Czech Tycoon Secures Prime Ministerial Post, Promising to Sever Corporate Holdings
Entrepreneur Andrej Babis has officially become the Czech Republic's new head of government, with his complete ministerial team slated to assume their roles within days.
His selection was contingent upon a central condition from President Petr Pavel – a official vow by Babis to relinquish command over his sprawling food-processing, agriculture and chemicals holding company, Agrofert.
"I vow to be a prime minister who champions the interests of the entire populace, both locally and globally," stated Babis after the swearing-in at Prague Castle.
"A prime minister who will work to make the Czech Republic the top destination to live on the whole globe."
High Aspirations and a Vast Business Presence
These are grandiose goals, but Babis, 71, is accustomed to large-scale thinking.
Agrofert is so deeply embedded in the Czech commercial ecosystem that there is even a dedicated app to help shoppers steer clear of purchasing products made by the group's numerous subsidiaries.
If a product – for example, Viennese-style sausages from Kostelecké uzeniny or sliced bread from Penam – belongs to an Agrofert company, a negative symbol shows up.
Babis, who held the role of prime minister for four years until 2021, has moved rightward in recent years and his cabinet will feature members of the far-right SPD and the Eurosceptic "Drivers for Themselves" party.
The Pledge of Separation
If he honors his promise to withdraw from the company he built from scratch, he will no longer benefit from the sale of any Agrofert product – from frankfurters to fertiliser.
As prime minister, he asserts he will have no knowledge of the conglomerate's economic status, nor any ability to influence its performance.
Administrative decisions on government procurement or subsidies – whether Czech or European – will be made with no consideration for a company he will no longer own 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. Then, it will be inherited by his children.
This arrangement, he commented in a social media post, went "exceeded" the demands of Czech law.
Outstanding Issues
What kind of trust has yet to be clarified – a domestic trust, or one based abroad? The legal framework of a "blind trust" has no basis in Czech statutory law, and an team of legal experts will be necessary to design an solution that works.
Criticism from Anti-Corruption Groups
Critics, 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 interview.
"The divide is insufficient. He is familiar with the managers. He knows Agrofert's holdings. From an position of power, even at a European level, he could possibly act in matters that would affect the sector in which Agrofert is active," Kotora warned.
Broad Reach Extending Past Agrofert
But it's not only food – and it's not only Agrofert.
In the eastern suburbs of Prague, a private health clinic stands near 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, controlled by Babis.
Hartenberg also runs a chain of reproductive clinics, as well as a flower shop network, 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 time, it is about to get more extensive.