A Czech Wealthy Magnate Takes Prime Ministerial Role, Vowing to Disentangle Corporate Empire

Entrepreneur Andrej Babis has taken office as the nation's new prime minister, with his complete ministerial team anticipated to be appointed in the coming days.

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

"I vow to be a prime minister who champions the interests of all our citizens, both locally and globally," affirmed Babis after the ceremony at Prague Castle.

"A leader who will work to establish the Czech Republic the best place to live on the whole globe."

Lofty Ambitions and a Vast Corporate Footprint

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

Agrofert is so thoroughly integrated in the Czech economic fabric that there is even a dedicated app to help shoppers steer clear of purchasing products made by the group's numerous subsidiaries.

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

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 right-wing SPD party and the Eurosceptic "Drivers for Themselves" party.

The Promise of Separation

If he honors his pledge to divest 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 claims he will have no insight of the conglomerate's economic status, nor any capacity to affect its prospects.

State decisions on public tenders or subsidies – whether Czech or European – will be made with no consideration for a company he will have severed ties with 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 autonomous trustee, where it will stay until his death. Then, it will transfer to his children.

This arrangement, he remarked in a Facebook video, went "exceeded" the demands of Czech law.

Unanswered Questions

What kind of trust is still uncertain – a trust under Czech law, or one established overseas? The legal framework of a "fully independent trust" does not exist in Czech legislation, and an team of legal experts will be required to design an structure that is legally sound.

Skepticism from Watchdogs

Skeptics, including Transparency International, continue to doubt.

"A blind trust is an inadequate measure," said David Kotora, the head of Transparency International's Czech branch, in an statement.

"There's no separation. He is familiar 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 affect the sector in which Agrofert operates," Kotora cautioned.

Broad Reach Beyond Agrofert

But it's not only 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, controlled by Babis.

Hartenberg also runs a chain of fertility centers, as well as a florist chain, Flamengo, and an underwear retailer, Astratex.

The reach of Babis into every facet of Czech life is extensive. And as prime minister, for the second occasion, it is poised to become more extensive.