Czech Billionaire Assumes PM Post, Vowing to Sever Commercial Interests

Entrepreneur Andrej Babis has officially become the nation's new head of government, with his complete ministerial team slated to assume their roles in the coming days.

His confirmation was contingent upon a key condition from President Petr Pavel – a public assurance by Babis to give up command over his extensive food-processing, agriculture and chemicals holding company, Agrofert.

"I vow to be a prime minister who upholds the interests of the entire populace, at home and abroad," affirmed Babis after the swearing-in at Prague Castle.

"A leader who will work to establish the Czech Republic the top destination to live on the entire planet."

Grand Visions and a Far-Reaching Business Presence

These are grandiose goals, but Babis, 71, is familiar with thinking big.

Agrofert is so firmly entrenched 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, frankfurters from Kostelecké uzeniny or sliced bread from Penam – is part of an Agrofert company, a negative symbol shows up.

Babis, who held the role of prime minister for four years until 2021, has shifted to the right in recent years and his cabinet will include members of the right-wing SPD party and the Eurosceptic "Motorists for Themselves" party.

The Promise of Divestment

If he honors his pledge to divest from the company he built from scratch, 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 fiscal condition, nor any capacity to influence its performance.

Governmental decisions on public tenders or subsidies – whether Czech or European – will be made with no consideration for a company he will have relinquished ownership of or profit from, he emphasizes.

Instead, he says that Agrofert, worth an estimated $4.3bn (£3.3bn), will be transferred to a fiduciary structure managed by an third-party manager, where it will stay until his death. At that point, it will pass to his children.

This arrangement, he stated in a online address, went "well above" the stipulations of Czech law.

Outstanding Issues

The specific type of trust is still uncertain – a domestic trust, or one based abroad? The legal framework of a "blind trust" has no basis in Czech legislation, and an army of lawyers will be required to devise an structure that works.

Criticism from Observers

Skeptics, including Transparency International, are still skeptical.

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

"There's no separation. [Babis] undoubtedly is acquainted with the managers. He knows Agrofert's holdings. From an executive position, even at a EU level, he could possibly act in matters that would affect the industry in which Agrofert is active," Kotora cautioned.

Extensive Influence Beyond Agrofert

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

Hartenberg also manages a chain of reproductive clinics, as well as a flower shop network, Flamengo, and an lingerie store chain, Astratex.

The influence of Babis into multiple areas of Czech life is extensive. And as prime minister, for the second time, it is about to get broader.