A Czech Billionaire Takes Prime Ministerial Post, Promising to Cut Corporate Empire
Tycoon Andrej Babis has taken office as the Czech Republic's new premier, with his full cabinet anticipated to be appointed shortly.
His confirmation came after a fundamental stipulation from President Petr Pavel – a public commitment by Babis to give up oversight over his vast food-processing, agriculture and chemicals holding company, Agrofert.
"I promise to be a prime minister who defends the interests of every citizen, both locally and globally," stated Babis after the ceremony at Prague Castle.
"A leader who will work to make the Czech Republic the best place to live on the whole globe."
Lofty Ambitions and a Vast 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 mobile tool to help shoppers bypass purchasing products made by the group's over two hundred subsidiaries.
If a product – for example, frankfurters from Kostelecké uzeniny or sliced bread from Penam – is part of an Agrofert company, a warning 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 far-right SPD and the EU-skeptical "Motorists for Themselves" party.
The Commitment of Withdrawal
If he fulfills his pledge to separate himself from the company he established, he will no longer benefit from the sale of any Agrofert product – from frankfurters to fertiliser.
As prime minister, he states he will have no information of the conglomerate's economic status, nor any power to sway its performance.
Administrative decisions on government procurement or subsidies – whether national or EU-funded – will be made independently of a company he will no longer own or profit from, he adds.
Instead, he says that Agrofert, valued at $4.3bn (£3.3bn), will be placed in a fiduciary structure managed by an autonomous trustee, where it will stay until his death. Upon that event, it will pass to his children.
This arrangement, he commented in a online address, went "well above" the requirements of Czech law.
Clarification Needed
What kind of trust remains unclear – a domestic trust, or one established overseas? The concept of a "blind trust" has no basis in Czech legislation, and an team of legal experts will be necessary to design an structure that is legally sound.
Doubts from Observers
Watchdog organizations, including Transparency International, continue to doubt.
"A blind trust is not the answer," stated David Kotora, the head of Transparency International's Czech branch, in an statement.
"True separation is absent. [Babis] undoubtedly is acquainted with the managers. He knows Agrofert's range of businesses. From an high office, even at a European level, he could theoretically intervene in matters that would impact the industry in which Agrofert is active," Kotora cautioned.
Broad Reach Beyond Agrofert
But it's not just food – and it's not only Agrofert.
In the outskirts of Prague, a medical facility stands near the O2 arena. While it is the property of a company called FutureLife a.s, that company is majority-owned by Hartenberg Holding, and Hartenberg Holding is, in turn, controlled by Babis.
Hartenberg also runs a network of reproductive clinics, as well as a florist chain, Flamengo, and an underwear retailer, Astratex.
The influence of Babis into multiple areas of Czech life is broad. And as prime minister, for the second occasion, it is poised to become more extensive.
