Czech Tycoon Secures PM Office, Vowing to Cut Business Empire
Wealthy businessman Andrej Babis has been sworn in as the Czech Republic's new head of government, with his full cabinet anticipated to take their posts shortly.
His confirmation came after a key demand from President Petr Pavel – a official vow by Babis to cede control over his extensive agribusiness and chemical group, Agrofert.
"I vow to be a prime minister who champions the interests of every citizen, both locally and globally," affirmed Babis following the event at Prague Castle.
"A leader who will work to make the Czech Republic the finest location to live on the entire planet."
Lofty Ambitions and a Pervasive Business Presence
These are grandiose goals, but Babis, 71, is used to ambitious plans.
Agrofert is so thoroughly integrated in the Czech economic fabric that there is even a specialized application to help shoppers steer clear of purchasing products made by the group's more than 200 subsidiaries.
If a product – for example, Viennese-style sausages from Kostelecké uzeniny or packaged bread from Penam – is part of an Agrofert company, a negative symbol shows up.
Babis, who previously served as prime minister for four years until 2021, has moved rightward in recent years and his cabinet will include members of the far-right SPD and the Eurosceptic "Motorists for Themselves" party.
The Commitment of Divestment
If he upholds his promise to withdraw from the company he established, he will cease to profit from the sale of any Agrofert product – ranging from processed meats to agricultural chemicals.
As prime minister, he asserts he will have no information of the conglomerate's financial health, nor any capacity 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 have relinquished ownership of or profit from, he emphasizes.
Instead, he proposes that Agrofert, valued at $4.3bn (£3.3bn), will be transferred to a trust managed by an autonomous trustee, where it will stay until his death. Upon that event, it will transfer to his children.
This arrangement, he remarked in a social media post, went "well above" the stipulations of Czech law.
Outstanding Issues
What kind of trust remains unclear – a domestic trust, or one in a foreign jurisdiction? The legal framework of a "blind trust" does not exist in Czech legislation, and an battalion of attorneys will be necessary to craft an structure that is legally sound.
Criticism from Anti-Corruption Groups
Skeptics, 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 interview.
"True separation is absent. He obviously knows the managers. He knows Agrofert's holdings. From an high office, even at a European level, he could potentially influence in matters that would impact the sector in which Agrofert is active," Kotora advised.
Extensive Influence Beyond Agrofert
But it's not only food – and it's not only Agrofert.
In the eastern suburbs of Prague, a medical facility towers over 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 chain of fertility centers, as well as a flower shop network, Flamengo, and an underwear retailer, Astratex.
The influence of Babis into multiple areas of Czech life is wide. And as prime minister, for the second occasion, it is about to get even wider.