Czech Wealthy Magnate Assumes PM Office, Vowing to Sever Corporate Holdings

Wealthy businessman Andrej Babis has taken office as the nation's new premier, with his complete ministerial team slated to be appointed shortly.

His selection followed a fundamental condition from President Petr Pavel – a formal vow by Babis to relinquish oversight over his sprawling agribusiness and chemical group, Agrofert.

"I promise to be a prime minister who defends the interests of every citizen, domestically and internationally," affirmed Babis following the event at Prague Castle.

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

Lofty Ambitions and a Pervasive Corporate Footprint

These are high-reaching aspirations, but Babis, 71, is familiar with large-scale thinking.

Agrofert is so firmly entrenched in the Czech commercial ecosystem that there is even a specialized application to help shoppers steer clear of 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 – is part of an Agrofert company, a thumbs-down symbol shows up.

Babis, who previously served as prime minister for four years until 2021, has moved rightward in recent years and his cabinet will feature members of the right-wing SPD party and the Eurosceptic "Drivers for Themselves" party.

The Promise of Separation

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

As prime minister, he claims he will have no knowledge of the conglomerate's fiscal condition, nor any power to affect its fortunes.

Administrative decisions on public tenders 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 adds.

Instead, he proposes 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 pass to his children.

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

Outstanding Issues

The legal nature of this trust remains unclear – a trust under Czech law, or one in a foreign jurisdiction? The concept of a "blind trust" is not recognized in Czech legislation, and an army of lawyers will be needed to design an structure that works.

Doubts from Watchdogs

Skeptics, including Transparency International, are still skeptical.

"A blind trust is an inadequate measure," stated David Kotora, the head of Transparency International's Czech branch, in an comment.

"There's no separation. [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 theoretically intervene in matters that would affect the sector in which Agrofert is active," Kotora advised.

Extensive Influence Beyond 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 owned by 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 footprint of Babis into multiple areas of Czech life is broad. And as prime minister, for the second time, it is about to get broader.