Czech Wealthy Magnate Takes PM Office, Pledging to Disentangle Commercial Holdings

Wealthy businessman Andrej Babis has officially become the nation's new premier, with his full cabinet slated to take their posts shortly.

His appointment came after a key stipulation from President Petr Pavel – a official commitment by Babis to give up control over his extensive agribusiness and chemical group, Agrofert.

"I commit to be a prime minister who defends the interests of all our citizens, at home and abroad," affirmed Babis following the swearing-in at Prague Castle.

"A leader who will work to establish the Czech Republic the best place to live on the face of the Earth."

High Aspirations and a Far-Reaching Business Presence

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

Agrofert is so deeply embedded 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 – falls under an Agrofert company, a warning symbol shows up.

Babis, who previously served as 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 Promise of Withdrawal

If he honors his promise to separate himself from the company he founded and grew, he will no longer benefit from the sale of any Agrofert product – from frankfurters to fertiliser.

As prime minister, he asserts he will have no insight of the conglomerate's financial health, nor any power to affect its performance.

Governmental 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 profit from, he emphasizes.

Instead, he says that Agrofert, valued at $4.3bn (£3.3bn), will be placed in a fiduciary structure managed by an third-party manager, where it will remain until his death. Then, it will be inherited by his children.

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

Unanswered Questions

The legal nature of this trust is still uncertain – a trust under Czech law, or one established overseas? The notion of a "blind trust" is not recognized in Czech statutory law, and an army of lawyers will be required to design an structure that is legally sound.

Doubts from Anti-Corruption Groups

Critics, including Transparency International, continue to doubt.

"Such a trust is not the answer," argued David Kotora, the head of Transparency International's Czech branch, in an interview.

"There's no separation. He undoubtedly is acquainted with the managers. He knows Agrofert's portfolio. From an executive position, even at a European level, he could potentially influence in matters that would impact the industry in which Agrofert functions," Kotora cautioned.

Broad Reach Beyond Agrofert

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

In the outskirts 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 majority-owned 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 set to grow even wider.