Czech Wealthy Magnate Takes PM Post, Promising to Sever Commercial Empire

Entrepreneur Andrej Babis has officially become the nation's new premier, with his complete ministerial team slated to take their posts within days.

His appointment followed a central condition from President Petr Pavel – a formal commitment by Babis to give up oversight over his sprawling food-processing, agriculture and chemicals holding company, Agrofert.

"I commit to be a prime minister who upholds the interests of all our citizens, domestically and internationally," declared Babis following the swearing-in at Prague Castle.

"A leader who will work to make the Czech Republic the top destination to live on the face of the Earth."

Grand Visions and a Vast Business Presence

These are high-reaching aspirations, but Babis, 71, is accustomed to thinking big.

Agrofert is so firmly entrenched in the Czech economic fabric that there is even a dedicated app 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 sliced bread from Penam – falls under an Agrofert company, a negative 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 incorporate members of the far-right SPD and the Eurosceptic "Drivers for Themselves" party.

The Pledge of Separation

If he fulfills his pledge to separate himself from the company he built from scratch, he will no longer benefit from the sale of any Agrofert product – ranging from processed meats to agricultural chemicals.

As prime minister, he states he will have no information of the conglomerate's financial health, nor any ability to influence its prospects.

Governmental decisions on state contracts or subsidies – whether national or EU-funded – will be made independently of a company he will have severed ties with or gain financially from, he adds.

Instead, he explains that Agrofert, valued at $4.3bn (£3.3bn), will be transferred to a fiduciary structure managed by an third-party manager, where it will stay until his death. Then, it will pass to his children.

This arrangement, he stated in a online address, went "well above" the stipulations of Czech law.

Unanswered Questions

What kind of trust has yet to be clarified – a trust under Czech law, or one based abroad? The legal framework of a "blind trust" does not exist in Czech legislation, and an battalion of attorneys will be needed to devise an solution that is functional.

Skepticism from Observers

Critics, including Transparency International, remain unconvinced.

"Such a trust is not the answer," 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 portfolio. From an position of power, even at a European level, he could possibly act in matters that would impact the sector in which Agrofert functions," Kotora warned.

Broad Reach Beyond Agrofert

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

In the eastern suburbs of Prague, a private health clinic stands near the O2 arena. While it is the property of a company called FutureLife a.s, that company is controlled 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 flower shop network, Flamengo, and an lingerie store chain, Astratex.

The influence of Babis into all corners of Czech life is wide. And as prime minister, for the second time, it is set to grow broader.