Czech Billionaire Assumes Prime Ministerial Role, Pledging to Sever Commercial Empire

Entrepreneur Andrej Babis has officially become the Czech Republic's new head of government, with his complete ministerial team anticipated to take their posts within days.

His selection followed a fundamental condition from President Petr Pavel – a formal commitment by Babis to give up control over his vast food-processing, agriculture and chemicals holding company, Agrofert.

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

"A leader who will work to establish the Czech Republic the finest location to live on the face of the Earth."

High Aspirations and a Pervasive 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 specialized application to help shoppers steer clear of purchasing products made by the group's over two hundred subsidiaries.

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

The Pledge of Withdrawal

If he upholds his promise to withdraw from the company he built from scratch, he will no longer benefit from the sale of a single Agrofert product – from frankfurters to fertiliser.

As prime minister, he asserts he will have no insight of the conglomerate's fiscal condition, nor any ability to affect its prospects.

Governmental decisions on government procurement or subsidies – whether national or EU-funded – will be made with no consideration for a company he will have relinquished ownership of or profit from, he adds.

Instead, he says that Agrofert, valued at $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 transfer to his children.

This arrangement, he commented in a social media post, went "well above" the stipulations of Czech law.

Unanswered Questions

The legal nature of this trust has yet to be clarified – a trust under Czech law, or one in a foreign jurisdiction? The concept of a "blind trust" is not recognized in Czech statutory law, and an battalion of attorneys will be necessary to craft an arrangement that is functional.

Criticism from Watchdogs

Watchdog organizations, including Transparency International, are still skeptical.

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

"There's no separation. He undoubtedly is acquainted with the managers. He knows Agrofert's holdings. From an position of power, even at a EU level, he could theoretically intervene in matters that would affect the industry in which Agrofert functions," Kotora cautioned.

Extensive Influence Extending Past Agrofert

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

In the eastern suburbs 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 controlled by Hartenberg Holding, and Hartenberg Holding is, in turn, majority-owned by Babis.

Hartenberg also runs a chain of reproductive clinics, as well as a flower shop network, Flamengo, and an underwear retailer, Astratex.

The reach of Babis into multiple areas of Czech life is wide. And as prime minister, for the second occasion, it is poised to become more extensive.