Czech Wealthy Magnate Takes PM Role, Promising to Sever Corporate Interests
Tycoon Andrej Babis has been sworn in as the Czech Republic's new premier, with his full cabinet slated to take their posts in the coming days.
His appointment was contingent upon a central condition from President Petr Pavel – a formal assurance by Babis to relinquish oversight over his vast food-processing, agriculture and chemicals holding company, Agrofert.
"I commit to be a prime minister who upholds the interests of the entire populace, domestically and internationally," stated Babis after the swearing-in at Prague Castle.
"A prime minister who will work to make 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 familiar with ambitious plans.
Agrofert is so firmly entrenched 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 – is part of an Agrofert company, a warning 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 feature members of the right-wing SPD party and the EU-skeptical "Drivers for Themselves" party.
The Promise of Separation
If he fulfills his pledge to withdraw from the company he founded and grew, he will cease to profit from the sale of any Agrofert product – ranging from processed meats to agricultural chemicals.
As prime minister, he states he will have no insight of the conglomerate's fiscal condition, nor any ability to affect its performance.
Governmental decisions on state contracts or subsidies – whether Czech or European – will be made independently of a company he will have severed ties with or gain financially from, he adds.
Instead, he proposes that Agrofert, worth an estimated $4.3bn (£3.3bn), will be placed in a fiduciary structure managed by an third-party manager, where it will stay until his death. At that point, it will be inherited by his children.
This arrangement, he remarked in a social media post, went "far beyond" the requirements of Czech law.
Outstanding Issues
The legal nature of this trust has yet to be clarified – a Czech trust, or one established overseas? The legal framework of a "fully independent trust" has no basis in Czech legislation, and an team of legal experts will be needed to design an arrangement that is legally sound.
Skepticism from Anti-Corruption Groups
Critics, 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 comment.
"The divide is insufficient. [Babis] obviously knows the managers. He knows Agrofert's range of businesses. From an high office, even at a European level, he could possibly act in matters that would affect the sector in which Agrofert functions," Kotora advised.
Extensive Influence Extending Past Agrofert
But it's not just food – and it's not only Agrofert.
In the eastern suburbs of Prague, a medical facility towers over the O2 arena. While it is the property of 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 chain of reproductive clinics, as well as a flower shop network, Flamengo, and an underwear retailer, Astratex.
The footprint of Babis into multiple areas of Czech life is extensive. And as prime minister, for the second occasion, it is set to grow even wider.
