Czech Tycoon Takes PM Role, Vowing to Sever Commercial Holdings
Wealthy businessman Andrej Babis has been sworn in as the nation's new head of government, with his government slated to be appointed shortly.
His appointment came after a key stipulation from President Petr Pavel – a public vow by Babis to relinquish command over his vast agribusiness and chemical group, Agrofert.
"I promise to be a prime minister who champions the interests of the entire populace, at home and abroad," declared Babis following the ceremony at Prague Castle.
"A leader who will work to establish the Czech Republic the finest location to live on the face of the Earth."
Grand Visions and a Vast Corporate Footprint
These are lofty ambitions, but Babis, 71, is familiar with thinking big.
Agrofert is so firmly entrenched in the Czech commercial ecosystem that there is even a mobile tool to help shoppers steer clear of purchasing products made by the group's more than 200 subsidiaries.
If a product – for example, Viennese-style sausages from Kostelecké uzeniny or packaged bread from Penam – is part of an Agrofert company, a warning symbol shows up.
Babis, who held the role of prime minister for four years until 2021, has adopted more right-leaning positions in recent years and his cabinet will incorporate members of the right-wing SPD party and the EU-skeptical "Drivers for Themselves" party.
The Pledge of Divestment
If he honors his promise to withdraw from the company he established, he will cease to profit from the sale of a single Agrofert product – ranging from processed meats to agricultural chemicals.
As prime minister, he states he will have no information of the conglomerate's economic status, nor any power to affect its performance.
Governmental decisions on government procurement or subsidies – whether national or EU-funded – will be made without regard to a company he will no longer own or profit from, he adds.
Instead, he says that Agrofert, valued at $4.3bn (£3.3bn), will be transferred to a trust managed by an independent administrator, where it will stay until his death. Then, it will transfer to his children.
This arrangement, he commented in a social media post, went "well above" the requirements of Czech law.
Unanswered Questions
The legal nature of this trust is still uncertain – a trust under Czech law, or one in a foreign jurisdiction? The legal framework of a "blind trust" has no basis in Czech statutory law, and an army of lawyers will be required to craft an arrangement that works.
Doubts from Anti-Corruption Groups
Critics, including Transparency International, remain unconvinced.
"A blind trust is not a solution," argued David Kotora, the head of Transparency International's Czech branch, in an statement.
"True separation is absent. [Babis] is familiar with the managers. He knows Agrofert's holdings. From an high office, even at a EU level, he could possibly act in matters that would impact the sector in which Agrofert operates," Kotora warned.
Wide-Ranging Interests Beyond Agrofert
But it's not just food – and it's not just Agrofert.
In the outskirts 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 controlled 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 lingerie store chain, Astratex.
The influence of Babis into all corners of Czech life is extensive. And as prime minister, for the second time, it is set to grow broader.