Czech Wealthy Magnate Takes PM Post, Vowing to Sever Business Interests
Tycoon Andrej Babis has taken office as the nation's new premier, with his full cabinet anticipated to take their posts in the coming days.
His selection followed a key condition from President Petr Pavel – a formal vow by Babis to give up control over his vast food-processing, agriculture and chemicals conglomerate, Agrofert.
"I promise to be a prime minister who defends the interests of every citizen, at home and abroad," stated 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."
Lofty Ambitions and a Pervasive Business Presence
These are high-reaching aspirations, but Babis, 71, is used to large-scale thinking.
Agrofert is so deeply embedded in the Czech commercial ecosystem that there is even a dedicated app to help shoppers bypass 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 thumbs-down symbol appears.
Babis, who previously served as prime minister for four years until 2021, has shifted to the right in recent years and his cabinet will include members of the right-wing SPD party and the Eurosceptic "Drivers for Themselves" party.
The Commitment of Divestment
If he honors his vow to separate himself from the company he built from scratch, he will no longer benefit from the sale of any Agrofert product – from frankfurters to fertiliser.
As prime minister, he asserts he will have no information of the conglomerate's economic status, nor any ability to influence its prospects.
Administrative decisions on government procurement or subsidies – whether Czech or European – will be made without regard to a company he will have relinquished ownership of or gain financially 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. At that point, it will transfer to his children.
This arrangement, he remarked in a social media post, went "far beyond" the stipulations of Czech law.
Clarification Needed
The legal nature of this trust remains unclear – a Czech trust, or one based abroad? The notion of a "fully independent trust" does not exist in Czech statutory law, and an team of legal experts will be required to craft an arrangement that is legally sound.
Criticism from Anti-Corruption Groups
Skeptics, including Transparency International, remain unconvinced.
"A blind trust is not the answer," stated David Kotora, the head of Transparency International's Czech branch, in an interview.
"There's no separation. [Babis] is familiar with the managers. He knows Agrofert's holdings. From an executive position, even at a EU level, he could theoretically intervene in matters that would affect the sector in which Agrofert operates," Kotora advised.
Broad Reach Beyond Agrofert
But it's not only food – and it's not just Agrofert.
In the outskirts of Prague, a medical facility 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, controlled by Babis.
Hartenberg also manages a network of fertility centers, as well as a florist chain, Flamengo, and an lingerie store chain, Astratex.
The reach of Babis into every facet of Czech life is extensive. And as prime minister, for the second occasion, it is poised to become more extensive.
