A Czech Billionaire Assumes Prime Ministerial Post, Vowing to Disentangle Corporate Empire

Tycoon Andrej Babis has taken office as the nation's new prime minister, with his complete ministerial team expected to assume their roles within days.

His selection came after a key demand from President Petr Pavel – a formal assurance by Babis to cede command over his vast food-processing, agriculture and chemicals conglomerate, Agrofert.

"I vow to be a prime minister who champions the interests of the entire populace, domestically and internationally," declared Babis after the event at Prague Castle.

"A prime minister who will work to establish the Czech Republic the finest location to live on the entire planet."

Lofty Ambitions and a Far-Reaching Corporate Footprint

These are high-reaching aspirations, but Babis, 71, is familiar with ambitious plans.

Agrofert is so thoroughly integrated in the Czech commercial ecosystem that there is even a mobile tool to help shoppers bypass purchasing products made by the group's more than 200 subsidiaries.

If a product – for example, frankfurters from Kostelecké uzeniny or packaged bread from Penam – falls under an Agrofert company, a warning symbol appears.

Babis, who was formerly 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 Promise of Separation

If he upholds his promise to separate himself from the company he founded and grew, he will stop gaining 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 financial health, nor any capacity to affect its prospects.

Administrative decisions on government procurement 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, valued at $4.3bn (£3.3bn), will be transferred to a trust managed by an autonomous trustee, where it will stay until his death. At that point, it will be inherited by his children.

This arrangement, he stated in a online address, went "exceeded" the requirements of Czech law.

Clarification Needed

What kind of trust is still uncertain – a trust under Czech law, or one based abroad? The legal framework of a "fully independent trust" does not exist in Czech statutory law, and an team of legal experts will be necessary to craft an arrangement that is legally sound.

Doubts from Watchdogs

Skeptics, 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 statement.

"The divide is insufficient. He is familiar with the managers. He knows Agrofert's holdings. From an executive position, even at a European level, he could possibly act in matters that would impact the industry in which Agrofert is active," Kotora advised.

Wide-Ranging Interests Beyond Agrofert

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

In the eastern suburbs of Prague, a medical facility towers over 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 reach of Babis into every facet of Czech life is wide. And as prime minister, for the second occasion, it is poised to become even wider.