Czech Billionaire Assumes PM Role, Pledging to Cut Corporate Empire
Tycoon Andrej Babis has been sworn in as the nation's new head of government, with his complete ministerial team expected to assume their roles shortly.
His appointment came after a central condition from President Petr Pavel – a official vow by Babis to cede oversight over his extensive agribusiness and chemical conglomerate, Agrofert.
"I vow to be a prime minister who champions the interests of the entire populace, domestically and internationally," stated Babis following the event at Prague Castle.
"A leader who will work to establish the Czech Republic the finest location to live on the whole globe."
Grand Visions and a Far-Reaching Business Presence
These are high-reaching aspirations, but Babis, 71, is familiar with large-scale thinking.
Agrofert is so firmly entrenched in the Czech commercial ecosystem that there is even a specialized application to help shoppers steer clear of purchasing products made by the group's more than 200 subsidiaries.
If a product – for example, frankfurters from Kostelecké uzeniny or packaged bread from Penam – falls under 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 include members of the right-wing SPD party and the EU-skeptical "Motorists for Themselves" party.
The Pledge of Withdrawal
If he fulfills his vow to withdraw from the company he built from scratch, 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 ability to affect its fortunes.
Administrative decisions on state contracts or subsidies – whether Czech or European – will be made independently of a company he will have severed ties with or gain financially from, he adds.
Instead, he says that Agrofert, valued at $4.3bn (£3.3bn), will be placed in a fiduciary structure managed by an autonomous trustee, where it will stay until his death. Then, it will pass to his children.
This arrangement, he commented in a Facebook video, went "exceeded" the requirements of Czech law.
Clarification Needed
What kind of trust has yet to be clarified – a domestic trust, or one based abroad? The concept of a "fully independent trust" does not exist in Czech statutory law, and an army of lawyers will be required to design an solution that is functional.
Skepticism from Observers
Critics, including Transparency International, continue to doubt.
"Such a trust is not the answer," stated David Kotora, the head of Transparency International's Czech branch, in an comment.
"The divide is insufficient. He undoubtedly is acquainted with the managers. He knows Agrofert's holdings. From an executive position, even at a European level, he could potentially influence in matters that would impact the sector in which Agrofert is active," Kotora warned.
Wide-Ranging Interests Extending Past Agrofert
But it's not just food – and it's not just 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 manages a chain of reproductive clinics, 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 wide. And as prime minister, for the second time, it is poised to become even wider.
