A Czech Billionaire Takes PM Post, Promising to Sever Business Empire

Entrepreneur Andrej Babis has taken office as the Czech Republic's new prime minister, with his government expected to assume their roles shortly.

His selection was contingent upon a central stipulation from President Petr Pavel – a formal vow by Babis to relinquish command over his sprawling agribusiness and chemical conglomerate, Agrofert.

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

"A prime minister who will work to establish the Czech Republic the finest location to live on the entire planet."

High Aspirations and a Vast Corporate Footprint

These are high-reaching aspirations, but Babis, 71, is familiar with ambitious plans.

Agrofert is so thoroughly integrated in the Czech business landscape that there is even a mobile tool to help shoppers steer clear of 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 warning 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 incorporate members of the far-right SPD and the EU-skeptical "Motorists for Themselves" party.

The Commitment of Withdrawal

If he honors his pledge to separate himself from the company he founded and grew, he will stop gaining from the sale of any Agrofert product – from frankfurters to fertiliser.

As prime minister, he claims he will have no insight of the conglomerate's fiscal condition, nor any capacity to sway its prospects.

State decisions on public tenders 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 emphasizes.

Instead, he explains that Agrofert, worth an estimated $4.3bn (£3.3bn), will be transferred to a trust managed by an autonomous trustee, where it will stay until his death. Upon that event, it will be inherited by his children.

This arrangement, he commented in a social media post, went "exceeded" the demands of Czech law.

Outstanding Issues

What kind of trust has yet to be clarified – a domestic trust, or one based abroad? The notion of a "fully independent trust" is not recognized in Czech statutory law, and an team of legal experts will be needed to design an structure that works.

Doubts from Anti-Corruption Groups

Skeptics, including Transparency International, remain unconvinced.

"A blind trust is not the answer," argued 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 portfolio. From an high office, even at a EU level, he could potentially influence in matters that would affect the sector in which Agrofert functions," Kotora warned.

Wide-Ranging Interests Extending Past Agrofert

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

In the eastern suburbs of Prague, a medical facility towers over 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 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 occasion, it is set to grow broader.