Czech Tycoon Assumes PM Office, Promising to Cut Business Empire
Tycoon Andrej Babis has been sworn in as the nation's new prime minister, with his government slated to take their posts within days.
His appointment was contingent upon a fundamental demand from President Petr Pavel – a official commitment by Babis to cede control over his extensive food-processing, agriculture and chemicals holding company, Agrofert.
"I vow to be a prime minister who upholds the interests of all our citizens, both locally and globally," declared Babis following the swearing-in at Prague Castle.
"A leader who will work to transform the Czech Republic the top destination to live on the entire planet."
Grand Visions and a Pervasive Business Presence
These are lofty ambitions, but Babis, 71, is used to thinking big.
Agrofert is so deeply embedded in the Czech commercial ecosystem that there is even a specialized application to help shoppers avoid purchasing products made by the group's more than 200 subsidiaries.
If a product – for example, frankfurters from Kostelecké uzeniny or sliced bread from Penam – falls under an Agrofert company, a negative symbol shows up.
Babis, who was formerly prime minister for four years until 2021, has adopted more right-leaning positions in recent years and his cabinet will feature members of the far-right SPD and the EU-skeptical "Motorists for Themselves" party.
The Commitment of Divestment
If he honors his pledge to withdraw from the company he established, he will cease to profit from the sale of any Agrofert product – from frankfurters to fertiliser.
As prime minister, he states he will have no information of the conglomerate's financial health, nor any power to influence its performance.
Governmental decisions on public tenders or subsidies – whether Czech or European – will be made with no consideration for a company he will have severed ties with or gain financially from, he emphasizes.
Instead, he explains that Agrofert, valued at $4.3bn (ÂŁ3.3bn), will be transferred to a trust managed by an independent administrator, where it will stay until his death. At that point, it will be inherited by his children.
This arrangement, he stated in a Facebook video, went "well above" the demands of Czech law.
Clarification Needed
The legal nature of this trust has yet to be clarified – a domestic trust, or one established overseas? The concept of a "fully independent trust" has no basis in Czech statutory law, and an army of lawyers will be necessary to craft an solution that works.
Skepticism from Watchdogs
Skeptics, including Transparency International, are still skeptical.
"A blind trust is an inadequate measure," argued David Kotora, the head of Transparency International's Czech branch, in an comment.
"There's no separation. He is familiar with 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 industry in which Agrofert functions," Kotora advised.
Extensive Influence Extending Past 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 owned by 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 network of fertility centers, as well as a flower shop network, Flamengo, and an underwear retailer, Astratex.
The footprint of Babis into multiple areas of Czech life is extensive. And as prime minister, for the second time, it is set to grow broader.
