A Czech Tycoon Takes PM Post, Promising to Sever Commercial Empire
Tycoon Andrej Babis has officially become the Czech Republic's new head of government, with his complete ministerial team expected to be appointed in the coming days.
His confirmation was contingent upon a central demand from President Petr Pavel – a public vow by Babis to relinquish command over his extensive food-processing, agriculture and chemicals holding company, Agrofert.
"I vow to be a prime minister who defends the interests of the entire populace, both locally and globally," affirmed Babis after the swearing-in at Prague Castle.
"A prime minister who will work to make the Czech Republic the best place to live on the whole globe."
Lofty Ambitions and a Far-Reaching Business Presence
These are high-reaching aspirations, but Babis, 71, is familiar with large-scale thinking.
Agrofert is so firmly entrenched in the Czech commercial ecosystem that there is even a mobile tool to help shoppers steer clear of purchasing products made by the group's numerous subsidiaries.
If a product – for example, Viennese-style sausages from Kostelecké uzeniny or packaged bread from Penam – belongs to an Agrofert company, a warning symbol appears.
Babis, who held the role of prime minister for four years until 2021, has moved rightward in recent years and his cabinet will incorporate members of the right-wing SPD party and the EU-skeptical "Motorists for Themselves" party.
The Promise of Divestment
If he upholds his pledge to divest from the company he built from scratch, he will cease to profit from the sale of any Agrofert product – from frankfurters to fertiliser.
As prime minister, he states he will have no insight of the conglomerate's financial health, nor any ability to affect its fortunes.
Governmental decisions on government procurement or subsidies – whether Czech or European – will be made with no consideration for a company he will have relinquished ownership of or profit from, he adds.
Instead, he says that Agrofert, worth an estimated $4.3bn (ÂŁ3.3bn), will be placed in a fiduciary structure managed by an third-party manager, where it will stay until his death. Then, it will transfer to his children.
This arrangement, he remarked in a social media post, went "well above" the requirements of Czech law.
Outstanding Issues
The specific type of trust is still uncertain – a domestic trust, or one in a foreign jurisdiction? The concept of a "blind trust" does not exist in Czech legislation, and an army of lawyers will be required to devise an solution that works.
Skepticism from Anti-Corruption Groups
Skeptics, including Transparency International, continue to doubt.
"A blind trust is an inadequate measure," said David Kotora, the head of Transparency International's Czech branch, in an comment.
"True separation is absent. He is familiar with the managers. He knows Agrofert's holdings. From an position of power, even at a European level, he could potentially influence in matters that would affect the industry in which Agrofert operates," Kotora warned.
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 stands near 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 chain of reproductive clinics, as well as a florist chain, Flamengo, and an underwear retailer, Astratex.
The footprint of Babis into all corners of Czech life is broad. And as prime minister, for the second time, it is set to grow broader.
