Czech Billionaire Secures Prime Ministerial Role, Promising to Sever Commercial Interests

Tycoon Andrej Babis has taken office as the nation's new prime minister, with his government expected to be appointed shortly.

His appointment was contingent upon a key stipulation from President Petr Pavel – a formal assurance by Babis to give up command over his sprawling agribusiness and chemical conglomerate, Agrofert.

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

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

Grand Visions and a Vast Corporate Footprint

These are grandiose goals, but Babis, 71, is familiar with thinking big.

Agrofert is so firmly entrenched in the Czech economic fabric that there is even a mobile tool to help shoppers avoid purchasing products made by the group's over two hundred subsidiaries.

If a product – for example, frankfurters from Kostelecké uzeniny or packaged bread from Penam – falls under an Agrofert company, a negative symbol is displayed.

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 right-wing SPD party and the Eurosceptic "Motorists for Themselves" party.

The Commitment of Divestment

If he fulfills his vow to separate himself from the company he founded and grew, he will cease to profit from the sale of a single Agrofert product – from frankfurters to fertiliser.

As prime minister, he states he will have no information of the conglomerate's financial health, nor any capacity to sway its prospects.

Governmental decisions on government procurement or subsidies – whether national or EU-funded – will be made independently of a company he will have severed ties with or gain financially from, he further notes.

Instead, he says that Agrofert, worth an estimated $4.3bn (£3.3bn), will be placed in a fiduciary structure managed by an independent administrator, where it will remain until his death. Then, it will be inherited by his children.

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

Unanswered Questions

The specific type of trust has yet to be clarified – a Czech trust, or one based abroad? The concept of a "fully independent trust" has no basis in Czech legislation, and an army of lawyers will be needed to devise an arrangement that works.

Doubts from Watchdogs

Skeptics, 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. [Babis] is familiar with the managers. He knows Agrofert's range of businesses. From an position of power, even at a European level, he could possibly act in matters that would impact the sector in which Agrofert operates," Kotora warned.

Wide-Ranging Interests Beyond Agrofert

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

In the eastern suburbs 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 majority-owned by Hartenberg Holding, and Hartenberg Holding is, in turn, majority-owned by Babis.

Hartenberg also runs 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 wide. And as prime minister, for the second occasion, it is poised to become broader.