Czech Wealthy Magnate Assumes PM Post, Pledging to Disentangle Corporate Interests

Entrepreneur Andrej Babis has been sworn in as the Czech Republic's new head of government, with his complete ministerial team slated to take their posts in the coming days.

His selection was contingent upon a key demand from President Petr Pavel – a public assurance by Babis to cede control over his vast food-processing, agriculture and chemicals conglomerate, Agrofert.

"I vow to be a prime minister who upholds the interests of the entire populace, both locally and globally," affirmed Babis following the ceremony at Prague Castle.

"A leader who will work to transform the Czech Republic the top destination to live on the face of the Earth."

High Aspirations and a Far-Reaching Business Presence

These are grandiose goals, but Babis, 71, is accustomed to ambitious plans.

Agrofert is so deeply embedded 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 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 thumbs-down symbol is displayed.

Babis, who previously served as prime minister for four years until 2021, has adopted more right-leaning positions in recent years and his cabinet will include members of the right-wing SPD party and the Eurosceptic "Drivers for Themselves" party.

The Pledge of Divestment

If he upholds his promise to withdraw from the company he established, he will no longer benefit from the sale of a single Agrofert product – ranging from processed meats to agricultural chemicals.

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

State decisions on public tenders or subsidies – whether Czech or European – will be made independently of a company he will have relinquished ownership of or profit from, he further notes.

Instead, he says that Agrofert, valued at $4.3bn (£3.3bn), will be placed in a trust managed by an third-party manager, where it will remain until his death. At that point, it will transfer to his children.

This arrangement, he stated in a Facebook video, went "far beyond" the demands of Czech law.

Unanswered Questions

What kind of trust is still uncertain – a trust under Czech law, or one based abroad? The notion of a "blind trust" is not recognized in Czech legislation, and an battalion of attorneys will be necessary to craft an arrangement that works.

Doubts from Anti-Corruption Groups

Watchdog organizations, including Transparency International, continue to doubt.

"A blind trust is not the answer," said David Kotora, the head of Transparency International's Czech branch, in an comment.

"There's no separation. [Babis] is familiar with the managers. He knows Agrofert's range of businesses. From an high office, even at a EU level, he could possibly act in matters that would impact the industry in which Agrofert functions," Kotora cautioned.

Extensive Influence Extending Past Agrofert

But it's not just food – and it's not just Agrofert.

In the eastern suburbs of Prague, a private health clinic stands near 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, controlled by Babis.

Hartenberg also operates a chain of fertility centers, as well as a florist chain, Flamengo, and an lingerie store chain, Astratex.

The influence of Babis into all corners of Czech life is extensive. And as prime minister, for the second time, it is set to grow broader.