Czech Wealthy Magnate Secures PM Office, Vowing to Sever Commercial Holdings

Wealthy businessman Andrej Babis has taken office as the Czech Republic's new prime minister, with his government slated to take their posts within days.

His appointment was contingent upon a central stipulation from President Petr Pavel – a public commitment by Babis to cede oversight over his sprawling food-processing, agriculture and chemicals group, Agrofert.

"I vow to be a prime minister who champions the interests of every citizen, both locally and globally," affirmed Babis following the swearing-in at Prague Castle.

"A prime minister who will work to make the Czech Republic the top destination to live on the face of the Earth."

Grand Visions and a Far-Reaching Business Presence

These are lofty ambitions, but Babis, 71, is used to thinking big.

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 numerous subsidiaries.

If a product – for example, Viennese-style sausages 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 moved rightward in recent years and his cabinet will feature members of the right-wing SPD party and the EU-skeptical "Drivers for Themselves" party.

The Pledge of Separation

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

As prime minister, he states he will have no insight of the conglomerate's financial health, nor any ability to affect its performance.

State decisions on public tenders or subsidies – whether Czech or European – will be made with no consideration for a company he will have severed ties with or profit from, he further notes.

Instead, he explains that Agrofert, worth an estimated $4.3bn (£3.3bn), will be placed in a trust managed by an independent administrator, where it will stay until his death. At that point, it will transfer to his children.

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

Clarification Needed

What kind of trust is still uncertain – a Czech trust, or one established overseas? The notion of a "fully independent trust" does not exist in Czech legislation, and an battalion of attorneys will be needed to craft an arrangement that is functional.

Doubts from Anti-Corruption Groups

Watchdog organizations, including Transparency International, continue to doubt.

"Such a trust is not the answer," said David Kotora, the head of Transparency International's Czech branch, in an interview.

"True separation is absent. [Babis] obviously knows the managers. He knows Agrofert's range of businesses. From an executive position, even at a EU level, he could possibly act in matters that would impact the sector in which Agrofert operates," Kotora cautioned.

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 controlled by Hartenberg Holding, and Hartenberg Holding is, in turn, controlled by Babis.

Hartenberg also manages 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 broad. And as prime minister, for the second time, it is about to get broader.