Czech Billionaire Takes PM Role, Vowing to Cut Commercial Interests

Wealthy businessman Andrej Babis has taken office as the Czech Republic's new prime minister, with his complete ministerial team slated to take their posts in the coming days.

His confirmation followed a key condition from President Petr Pavel – a official commitment by Babis to relinquish control over his vast agribusiness and chemical conglomerate, Agrofert.

"I vow to be a prime minister who upholds the interests of every citizen, domestically and internationally," declared Babis after the ceremony at Prague Castle.

"A prime minister who will work to establish the Czech Republic the top destination to live on the entire planet."

Grand Visions and a Pervasive Corporate Footprint

These are high-reaching aspirations, but Babis, 71, is accustomed to thinking big.

Agrofert is so deeply embedded in the Czech economic fabric that there is even a dedicated app to help shoppers avoid 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 – falls under an Agrofert company, a thumbs-down symbol shows up.

Babis, who held the role of 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 EU-skeptical "Drivers for Themselves" party.

The Commitment of Separation

If he upholds his vow to separate himself from the company he built from scratch, he will no longer benefit from the sale of a single Agrofert product – ranging from processed meats to agricultural chemicals.

As prime minister, he asserts he will have no information of the conglomerate's fiscal condition, nor any ability to sway its performance.

State decisions on government procurement or subsidies – whether national or EU-funded – will be made with no consideration for a company he will no longer own or profit from, he adds.

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. Upon that event, it will be inherited by his children.

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

Outstanding Issues

The specific type of trust has yet to be clarified – a domestic trust, or one in a foreign jurisdiction? The notion of a "fully independent trust" has no basis in Czech statutory law, and an battalion of attorneys will be required to devise an arrangement that works.

Skepticism from Observers

Watchdog organizations, including Transparency International, are still skeptical.

"A blind trust is an inadequate measure," said David Kotora, the head of Transparency International's Czech branch, in an comment.

"There's no separation. He obviously knows the managers. He knows Agrofert's holdings. From an high office, even at a European level, he could possibly act in matters that would impact the industry in which Agrofert operates," Kotora advised.

Wide-Ranging Interests Extending Past Agrofert

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

In the eastern suburbs 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 operates a chain of reproductive clinics, as well as a florist chain, Flamengo, and an lingerie store chain, Astratex.

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