A Czech Wealthy Magnate Takes PM Role, Promising to Cut Corporate Empire

Tycoon Andrej Babis has taken office as the Czech Republic's new premier, with his complete ministerial team slated to be appointed within days.

His confirmation came after a central demand from President Petr Pavel – a official assurance by Babis to give up oversight over his vast agribusiness and chemical group, Agrofert.

"I vow to be a prime minister who defends the interests of every citizen, at home and abroad," declared Babis after the swearing-in at Prague Castle.

"A prime minister who will work to transform the Czech Republic the top destination to live on the face of the Earth."

Grand Visions and a Vast Corporate Footprint

These are high-reaching aspirations, but Babis, 71, is accustomed to ambitious plans.

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 packaged bread from Penam – is part of an Agrofert company, a thumbs-down symbol shows up.

Babis, who previously served as prime minister for four years until 2021, has adopted more right-leaning positions in recent years and his cabinet will incorporate members of the far-right SPD and the Eurosceptic "Motorists for Themselves" party.

The Commitment of Withdrawal

If he fulfills his promise to withdraw from the company he founded and grew, he will no longer benefit from the sale of a single Agrofert product – from frankfurters to fertiliser.

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

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 emphasizes.

Instead, he says that Agrofert, valued at $4.3bn (£3.3bn), will be transferred to a trust managed by an autonomous trustee, where it will stay until his death. Upon that event, it will pass to his children.

This arrangement, he stated in a social media post, went "far beyond" the stipulations of Czech law.

Outstanding Issues

What kind of trust remains unclear – a trust under Czech law, or one established overseas? The legal framework of a "fully independent trust" has no basis in Czech statutory law, and an battalion of attorneys will be needed to devise an solution that is functional.

Doubts from Observers

Critics, including Transparency International, continue to doubt.

"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 high office, even at a EU level, he could potentially influence in matters that would impact the sector in which Agrofert is active," Kotora advised.

Broad Reach Extending Past Agrofert

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

In the outskirts of Prague, a private health clinic 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, majority-owned by Babis.

Hartenberg also manages a network of reproductive clinics, 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 occasion, it is poised to become broader.