A Czech Wealthy Magnate Takes Prime Ministerial Post, Vowing to Disentangle Commercial Holdings

Tycoon Andrej Babis has officially become the Czech Republic's new prime minister, with his government anticipated to take their posts in the coming days.

His confirmation came after a central condition from President Petr Pavel – a formal vow by Babis to relinquish command over his sprawling agribusiness and chemical holding company, Agrofert.

"I promise to be a prime minister who defends the interests of all our citizens, domestically and internationally," stated Babis after the event at Prague Castle.

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

Grand Visions and a Pervasive Corporate Footprint

These are lofty ambitions, but Babis, 71, is used to large-scale thinking.

Agrofert is so deeply embedded in the Czech business landscape that there is even a dedicated app to help shoppers steer clear of purchasing products made by the group's numerous subsidiaries.

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

Babis, who previously served as 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 Eurosceptic "Motorists for Themselves" party.

The Pledge of Withdrawal

If he honors his vow to separate himself from the company he built from scratch, 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 knowledge of the conglomerate's economic status, nor any power to influence its fortunes.

State decisions on government procurement or subsidies – whether national or EU-funded – will be made without regard to a company he will have severed ties with or gain financially from, he further notes.

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 remarked in a social media post, went "far beyond" the demands of Czech law.

Unanswered Questions

The specific type of trust is still uncertain – a trust under Czech law, or one established overseas? The notion of a "fully independent trust" has no basis in Czech statutory law, and an army of lawyers will be necessary to devise an arrangement that works.

Skepticism from Anti-Corruption Groups

Skeptics, including Transparency International, are still skeptical.

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

"The divide is insufficient. He is familiar with the managers. He knows Agrofert's holdings. From an position of power, even at a EU level, he could possibly act in matters that would affect the industry in which Agrofert operates," Kotora cautioned.

Broad Reach Beyond Agrofert

But it's not just food – and it's not just 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, controlled by Babis.

Hartenberg also runs a chain of fertility centers, as well as a florist chain, 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 about to get even wider.