Czech Wealthy Magnate Assumes Prime Ministerial Office, Pledging to Cut Commercial Empire

Entrepreneur Andrej Babis has officially become the Czech Republic's new premier, with his government slated to be appointed in the coming days.

His appointment followed a central demand from President Petr Pavel – a official assurance by Babis to cede command over his vast food-processing, agriculture and chemicals holding company, Agrofert.

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

"A prime minister who will work to transform the Czech Republic the finest location to live on the whole globe."

Lofty Ambitions and a Vast Corporate Footprint

These are grandiose goals, but Babis, 71, is used to ambitious plans.

Agrofert is so thoroughly integrated in the Czech commercial ecosystem 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, Viennese-style sausages from Kostelecké uzeniny or packaged bread from Penam – belongs to an Agrofert company, a thumbs-down symbol shows up.

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 far-right SPD and the Eurosceptic "Motorists for Themselves" party.

The Commitment of Divestment

If he fulfills his vow to divest from the company he built from scratch, he will cease to profit from the sale of a single Agrofert product – from frankfurters to fertiliser.

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

Administrative decisions on government procurement or subsidies – whether Czech or European – will be made independently of a company he will have relinquished ownership of or profit from, he emphasizes.

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 stay until his death. Then, it will transfer to his children.

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

Clarification Needed

The legal nature of this trust remains unclear – a domestic trust, or one in a foreign jurisdiction? The legal framework of a "fully independent trust" does not exist in Czech statutory law, and an army of lawyers will be necessary to devise an solution that is functional.

Doubts from Watchdogs

Critics, including Transparency International, remain unconvinced.

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

"The divide is insufficient. He obviously knows the managers. He knows Agrofert's holdings. From an executive position, even at a EU level, he could potentially influence in matters that would affect the industry in which Agrofert is active," Kotora advised.

Wide-Ranging Interests Beyond Agrofert

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

In the eastern suburbs of Prague, a private health clinic stands near 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, majority-owned by Babis.

Hartenberg also runs 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 time, it is set to grow even wider.