A Czech Wealthy Magnate Takes Prime Ministerial Role, Vowing to Cut Corporate Empire

Wealthy businessman Andrej Babis has officially become the nation's new premier, with his government slated to take their posts within days.

His appointment came after a central stipulation from President Petr Pavel – a public assurance by Babis to cede control over his extensive food-processing, agriculture and chemicals holding company, Agrofert.

"I promise to be a prime minister who upholds the interests of every citizen, at home and abroad," declared Babis after the event at Prague Castle.

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

Grand Visions and a Pervasive Business Presence

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

Agrofert is so thoroughly integrated in the Czech economic fabric that there is even a dedicated app 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 held the role of prime minister for four years until 2021, has adopted more right-leaning positions in recent years and his cabinet will feature members of the far-right SPD and the EU-skeptical "Motorists for Themselves" party.

The Promise of Separation

If he honors his pledge to withdraw from the company he built from scratch, he will stop gaining from the sale of any Agrofert product – ranging from processed meats to agricultural chemicals.

As prime minister, he states he will have no insight of the conglomerate's economic status, nor any power to sway its fortunes.

Governmental decisions on government procurement or subsidies – whether Czech or European – will be made without regard to a company he will have severed ties with or gain financially 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 remain until his death. Upon that event, it will transfer to his children.

This arrangement, he stated in a Facebook video, went "far beyond" the stipulations of Czech law.

Clarification Needed

What kind of trust remains unclear – a trust under Czech law, or one in a foreign jurisdiction? The concept of a "fully independent trust" does not exist in Czech statutory law, and an battalion of attorneys will be necessary to craft an structure that works.

Skepticism from Watchdogs

Skeptics, including Transparency International, continue to doubt.

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

"The divide is insufficient. [Babis] is familiar with the managers. He knows Agrofert's range of businesses. From an executive position, even at a European level, he could theoretically intervene in matters that would impact the sector in which Agrofert is active," Kotora warned.

Wide-Ranging Interests Beyond Agrofert

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

In the eastern suburbs of Prague, a private health clinic 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, controlled by Babis.

Hartenberg also manages a network of fertility centers, as well as a flower shop network, Flamengo, and an underwear retailer, Astratex.

The influence of Babis into every facet of Czech life is broad. And as prime minister, for the second time, it is about to get broader.