A Czech Wealthy Magnate Assumes Prime Ministerial Post, Vowing to Cut Commercial Empire

Wealthy businessman Andrej Babis has officially become the Czech Republic's new prime minister, with his government anticipated to assume their roles in the coming days.

His appointment was contingent upon a fundamental stipulation from President Petr Pavel – a formal vow by Babis to give up command over his vast food-processing, agriculture and chemicals conglomerate, Agrofert.

"I vow to be a prime minister who upholds the interests of every citizen, both locally and globally," affirmed Babis following 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."

High Aspirations and a Vast Corporate Footprint

These are grandiose goals, but Babis, 71, is used 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 over two hundred subsidiaries.

If a product – for example, frankfurters from Kostelecké uzeniny or sliced bread from Penam – is part of an Agrofert company, a thumbs-down 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 incorporate members of the right-wing SPD party and the Eurosceptic "Drivers for Themselves" party.

The Promise of Separation

If he honors his pledge to separate himself from the company he founded and grew, he will no longer benefit from the sale of a single Agrofert product – from frankfurters to fertiliser.

As prime minister, he claims he will have no knowledge of the conglomerate's economic status, nor any capacity to affect its fortunes.

Administrative decisions on public tenders or subsidies – whether national or EU-funded – will be made without regard to a company he will no longer own or gain financially from, he adds.

Instead, he says that Agrofert, valued at $4.3bn (£3.3bn), will be transferred to a trust managed by an independent administrator, where it will stay until his death. Then, it will be inherited by his children.

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

Clarification Needed

The legal nature of this trust has yet to be clarified – a Czech trust, or one in a foreign jurisdiction? The legal framework of a "blind trust" has no basis in Czech statutory law, and an army of lawyers will be necessary to devise an solution that is legally sound.

Skepticism from Anti-Corruption Groups

Skeptics, including Transparency International, continue to doubt.

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

"The divide is insufficient. He undoubtedly is acquainted with the managers. He knows Agrofert's holdings. From an high office, even at a EU level, he could potentially influence in matters that would affect the sector in which Agrofert is active," Kotora warned.

Broad Reach Beyond Agrofert

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

In the outskirts of Prague, a medical facility towers over 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, controlled by Babis.

Hartenberg also runs a network of fertility centers, as well as a flower shop network, Flamengo, and an underwear retailer, Astratex.

The footprint of Babis into every facet of Czech life is broad. And as prime minister, for the second time, it is set to grow broader.