Czech Billionaire Takes PM Post, Promising to Sever Corporate Holdings

Wealthy businessman Andrej Babis has officially become the Czech Republic's new prime minister, with his full cabinet slated to assume their roles in the coming days.

His selection came after a central demand from President Petr Pavel – a formal assurance by Babis to cede oversight over his vast food-processing, agriculture and chemicals holding company, Agrofert.

"I promise to be a prime minister who defends the interests of all our citizens, at home and abroad," declared Babis after the swearing-in at Prague Castle.

"A prime minister who will work to establish the Czech Republic the finest location to live on the whole globe."

Lofty Ambitions and a Far-Reaching Corporate Footprint

These are lofty ambitions, but Babis, 71, is used to thinking big.

Agrofert is so firmly entrenched in the Czech economic fabric that there is even a specialized application to help shoppers steer clear of 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 – belongs to an Agrofert company, a thumbs-down symbol shows up.

Babis, who previously served as 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 Eurosceptic "Drivers for Themselves" party.

The Pledge of Separation

If he fulfills his promise to withdraw 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 knowledge of the conglomerate's economic status, nor any ability to affect its prospects.

Governmental decisions on public tenders or subsidies – whether Czech or European – will be made independently of a company he will have relinquished ownership of or profit from, he further notes.

Instead, he says that Agrofert, worth an estimated $4.3bn (£3.3bn), will be placed in a trust managed by an autonomous trustee, where it will stay until his death. Then, it will transfer 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 remains unclear – a Czech trust, or one in a foreign jurisdiction? The notion of a "fully independent trust" has no basis in Czech statutory law, and an team of legal experts will be necessary to design an structure that is legally sound.

Skepticism from Anti-Corruption Groups

Critics, including Transparency International, continue to doubt.

"A blind trust is not a solution," argued David Kotora, the head of Transparency International's Czech branch, in an comment.

"True separation is absent. [Babis] undoubtedly is acquainted with the managers. He knows Agrofert's holdings. From an executive position, even at a EU level, he could theoretically intervene in matters that would affect the sector in which Agrofert functions," Kotora cautioned.

Wide-Ranging Interests Beyond Agrofert

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

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

Hartenberg also manages 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 occasion, it is poised to become broader.