Czech Billionaire Assumes PM Post, Pledging to Sever Business Interests

Entrepreneur Andrej Babis has been sworn in as the Czech Republic's new head of government, with his complete ministerial team expected to assume their roles within days.

His confirmation was contingent upon a fundamental stipulation from President Petr Pavel – a formal assurance by Babis to give up oversight over his vast food-processing, agriculture and chemicals group, Agrofert.

"I promise to be a prime minister who upholds the interests of all our citizens, domestically and internationally," declared Babis following the ceremony at Prague Castle.

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

Grand Visions and a Pervasive Corporate Footprint

These are high-reaching aspirations, but Babis, 71, is accustomed to ambitious plans.

Agrofert is so thoroughly integrated in the Czech commercial ecosystem that there is even a specialized application to help shoppers bypass 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 warning symbol shows up.

Babis, who was formerly 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 Promise of Divestment

If he fulfills his pledge to divest from the company he established, he will cease to profit 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 capacity to affect its fortunes.

Governmental decisions on government procurement or subsidies – whether national or EU-funded – will be made without regard to a company he will have severed ties with or profit from, he emphasizes.

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

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

Unanswered Questions

The specific type of trust is still uncertain – a Czech trust, or one based abroad? The legal framework of a "blind trust" does not exist in Czech legislation, and an team of legal experts will be needed to devise an structure that works.

Doubts from Watchdogs

Skeptics, including Transparency International, continue to doubt.

"A blind trust is not the answer," said David Kotora, the head of Transparency International's Czech branch, in an comment.

"There's no separation. He is familiar with the managers. He knows Agrofert's portfolio. From an position of power, even at a European level, he could possibly act in matters that would affect the sector in which Agrofert operates," Kotora advised.

Wide-Ranging Interests Beyond Agrofert

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

In the outskirts 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, controlled by Babis.

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

The reach of Babis into all corners of Czech life is extensive. And as prime minister, for the second time, it is poised to become even wider.