A Czech Wealthy Magnate Secures Prime Ministerial Post, Vowing to Cut Corporate Interests

Wealthy businessman Andrej Babis has officially become the Czech Republic's new head of government, with his government slated to take their posts within days.

His selection was contingent upon a fundamental demand from President Petr Pavel – a formal vow by Babis to relinquish control over his vast food-processing, agriculture and chemicals conglomerate, Agrofert.

"I commit to be a prime minister who upholds the interests of the entire populace, at home and abroad," affirmed Babis after the event at Prague Castle.

"A prime minister who will work to transform the Czech Republic the best place to live on the entire planet."

High Aspirations and a Vast Corporate Footprint

These are grandiose goals, but Babis, 71, is used to thinking big.

Agrofert is so firmly entrenched in the Czech economic fabric that there is even a specialized application to help shoppers avoid 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 – falls under an Agrofert company, a negative symbol is displayed.

Babis, who was formerly prime minister for four years until 2021, has adopted more right-leaning positions in recent years and his cabinet will feature members of the far-right SPD and the EU-skeptical "Motorists for Themselves" party.

The Commitment of Separation

If he honors his pledge to divest from the company he established, he will stop gaining from the sale of any Agrofert product – ranging from processed meats to agricultural chemicals.

As prime minister, he claims he will have no insight of the conglomerate's economic status, nor any ability to influence its performance.

State decisions on public tenders or subsidies – whether Czech or European – will be made without regard to a company he will have relinquished ownership of or profit from, he emphasizes.

Instead, he says that Agrofert, worth an estimated $4.3bn (£3.3bn), will be transferred to a fiduciary structure managed by an independent administrator, where it will remain until his death. At that point, it will transfer to his children.

This arrangement, he commented in a Facebook video, went "exceeded" the stipulations of Czech law.

Unanswered Questions

The legal nature of this trust remains unclear – a Czech 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 required to craft an solution that works.

Criticism from Observers

Skeptics, including Transparency International, are still skeptical.

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

"True separation is absent. He obviously knows the managers. He knows Agrofert's portfolio. From an high office, even at a European level, he could possibly act in matters that would affect the industry in which Agrofert is active," Kotora cautioned.

Broad Reach Beyond Agrofert

But it's not just 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 controlled by Hartenberg Holding, and Hartenberg Holding is, in turn, controlled by Babis.

Hartenberg also operates a network of fertility centers, as well as a flower shop network, Flamengo, and an lingerie store chain, 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 broader.