A Czech Tycoon Takes PM Office, Pledging to Sever Business Empire
Tycoon Andrej Babis has been sworn in as the nation's new premier, with his complete ministerial team anticipated to assume their roles shortly.
His confirmation followed a fundamental stipulation from President Petr Pavel – a formal commitment by Babis to cede command over his extensive agribusiness and chemical holding company, Agrofert.
"I promise to be a prime minister who upholds the interests of every citizen, at home and abroad," affirmed Babis after the swearing-in at Prague Castle.
"A leader who will work to establish the Czech Republic the best place to live on the whole globe."
Grand Visions and a Vast Corporate Footprint
These are high-reaching aspirations, but Babis, 71, is accustomed to large-scale thinking.
Agrofert is so thoroughly integrated in the Czech economic fabric that there is even a dedicated app to help shoppers avoid purchasing products made by the group's numerous subsidiaries.
If a product – for example, frankfurters from Kostelecké uzeniny or sliced bread from Penam – belongs to an Agrofert company, a thumbs-down symbol appears.
Babis, who previously served as prime minister for four years until 2021, has adopted more right-leaning positions in recent years and his cabinet will incorporate members of the far-right SPD and the EU-skeptical "Drivers for Themselves" party.
The Promise of Separation
If he upholds his vow to divest from the company he founded and grew, he will no longer benefit from the sale of a single Agrofert product – ranging from processed meats to agricultural chemicals.
As prime minister, he claims he will have no information of the conglomerate's economic status, nor any power to sway its performance.
Governmental decisions on state contracts or subsidies – whether national or EU-funded – will be made without regard to a company he will no longer own or profit from, he further notes.
Instead, he proposes that Agrofert, worth an estimated $4.3bn (£3.3bn), will be transferred to a fiduciary structure managed by an independent administrator, where it will remain until his death. Upon that event, it will be inherited by his children.
This arrangement, he remarked in a online address, went "exceeded" the requirements of Czech law.
Outstanding Issues
The legal nature of this trust is still uncertain – a Czech trust, or one based abroad? The concept of a "fully independent trust" has no basis in Czech legislation, and an team of legal experts will be required to devise an arrangement that works.
Criticism from Anti-Corruption Groups
Skeptics, including Transparency International, are still skeptical.
"Such a trust is an inadequate measure," argued David Kotora, the head of Transparency International's Czech branch, in an comment.
"The divide is insufficient. [Babis] undoubtedly is acquainted with the managers. He knows Agrofert's holdings. From an position of power, even at a EU level, he could possibly act in matters that would impact the sector in which Agrofert is active," Kotora advised.
Broad Reach Beyond Agrofert
But it's not only food – and it's not just Agrofert.
In the outskirts of Prague, a private health clinic 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, majority-owned by Babis.
Hartenberg also manages a chain of reproductive clinics, as well as a flower shop network, Flamengo, and an underwear retailer, Astratex.
The influence of Babis into multiple areas of Czech life is wide. And as prime minister, for the second occasion, it is about to get more extensive.