Czech Billionaire Assumes PM Role, Promising to Sever Corporate Empire

Tycoon Andrej Babis has officially become the Czech Republic's new prime minister, with his government anticipated to be appointed within days.

His selection followed a key demand from President Petr Pavel – a public commitment by Babis to relinquish command over his sprawling agribusiness and chemical group, Agrofert.

"I promise to be a prime minister who champions the interests of the entire populace, both locally and globally," affirmed Babis after the swearing-in at Prague Castle.

"A leader who will work to establish the Czech Republic the top destination to live on the face of the Earth."

Lofty Ambitions and a Pervasive Corporate Footprint

These are high-reaching aspirations, but Babis, 71, is used to thinking big.

Agrofert is so thoroughly integrated 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 over two hundred subsidiaries.

If a product – for example, Viennese-style sausages from Kostelecké uzeniny or packaged bread from Penam – belongs to an Agrofert company, a negative symbol appears.

Babis, who previously served as 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 Promise of Withdrawal

If he honors his vow to withdraw from the company he founded and grew, he will no longer benefit from the sale of any Agrofert product – ranging from processed meats to agricultural chemicals.

As prime minister, he states he will have no information of the conglomerate's financial health, nor any power to sway its performance.

State decisions on public tenders or subsidies – whether national or EU-funded – will be made with no consideration for a company he will no longer own or profit from, he adds.

Instead, he proposes that Agrofert, worth an estimated $4.3bn (£3.3bn), will be placed in a trust managed by an autonomous trustee, where it will stay until his death. Then, it will transfer to his children.

This arrangement, he remarked in a Facebook video, went "well above" the demands of Czech law.

Outstanding Issues

The legal nature of this trust has yet to be clarified – a Czech trust, or one based abroad? The legal framework of a "blind trust" has no basis in Czech statutory law, and an army of lawyers will be required to design an structure that works.

Criticism from Watchdogs

Skeptics, including Transparency International, remain unconvinced.

"A blind trust is not the answer," argued David Kotora, the head of Transparency International's Czech branch, in an comment.

"The divide is insufficient. [Babis] obviously knows the managers. He knows Agrofert's portfolio. From an executive position, even at a EU level, he could theoretically intervene in matters that would affect the sector in which Agrofert operates," Kotora advised.

Extensive Influence Beyond Agrofert

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

In the outskirts 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 network of fertility centers, as well as a florist chain, 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 occasion, it is set to grow more extensive.