A Czech Billionaire Assumes Prime Ministerial Post, Vowing to Cut Corporate Holdings

Tycoon Andrej Babis has been sworn in as the nation's new prime minister, with his complete ministerial team expected to be appointed in the coming days.

His confirmation followed a fundamental stipulation from President Petr Pavel – a formal commitment by Babis to give up control over his vast food-processing, agriculture and chemicals conglomerate, Agrofert.

"I commit to be a prime minister who champions the interests of every citizen, domestically and internationally," declared Babis following the ceremony at Prague Castle.

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

Grand Visions and a Far-Reaching Corporate Footprint

These are high-reaching aspirations, but Babis, 71, is familiar with large-scale thinking.

Agrofert is so firmly entrenched 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 over two hundred subsidiaries.

If a product – for example, Viennese-style sausages from Kostelecké uzeniny or sliced bread from Penam – falls under an Agrofert company, a thumbs-down symbol appears.

Babis, who held the role of prime minister for four years until 2021, has shifted to the right in recent years and his cabinet will feature members of the right-wing SPD party and the Eurosceptic "Motorists for Themselves" party.

The Commitment of Withdrawal

If he upholds his promise to separate himself from the company he established, he will cease to profit from the sale of a single Agrofert product – from frankfurters to fertiliser.

As prime minister, he claims he will have no information of the conglomerate's fiscal condition, nor any capacity to affect its performance.

Administrative decisions on public tenders 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 explains that Agrofert, worth an estimated $4.3bn (£3.3bn), will be placed in a fiduciary structure managed by an independent administrator, where it will remain until his death. Then, it will transfer to his children.

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

Outstanding Issues

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

Skepticism from Anti-Corruption Groups

Critics, 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 interview.

"True separation is absent. He undoubtedly is acquainted with the managers. He knows Agrofert's portfolio. From an executive position, even at a EU level, he could possibly act in matters that would affect the sector in which Agrofert operates," Kotora cautioned.

Wide-Ranging Interests Extending Past Agrofert

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

In the eastern suburbs of Prague, a medical facility stands near 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 operates a chain of fertility centers, as well as a flower shop network, Flamengo, and an lingerie store chain, Astratex.

The footprint of Babis into every facet of Czech life is extensive. And as prime minister, for the second time, it is poised to become even wider.