A Czech Wealthy Magnate Assumes PM Office, Promising to Cut Business Empire

Wealthy businessman Andrej Babis has been sworn in as the nation's new head of government, with his full cabinet slated to be appointed shortly.

His appointment was contingent upon a central demand from President Petr Pavel – a public vow by Babis to cede oversight over his vast food-processing, agriculture and chemicals conglomerate, Agrofert.

"I commit to be a prime minister who upholds the interests of every citizen, domestically and internationally," declared Babis following the swearing-in at Prague Castle.

"A prime minister who will work to transform the Czech Republic the top destination to live on the entire planet."

Grand Visions and a Pervasive Corporate Footprint

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

Agrofert is so thoroughly integrated in the Czech business landscape that there is even a mobile tool to help shoppers avoid 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 – belongs to an Agrofert company, a warning 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 far-right SPD and the EU-skeptical "Motorists for Themselves" party.

The Promise of Separation

If he fulfills his vow to withdraw 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 asserts he will have no knowledge of the conglomerate's fiscal condition, nor any capacity to affect its performance.

Administrative decisions on public tenders or subsidies – whether Czech or European – will be made without regard to a company he will have severed ties with or profit from, he adds.

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

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

Outstanding Issues

The specific type of trust has yet to be clarified – a domestic trust, or one established overseas? The concept of a "blind trust" has no basis in Czech legislation, and an army of lawyers will be required to devise an structure that is legally sound.

Criticism from Observers

Critics, including Transparency International, continue to doubt.

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

"True separation is absent. He is familiar with the managers. He knows Agrofert's range of businesses. From an executive position, even at a EU level, he could theoretically intervene in matters that would affect the industry in which Agrofert operates," Kotora advised.

Broad Reach Beyond Agrofert

But it's not just 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 controlled by Hartenberg Holding, and Hartenberg Holding is, in turn, majority-owned by Babis.

Hartenberg also runs a chain of reproductive clinics, as well as a flower shop network, Flamengo, and an lingerie store chain, Astratex.

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