Czech Billionaire Assumes Prime Ministerial Office, Vowing to Sever Corporate Holdings
Entrepreneur Andrej Babis has officially become the Czech Republic's new head of government, with his government expected to be appointed within days.
His selection followed a fundamental demand from President Petr Pavel – a official commitment by Babis to cede command over his extensive agribusiness and chemical conglomerate, Agrofert.
"I vow to be a prime minister who defends the interests of all our citizens, both locally and globally," declared Babis following the swearing-in at Prague Castle.
"A leader who will work to establish the Czech Republic the top destination to live on the entire planet."
Lofty Ambitions and a Vast Business Presence
These are lofty ambitions, but Babis, 71, is accustomed to large-scale thinking.
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, Viennese-style sausages from Kostelecké uzeniny or sliced bread from Penam – belongs to an Agrofert company, a negative 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 Eurosceptic "Motorists for Themselves" party.
The Pledge of Divestment
If he fulfills his promise to withdraw from the company he built from scratch, he will no longer benefit from the sale of any Agrofert product – from frankfurters to fertiliser.
As prime minister, he claims he will have no insight of the conglomerate's economic status, nor any ability to influence its fortunes.
State decisions on government procurement or subsidies – whether Czech or European – will be made without regard to a company he will have relinquished ownership of or gain financially from, he emphasizes.
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. Upon that event, it will be inherited by his children.
This arrangement, he commented in a Facebook video, went "far beyond" the stipulations of Czech law.
Clarification Needed
What kind of trust remains unclear – a Czech trust, or one established overseas? The concept of a "fully independent trust" is not recognized in Czech legislation, and an battalion of attorneys will be necessary to craft an arrangement that is legally sound.
Skepticism from Anti-Corruption Groups
Skeptics, including Transparency International, continue to doubt.
"A blind trust is an inadequate measure," stated 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 range of businesses. From an position of power, even at a EU level, he could theoretically intervene in matters that would impact the industry in which Agrofert operates," Kotora warned.
Broad Reach Extending Past Agrofert
But it's not just food – and it's not just Agrofert.
In the outskirts of Prague, a medical facility 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 manages a network of reproductive clinics, as well as a flower shop network, Flamengo, and an lingerie store chain, Astratex.
The reach of Babis into every facet of Czech life is broad. And as prime minister, for the second occasion, it is set to grow even wider.
