Czech Billionaire Takes PM Post, Pledging to Sever Corporate Holdings
Entrepreneur Andrej Babis has taken office as the Czech Republic's new head of government, with his government expected to be appointed in the coming days.
His confirmation followed a key condition from President Petr Pavel – a formal commitment by Babis to relinquish command over his sprawling agribusiness and chemical holding company, Agrofert.
"I vow to be a prime minister who defends the interests of every citizen, at home and abroad," stated Babis after the event at Prague Castle.
"A leader who will work to transform the Czech Republic the finest location to live on the entire planet."
High Aspirations and a Vast Business Presence
These are high-reaching aspirations, but Babis, 71, is familiar with large-scale thinking.
Agrofert is so firmly entrenched in the Czech economic fabric that there is even a dedicated app to help shoppers bypass purchasing products made by the group's more than 200 subsidiaries.
If a product – for example, frankfurters from Kostelecké uzeniny or sliced bread from Penam – falls under an Agrofert company, a warning symbol shows up.
Babis, who was formerly 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 Promise of Withdrawal
If he honors his promise to withdraw from the company he built from scratch, he will stop gaining from the sale of any Agrofert product – ranging from processed meats to agricultural chemicals.
As prime minister, he states he will have no information of the conglomerate's fiscal condition, nor any ability to sway its prospects.
Governmental decisions on state contracts or subsidies – whether national or EU-funded – will be made without regard to a company he will have severed ties with or profit from, he emphasizes.
Instead, he explains that Agrofert, valued at $4.3bn (£3.3bn), will be placed in a trust managed by an third-party manager, where it will remain until his death. At that point, it will transfer to his children.
This arrangement, he commented in a social media post, went "exceeded" the demands of Czech law.
Unanswered Questions
The legal nature of this trust has yet to be clarified – a trust under Czech law, or one established overseas? The notion of a "fully independent trust" does not exist in Czech statutory law, and an battalion of attorneys will be necessary to design an solution that is functional.
Doubts from Observers
Critics, including Transparency International, are still skeptical.
"Such a trust is not a solution," argued David Kotora, the head of Transparency International's Czech branch, in an interview.
"True separation is absent. He is familiar with the managers. He knows Agrofert's range of businesses. From an position of power, even at a EU level, he could possibly act in matters that would impact the sector in which Agrofert functions," Kotora cautioned.
Extensive Influence Extending Past 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 owned by 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 operates a network of fertility centers, as well as a flower shop network, Flamengo, and an underwear retailer, Astratex.
The reach of Babis into every facet of Czech life is extensive. And as prime minister, for the second time, it is poised to become more extensive.