Czech Wealthy Magnate Takes PM Office, Vowing to Disentangle Business Holdings

Tycoon Andrej Babis has officially become the Czech Republic's new prime minister, with his complete ministerial team slated to take their posts shortly.

His confirmation came after a fundamental stipulation from President Petr Pavel – a formal commitment by Babis to relinquish oversight over his extensive agribusiness and chemical group, Agrofert.

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

"A leader who will work to make the Czech Republic the top destination to live on the whole globe."

High Aspirations and a Far-Reaching Business Presence

These are lofty ambitions, but Babis, 71, is accustomed to large-scale thinking.

Agrofert is so thoroughly integrated in the Czech commercial ecosystem that there is even a specialized application to help shoppers bypass purchasing products made by the group's numerous subsidiaries.

If a product – for example, frankfurters from Kostelecké uzeniny or packaged bread from Penam – is part of an Agrofert company, a warning symbol shows up.

Babis, who held the role of prime minister for four years until 2021, has moved rightward in recent years and his cabinet will include members of the right-wing SPD party and the Eurosceptic "Motorists for Themselves" party.

The Pledge of Separation

If he honors his pledge to divest from the company he founded and grew, he will no longer benefit from the sale of any Agrofert product – ranging from processed meats to agricultural chemicals.

As prime minister, he asserts he will have no insight of the conglomerate's economic status, nor any ability to affect its prospects.

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 gain financially from, he adds.

Instead, he says that Agrofert, valued at $4.3bn (£3.3bn), will be placed in a fiduciary structure managed by an third-party manager, where it will stay until his death. Then, it will be inherited by his children.

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

Clarification Needed

The legal nature of this trust remains unclear – a domestic trust, or one established overseas? The legal framework of a "fully independent trust" does not exist in Czech statutory law, and an team of legal experts will be needed to craft an arrangement that is legally sound.

Skepticism from Watchdogs

Watchdog organizations, including Transparency International, are still skeptical.

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

"The divide is insufficient. [Babis] obviously knows the managers. He knows Agrofert's portfolio. From an executive position, even at a European level, he could theoretically intervene in matters that would affect the sector in which Agrofert operates," Kotora cautioned.

Wide-Ranging Interests Beyond Agrofert

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

In the outskirts 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, controlled by Babis.

Hartenberg also runs a network of reproductive clinics, as well as a flower shop network, Flamengo, and an lingerie store chain, Astratex.

The influence of Babis into every facet of Czech life is extensive. And as prime minister, for the second time, it is set to grow more extensive.