A Czech Billionaire Secures PM Office, Pledging to Cut Business Empire

Tycoon Andrej Babis has taken office as the Czech Republic's new premier, with his government anticipated to take their posts shortly.

His appointment followed a key condition from President Petr Pavel – a formal assurance by Babis to relinquish control over his extensive food-processing, agriculture and chemicals group, Agrofert.

"I promise to be a prime minister who upholds the interests of every citizen, both locally and globally," stated Babis following the ceremony at Prague Castle.

"A leader 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 lofty ambitions, but Babis, 71, is familiar with large-scale thinking.

Agrofert is so thoroughly integrated in the Czech business landscape that there is even a dedicated app to help shoppers avoid purchasing products made by the group's over two hundred subsidiaries.

If a product – for example, frankfurters from Kostelecké uzeniny or sliced bread from Penam – belongs to an Agrofert company, a thumbs-down symbol is displayed.

Babis, who was formerly prime minister for four years until 2021, has adopted more right-leaning positions in recent years and his cabinet will include members of the right-wing SPD party and the EU-skeptical "Motorists for Themselves" party.

The Pledge of Divestment

If he fulfills his pledge to divest from the company he built from scratch, he will cease to profit from the sale of any Agrofert product – from frankfurters to fertiliser.

As prime minister, he claims he will have no insight of the conglomerate's financial health, nor any ability to affect its fortunes.

Governmental decisions on state contracts or subsidies – whether national or EU-funded – will be made independently of a company he will have severed ties with or profit from, he adds.

Instead, he says that Agrofert, valued at $4.3bn (£3.3bn), will be transferred to a fiduciary structure managed by an independent administrator, where it will stay until his death. At that point, it will transfer to his children.

This arrangement, he stated in a social media post, went "well above" the stipulations 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 "blind trust" has no basis in Czech legislation, and an battalion of attorneys will be needed to devise an structure that works.

Doubts from Watchdogs

Critics, including Transparency International, continue to doubt.

"A blind trust is an inadequate measure," said David Kotora, the head of Transparency International's Czech branch, in an interview.

"There's no separation. He undoubtedly is acquainted with the managers. He knows Agrofert's portfolio. From an high office, even at a European level, he could potentially influence in matters that would affect the sector in which Agrofert operates," Kotora cautioned.

Broad Reach Extending Past Agrofert

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

In the outskirts of Prague, a medical facility towers over the O2 arena. While it is the property of a company called FutureLife a.s, that company is controlled by Hartenberg Holding, and Hartenberg Holding is, in turn, controlled 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 influence of Babis into multiple areas of Czech life is extensive. And as prime minister, for the second occasion, it is about to get more extensive.