A Czech Billionaire Takes PM Office, Vowing to Cut Business Empire

Tycoon Andrej Babis has taken office as the nation's new premier, with his government expected to assume their roles shortly.

His selection was contingent upon a key condition from President Petr Pavel – a official assurance by Babis to cede command over his extensive agribusiness and chemical conglomerate, Agrofert.

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

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

High Aspirations and a Pervasive Business Presence

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

Agrofert is so thoroughly integrated in the Czech business landscape that there is even a specialized application 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 – is part of an Agrofert company, a negative symbol is displayed.

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 Pledge of Divestment

If he upholds his promise to separate himself from the company he established, he will stop gaining from the sale of a single Agrofert product – from frankfurters to fertiliser.

As prime minister, he states he will have no information of the conglomerate's economic status, nor any ability to influence its performance.

Administrative decisions on public tenders or subsidies – whether national or EU-funded – will be made with no consideration for a company he will have relinquished ownership of or gain financially from, he further notes.

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. Then, it will be inherited by his children.

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

Outstanding Issues

What kind of trust is still uncertain – a Czech trust, or one established overseas? The legal framework of a "blind trust" does not exist in Czech legislation, and an battalion of attorneys will be necessary to design an arrangement that is legally sound.

Skepticism 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 interview.

"True separation is absent. He obviously knows the managers. He knows Agrofert's range of businesses. From an position of power, even at a European level, he could possibly act in matters that would affect the industry in which Agrofert is active," Kotora cautioned.

Broad Reach Beyond Agrofert

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

In the outskirts of Prague, a private health clinic 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 manages a network of fertility centers, as well as a florist chain, Flamengo, and an underwear retailer, Astratex.

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