A Czech Wealthy Magnate Secures PM Post, Vowing to Disentangle Corporate Interests

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

His selection came after a central condition from President Petr Pavel – a official vow by Babis to cede control over his sprawling food-processing, agriculture and chemicals conglomerate, Agrofert.

"I promise to be a prime minister who defends the interests of the entire populace, both locally and globally," stated Babis after the ceremony at Prague Castle.

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

Grand Visions and a Vast Business Presence

These are grandiose goals, but Babis, 71, is accustomed to ambitious plans.

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

If a product – for example, Viennese-style sausages from Kostelecké uzeniny or packaged bread from Penam – falls under an Agrofert company, a negative symbol appears.

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 Eurosceptic "Drivers for Themselves" party.

The Pledge of Divestment

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

As prime minister, he asserts he will have no information of the conglomerate's financial health, nor any power to affect its fortunes.

Governmental decisions on public tenders 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 further notes.

Instead, he says that Agrofert, worth an estimated $4.3bn (£3.3bn), will be placed in a trust managed by an autonomous trustee, where it will stay until his death. Then, it will transfer to his children.

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

Outstanding Issues

The specific type of trust remains unclear – a trust under Czech law, or one established overseas? The legal framework of a "blind trust" does not exist in Czech legislation, and an team of legal experts will be needed to design an solution that is legally sound.

Doubts from Anti-Corruption Groups

Skeptics, including Transparency International, remain unconvinced.

"A blind trust is an inadequate measure," stated David Kotora, the head of Transparency International's Czech branch, in an interview.

"The divide is insufficient. [Babis] undoubtedly is acquainted with the managers. He knows Agrofert's portfolio. From an high office, even at a European level, he could potentially influence in matters that would affect the sector in which Agrofert is active," Kotora cautioned.

Broad Reach 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 controlled by Hartenberg Holding, and Hartenberg Holding is, in turn, controlled by Babis.

Hartenberg also operates a chain of reproductive clinics, as well as a florist chain, Flamengo, and an underwear retailer, Astratex.

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