Czech Wealthy Magnate Assumes PM Post, Pledging to Disentangle Business Empire

Wealthy businessman Andrej Babis has been sworn in as the Czech Republic's new premier, with his full cabinet slated to take their posts in the coming days.

His appointment followed a key condition from President Petr Pavel – a formal assurance by Babis to cede 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, domestically and internationally," affirmed Babis after the swearing-in at Prague Castle.

"A prime minister who will work to establish the Czech Republic the best place to live on the face of the Earth."

Grand Visions and a Far-Reaching Corporate Footprint

These are grandiose goals, but Babis, 71, is used to ambitious plans.

Agrofert is so deeply embedded in the Czech economic fabric that there is even a mobile tool to help shoppers bypass purchasing products made by the group's over two hundred subsidiaries.

If a product – for example, Viennese-style sausages from Kostelecké uzeniny or packaged bread from Penam – is part of an Agrofert company, a thumbs-down symbol is displayed.

Babis, who held the role of prime minister for four years until 2021, has shifted to the right in recent years and his cabinet will include members of the right-wing SPD party and the Eurosceptic "Motorists for Themselves" party.

The Commitment of Separation

If he upholds his promise to divest from the company he founded and grew, he will no longer benefit from the sale of a single Agrofert product – ranging from processed meats to agricultural chemicals.

As prime minister, he states he will have no information of the conglomerate's economic status, nor any ability to sway its prospects.

State decisions on state contracts or subsidies – whether Czech or European – will be made independently of a company he will no longer own or gain financially from, he adds.

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 remain until his death. Then, it will pass to his children.

This arrangement, he commented in a online address, went "far beyond" the requirements of Czech law.

Unanswered Questions

The specific type of trust remains unclear – a trust under Czech law, or one in a foreign jurisdiction? The legal framework of a "fully independent trust" has no basis in Czech legislation, and an battalion of attorneys will be necessary to craft an solution that is legally sound.

Doubts from Observers

Critics, including Transparency International, are still skeptical.

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

"There's no separation. [Babis] obviously knows the managers. He knows Agrofert's holdings. From an high office, even at a EU level, he could possibly act in matters that would affect the industry in which Agrofert functions," Kotora advised.

Wide-Ranging Interests Beyond Agrofert

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

In the outskirts of Prague, a private health clinic towers over the O2 arena. While it is the property of a company called FutureLife a.s, that company is majority-owned by Hartenberg Holding, and Hartenberg Holding is, in turn, controlled by Babis.

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

The reach of Babis into every facet of Czech life is extensive. And as prime minister, for the second time, it is poised to become more extensive.