Czech Billionaire Takes PM Office, Vowing to Sever Corporate Holdings

Tycoon Andrej Babis has taken office as the nation's new prime minister, with his full cabinet expected to take their posts within days.

His appointment came after a central stipulation from President Petr Pavel – a public vow by Babis to relinquish control over his extensive food-processing, agriculture and chemicals holding company, Agrofert.

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

"A prime minister who will work to establish the Czech Republic the best place to live on the entire planet."

High Aspirations and a Pervasive Corporate Footprint

These are high-reaching aspirations, but Babis, 71, is familiar with thinking big.

Agrofert is so deeply embedded in the Czech business landscape that there is even a dedicated app to help shoppers bypass 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 – falls under an Agrofert company, a negative symbol is displayed.

Babis, who previously served as prime minister for four years until 2021, has shifted to the right in recent years and his cabinet will feature members of the right-wing SPD party and the EU-skeptical "Drivers for Themselves" party.

The Pledge of Separation

If he fulfills his pledge to separate himself from the company he founded and grew, he will stop gaining from the sale of any Agrofert product – from frankfurters to fertiliser.

As prime minister, he asserts he will have no information of the conglomerate's financial health, nor any capacity to sway its fortunes.

State decisions on public tenders or subsidies – whether national or EU-funded – will be made independently of a company he will no longer own or profit from, he further notes.

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. At that point, it will transfer to his children.

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

Unanswered Questions

The legal nature of this trust is still uncertain – a domestic trust, or one in a foreign jurisdiction? The notion of a "blind trust" does not exist in Czech legislation, and an army of lawyers will be required to devise an structure that works.

Criticism from Watchdogs

Critics, including Transparency International, are still skeptical.

"Such a trust is not the answer," said David Kotora, the head of Transparency International's Czech branch, in an statement.

"There's no separation. He obviously knows the managers. He knows Agrofert's range of businesses. From an high office, even at a European level, he could possibly act in matters that would impact the industry in which Agrofert functions," Kotora advised.

Extensive Influence Beyond Agrofert

But it's not just food – and it's not just 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 network of reproductive clinics, as well as a florist chain, 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 poised to become broader.