A Czech Wealthy Magnate Secures PM Office, Pledging to Disentangle Corporate Interests

Entrepreneur Andrej Babis has been sworn in as the nation's new head of government, with his government anticipated to take their posts within days.

His confirmation was contingent upon a key stipulation from President Petr Pavel – a official vow by Babis to cede oversight over his extensive food-processing, agriculture and chemicals holding company, Agrofert.

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

"A leader who will work to make the Czech Republic the top destination to live on the whole globe."

High Aspirations and a Vast Corporate Footprint

These are lofty ambitions, but Babis, 71, is familiar with large-scale thinking.

Agrofert is so thoroughly integrated in the Czech commercial ecosystem that there is even a mobile tool 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 packaged bread from Penam – falls under an Agrofert company, a negative 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 EU-skeptical "Motorists for Themselves" party.

The Pledge of Divestment

If he honors his pledge to divest from the company he built from scratch, he will stop gaining from the sale of any Agrofert product – from frankfurters to fertiliser.

As prime minister, he states he will have no insight of the conglomerate's financial health, nor any ability to affect its performance.

Governmental decisions on public tenders or subsidies – whether national or EU-funded – will be made independently of a company he will have severed ties with or profit from, he further notes.

Instead, he proposes that Agrofert, worth an estimated $4.3bn (£3.3bn), will be placed in a fiduciary structure managed by an autonomous trustee, where it will stay until his death. Upon that event, it will be inherited by his children.

This arrangement, he stated in a social media post, went "far beyond" the stipulations of Czech law.

Outstanding Issues

The legal nature of this trust is still uncertain – a domestic trust, or one established overseas? The concept of a "fully independent trust" is not recognized in Czech legislation, and an army of lawyers will be needed to craft an arrangement that works.

Criticism from Watchdogs

Watchdog organizations, including Transparency International, remain unconvinced.

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

"The divide is insufficient. [Babis] undoubtedly is acquainted with the managers. He knows Agrofert's holdings. 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 cautioned.

Wide-Ranging Interests Beyond Agrofert

But it's not only food – and it's not only 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 majority-owned by Hartenberg Holding, and Hartenberg Holding is, in turn, controlled by Babis.

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

The reach of Babis into multiple areas of Czech life is wide. And as prime minister, for the second time, it is poised to become even wider.