Czech Billionaire Takes Prime Ministerial Office, Pledging to Sever Business Holdings
Wealthy businessman Andrej Babis has been sworn in as the nation's new premier, with his government expected to assume their roles in the coming days.
His selection was contingent upon a key demand from President Petr Pavel – a public commitment by Babis to cede oversight over his sprawling agribusiness and chemical group, Agrofert.
"I vow to be a prime minister who champions the interests of every citizen, domestically and internationally," affirmed Babis after the ceremony at Prague Castle.
"A leader who will work to transform the Czech Republic the best place to live on the face of the Earth."
Grand Visions and a Vast Corporate Footprint
These are grandiose goals, but Babis, 71, is accustomed to thinking big.
Agrofert is so thoroughly integrated in the Czech business landscape that there is even a specialized application to help shoppers avoid 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 thumbs-down symbol appears.
Babis, who was formerly prime minister for four years until 2021, has adopted more right-leaning positions in recent years and his cabinet will feature members of the right-wing SPD party and the Eurosceptic "Motorists for Themselves" party.
The Pledge of Divestment
If he fulfills his vow to withdraw from the company he founded and grew, he will cease to profit from the sale of any Agrofert product – ranging from processed meats to agricultural chemicals.
As prime minister, he states he will have no information of the conglomerate's financial health, nor any ability to affect its prospects.
Administrative decisions on state contracts or subsidies – whether national or EU-funded – will be made without regard to a company he will no longer own or gain financially from, he further notes.
Instead, he explains that Agrofert, worth an estimated $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 be inherited by his children.
This arrangement, he remarked in a social media post, went "well above" the demands 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 "fully independent trust" does not exist in Czech statutory law, and an team of legal experts will be needed to devise an arrangement that is legally sound.
Doubts from Observers
Critics, including Transparency International, continue to doubt.
"A blind trust is not a solution," said David Kotora, the head of Transparency International's Czech branch, in an comment.
"There's no separation. [Babis] undoubtedly is acquainted with the managers. He knows Agrofert's holdings. From an executive position, even at a EU level, he could potentially influence in matters that would impact the industry in which Agrofert is active," Kotora warned.
Broad Reach Extending Past Agrofert
But it's not only 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 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 network 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 extensive. And as prime minister, for the second occasion, it is poised to become more extensive.
