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

Tycoon Andrej Babis has taken office as the nation's new head of government, with his government expected to take their posts within days.

His confirmation came after a key condition from President Petr Pavel – a official commitment by Babis to cede control over his extensive food-processing, agriculture and chemicals holding company, Agrofert.

"I commit to be a prime minister who upholds the interests of all our citizens, both locally and globally," stated Babis following the ceremony at Prague Castle.

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

Lofty Ambitions and a Far-Reaching Business Presence

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

Agrofert is so firmly entrenched in the Czech business landscape that there is even a specialized application to help shoppers avoid purchasing products made by the group's numerous subsidiaries.

If a product – for example, Viennese-style sausages from Kostelecké uzeniny or packaged bread from Penam – belongs to an Agrofert company, a thumbs-down symbol appears.

Babis, who held the role of prime minister for four years until 2021, has adopted more right-leaning positions in recent years and his cabinet will incorporate members of the right-wing SPD party and the EU-skeptical "Motorists for Themselves" party.

The Commitment of Separation

If he honors his promise to separate himself from the company he founded and grew, he will cease to profit from the sale of a single Agrofert product – ranging from processed meats to agricultural chemicals.

As prime minister, he claims he will have no information of the conglomerate's economic status, nor any power to affect its performance.

Governmental decisions on state contracts or subsidies – whether national or EU-funded – will be made independently of a company he will have relinquished ownership of or gain financially from, he further notes.

Instead, he says that Agrofert, valued at $4.3bn (£3.3bn), will be transferred to a trust managed by an third-party manager, where it will remain until his death. At that point, it will be inherited by his children.

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

Outstanding Issues

The legal nature of this trust has yet to be clarified – a trust under Czech law, or one in a foreign jurisdiction? The notion of a "fully independent trust" has no basis in Czech statutory law, and an battalion of attorneys will be needed to craft an solution that works.

Doubts from Anti-Corruption Groups

Watchdog organizations, including Transparency International, continue to doubt.

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

"There's no separation. He obviously knows the managers. He knows Agrofert's holdings. From an executive position, even at a European level, he could possibly act in matters that would affect the industry in which Agrofert functions," Kotora advised.

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 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 operates a network of reproductive clinics, as well as a flower shop network, Flamengo, and an underwear retailer, Astratex.

The influence of Babis into every facet of Czech life is broad. And as prime minister, for the second occasion, it is set to grow broader.