Czech Wealthy Magnate Assumes Prime Ministerial Role, Promising to Cut Corporate Empire
Entrepreneur Andrej Babis has been sworn in as the nation's new premier, with his government slated to assume their roles shortly.
His appointment followed a key condition from President Petr Pavel – a official vow by Babis to relinquish control over his extensive agribusiness and chemical conglomerate, Agrofert.
"I vow to be a prime minister who defends the interests of every citizen, at home and abroad," declared 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 Far-Reaching Corporate Footprint
These are grandiose goals, but Babis, 71, is used to thinking big.
Agrofert is so thoroughly integrated in the Czech economic fabric that there is even a specialized application to help shoppers avoid purchasing products made by the group's numerous subsidiaries.
If a product – for example, Viennese-style sausages from Kostelecké uzeniny or sliced bread from Penam – falls under an Agrofert company, a warning symbol is displayed.
Babis, who was formerly prime minister for four years until 2021, has adopted more right-leaning positions in recent years and his cabinet will include members of the far-right SPD and the Eurosceptic "Drivers for Themselves" party.
The Pledge of Divestment
If he honors his vow to divest from the company he founded and grew, he will stop gaining from the sale of any Agrofert product – ranging from processed meats to agricultural chemicals.
As prime minister, he claims he will have no insight of the conglomerate's economic status, nor any capacity to sway its prospects.
State decisions on public tenders or subsidies – whether national or EU-funded – will be made independently of a company he will have severed ties with or profit from, he further notes.
Instead, he explains that Agrofert, valued at $4.3bn (£3.3bn), will be placed in a fiduciary structure managed by an independent administrator, where it will remain until his death. Then, it will pass to his children.
This arrangement, he remarked in a Facebook video, went "far beyond" the requirements of Czech law.
Unanswered Questions
The specific type of trust is still uncertain – a trust under Czech law, or one established overseas? The legal framework of a "blind trust" does not exist in Czech statutory law, and an army of lawyers will be required to devise an arrangement that works.
Doubts from Anti-Corruption Groups
Critics, 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.
"There's no separation. He obviously knows the managers. He knows Agrofert's range of businesses. From an executive position, even at a European level, he could possibly act in matters that would affect the sector in which Agrofert functions," Kotora cautioned.
Wide-Ranging Interests Extending Past Agrofert
But it's not only food – and it's not just Agrofert.
In the eastern suburbs 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, majority-owned by Babis.
Hartenberg also operates a network of fertility centers, as well as a flower shop network, Flamengo, and an underwear retailer, Astratex.
The influence of Babis into all corners of Czech life is extensive. And as prime minister, for the second time, it is poised to become even wider.
