Czech Billionaire Assumes Prime Ministerial Role, Pledging to Cut Corporate Empire

Entrepreneur Andrej Babis has taken office as the Czech Republic's new premier, with his full cabinet anticipated to take their posts within days.

His selection came after a central demand from President Petr Pavel – a official assurance by Babis to give up control over his vast food-processing, agriculture and chemicals group, Agrofert.

"I commit to be a prime minister who champions the interests of the entire populace, at home and abroad," affirmed Babis after the ceremony at Prague Castle.

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

Grand Visions and a Far-Reaching Business Presence

These are lofty ambitions, but Babis, 71, is familiar with thinking big.

Agrofert is so deeply embedded in the Czech business landscape that there is even a mobile tool to help shoppers steer clear of purchasing products made by the group's numerous subsidiaries.

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

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 EU-skeptical "Drivers for Themselves" party.

The Pledge of Withdrawal

If he fulfills his promise to withdraw from the company he founded and grew, he will cease to profit from the sale of a single Agrofert product – ranging from processed meats to agricultural chemicals.

As prime minister, he asserts he will have no insight of the conglomerate's financial health, nor any power to affect its performance.

Governmental decisions on state contracts or subsidies – whether national or EU-funded – will be made with no consideration for a company he will have severed ties with or gain financially from, he emphasizes.

Instead, he proposes that Agrofert, valued at $4.3bn (£3.3bn), will be placed in a fiduciary structure managed by an autonomous trustee, where it will remain until his death. Upon that event, it will transfer to his children.

This arrangement, he commented in a social media post, went "exceeded" the stipulations of Czech law.

Unanswered Questions

What kind of trust remains unclear – a trust under Czech law, or one based abroad? The concept of a "fully independent trust" does not exist in Czech legislation, and an army of lawyers will be necessary to design an arrangement that is functional.

Doubts from Watchdogs

Watchdog organizations, 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.

"The divide is insufficient. [Babis] is familiar with the managers. He knows Agrofert's portfolio. From an high office, even at a European level, he could theoretically intervene in matters that would affect the sector 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 eastern suburbs 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, majority-owned by Babis.

Hartenberg also runs a chain of fertility centers, as well as a flower shop network, Flamengo, and an lingerie store chain, Astratex.

The footprint of Babis into multiple areas of Czech life is broad. And as prime minister, for the second time, it is about to get broader.