-wing SPD party and the EU-skeptical "Motorists for Themselves" party.

The Commitment of Withdrawal

If he fulfills his promise to withdraw from the company he established, he will stop gaining 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 economic status, nor any power to sway its performance.

State decisions on public tenders or subsidies – whether Czech or European – will be made with no consideration for a company he will have severed ties with or profit from, he further notes.

Instead, he proposes that Agrofert, worth an estimated $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 transfer to his children.

This arrangement, he commented in a Facebook video, went "well above" the requirements of Czech law.

Unanswered Questions

What kind of trust has yet to be clarified – a Czech trust, or one based abroad? The notion of a "fully independent trust" is not recognized in Czech statutory law, and an battalion of attorneys will be needed to design an structure that is legally sound.

Criticism from Anti-Corruption Groups

Skeptics, including Transparency International, are still skeptical.

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

"There's no separation. He obviously knows the managers. He knows Agrofert's holdings. From an high office, even at a EU level, he could theoretically intervene in matters that would impact the industry in which Agrofert functions," Kotora advised.

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 stands near 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 chain of fertility centers, as well as a flower shop network, Flamengo, and an lingerie store chain, Astratex.

The footprint of Babis into multiple areas of Czech life is wide. And as prime minister, for the second time, it is about to get more extensive.