Czech Billionaire Secures PM Office, Promising to Sever Corporate Interests

Tycoon Andrej Babis has been sworn in as the nation's new premier, with his complete ministerial team slated to be appointed within days.

His confirmation followed a fundamental demand from President Petr Pavel – a formal assurance by Babis to cede control over his vast agribusiness and chemical group, Agrofert.

"I vow to be a prime minister who champions the interests of the entire populace, domestically and internationally," affirmed Babis following the event at Prague Castle.

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

High Aspirations and a Far-Reaching Corporate Footprint

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

Agrofert is so thoroughly integrated in the Czech commercial ecosystem that there is even a dedicated app to help shoppers bypass 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 appears.

Babis, who held the role of 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 EU-skeptical "Motorists for Themselves" party.

The Commitment of Separation

If he honors his pledge to separate himself from the company he founded and grew, he will stop gaining from the sale of a single Agrofert product – from frankfurters to fertiliser.

As prime minister, he states he will have no information of the conglomerate's economic status, nor any capacity to influence its prospects.

Administrative decisions on state contracts or subsidies – whether Czech or European – will be made without regard to a company he will have severed ties with or profit from, he emphasizes.

Instead, he explains that Agrofert, worth an estimated $4.3bn (£3.3bn), will be transferred to a fiduciary structure managed by an independent administrator, where it will remain until his death. At that point, it will be inherited by his children.

This arrangement, he commented in a social media post, went "well above" the stipulations of Czech law.

Clarification Needed

The specific type of trust has yet to be clarified – a Czech trust, or one established overseas? The notion of a "fully independent trust" does not exist in Czech statutory law, and an team of legal experts will be required to craft an structure that works.

Skepticism from Watchdogs

Watchdog organizations, including Transparency International, continue to doubt.

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

"True separation is absent. [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 industry in which Agrofert functions," Kotora cautioned.

Broad Reach 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 majority-owned by Hartenberg Holding, and Hartenberg Holding is, in turn, majority-owned by Babis.

Hartenberg also operates a network of reproductive clinics, as well as a florist chain, Flamengo, and an underwear retailer, Astratex.

The influence of Babis into multiple areas of Czech life is broad. And as prime minister, for the second time, it is set to grow even wider.