Czech Wealthy Magnate Takes PM Office, Promising to Cut Commercial Holdings

Wealthy businessman Andrej Babis has been sworn in as the Czech Republic's new prime minister, with his full cabinet anticipated to be appointed in the coming days.

His confirmation followed a fundamental stipulation from President Petr Pavel – a public assurance by Babis to cede control over his vast agribusiness and chemical conglomerate, Agrofert.

"I commit to be a prime minister who defends the interests of all our citizens, both locally and globally," affirmed Babis after the ceremony at Prague Castle.

"A leader who will work to transform the Czech Republic the finest location to live on the face of the Earth."

Lofty Ambitions and a Vast Business Presence

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

Agrofert is so thoroughly integrated in the Czech business landscape that there is even a specialized application to help shoppers avoid purchasing products made by the group's more than 200 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 was formerly 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 "Drivers for Themselves" party.

The Commitment of Divestment

If he honors his vow to divest from the company he founded and grew, he will stop gaining from the sale of a single Agrofert product – from frankfurters to fertiliser.

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

State decisions on government procurement or subsidies – whether national or EU-funded – will be made with no consideration for a company he will no longer own or profit from, he further notes.

Instead, he proposes that Agrofert, valued at $4.3bn (£3.3bn), will be transferred to a fiduciary structure managed by an independent administrator, where it will stay until his death. Upon that event, it will transfer to his children.

This arrangement, he stated in a Facebook video, went "far beyond" the requirements of Czech law.

Clarification Needed

The legal nature of this trust is still uncertain – a trust under Czech law, or one based abroad? The legal framework of a "blind trust" does not exist in Czech legislation, and an team of legal experts will be necessary to devise an solution that is functional.

Criticism from Observers

Skeptics, including Transparency International, continue to doubt.

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

"The divide is insufficient. [Babis] undoubtedly is acquainted with the managers. He knows Agrofert's portfolio. From an position of power, even at a European level, he could theoretically intervene in matters that would impact the industry in which Agrofert operates," Kotora cautioned.

Extensive Influence Extending Past Agrofert

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

In the eastern suburbs of Prague, a medical facility stands near 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, majority-owned by Babis.

Hartenberg also operates a network of fertility centers, as well as a florist chain, Flamengo, and an underwear retailer, Astratex.

The influence of Babis into every facet of Czech life is wide. And as prime minister, for the second occasion, it is poised to become even wider.