A Czech Wealthy Magnate Secures Prime Ministerial Role, Promising to Disentangle Corporate Empire

Entrepreneur Andrej Babis has been sworn in as the Czech Republic's new head of government, with his full cabinet anticipated to be appointed in the coming days.

His appointment followed a central condition from President Petr Pavel – a public vow by Babis to give up command over his extensive food-processing, agriculture and chemicals holding company, Agrofert.

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

"A prime minister who will work to transform the Czech Republic the top destination to live on the whole globe."

High Aspirations and a Far-Reaching Business Presence

These are grandiose goals, but Babis, 71, is accustomed to large-scale thinking.

Agrofert is so deeply embedded in the Czech commercial ecosystem that there is even a dedicated app to help shoppers steer clear of purchasing products made by the group's more than 200 subsidiaries.

If a product – for example, frankfurters from Kostelecké uzeniny or sliced bread from Penam – is part of an Agrofert company, a thumbs-down symbol is displayed.

Babis, who was formerly prime minister for four years until 2021, has shifted to the right in recent years and his cabinet will incorporate members of the far-right SPD and the Eurosceptic "Drivers for Themselves" party.

The Commitment of Divestment

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

As prime minister, he states he will have no knowledge of the conglomerate's fiscal condition, nor any capacity to influence its prospects.

State decisions on government procurement or subsidies – whether national or EU-funded – will be made with no consideration for a company he will no longer own or profit 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 third-party manager, where it will remain until his death. Upon that event, it will pass to his children.

This arrangement, he stated in a social media post, went "exceeded" the demands of Czech law.

Outstanding Issues

The specific type of trust is still uncertain – a trust under Czech law, or one based abroad? The notion of a "blind trust" is not recognized in Czech statutory law, and an team of legal experts will be required to devise an arrangement that works.

Criticism from Observers

Critics, including Transparency International, are still skeptical.

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

"The divide is insufficient. [Babis] is familiar with the managers. He knows Agrofert's range of businesses. From an executive position, even at a European level, he could potentially influence in matters that would affect the industry in which Agrofert functions," Kotora cautioned.

Wide-Ranging Interests Beyond Agrofert

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

In the outskirts 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, majority-owned by Babis.

Hartenberg also manages a chain of fertility centers, as well as a flower shop network, Flamengo, and an underwear retailer, Astratex.

The reach of Babis into every facet of Czech life is wide. And as prime minister, for the second time, it is set to grow broader.