A Czech Wealthy Magnate Secures Prime Ministerial Role, Pledging to Disentangle Business Holdings
Wealthy businessman Andrej Babis has officially become the nation's new head of government, with his government anticipated to take their posts shortly.
His selection came after a key demand from President Petr Pavel – a formal commitment by Babis to relinquish control over his sprawling agribusiness and chemical holding company, Agrofert.
"I promise to be a prime minister who defends the interests of all our citizens, domestically and internationally," stated Babis after the ceremony at Prague Castle.
"A prime minister who will work to establish the Czech Republic the finest location to live on the entire planet."
High Aspirations and a Vast Business Presence
These are grandiose goals, but Babis, 71, is used to thinking big.
Agrofert is so deeply embedded 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 shows up.
Babis, who previously served as prime minister for four years until 2021, has moved rightward in recent years and his cabinet will include members of the right-wing SPD party and the Eurosceptic "Motorists for Themselves" party.
The Promise of Separation
If he fulfills his pledge to separate himself 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 states he will have no knowledge of the conglomerate's financial health, nor any power to influence its performance.
Administrative decisions on government procurement or subsidies – whether Czech or European – will be made independently of a company he will no longer own or gain financially from, he adds.
Instead, he explains that Agrofert, worth an estimated $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 stated in a Facebook video, went "far beyond" the requirements of Czech law.
Outstanding Issues
What kind of trust remains unclear – a Czech trust, or one based abroad? The legal framework of a "fully independent trust" is not recognized in Czech legislation, and an team of legal experts will be necessary to craft an arrangement that is functional.
Criticism from Watchdogs
Watchdog organizations, 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 statement.
"True separation is absent. [Babis] undoubtedly is acquainted with the managers. He knows Agrofert's range of businesses. From an high office, even at a EU level, he could theoretically intervene in matters that would impact the sector in which Agrofert is active," Kotora warned.
Broad Reach Beyond Agrofert
But it's not only food – and it's not only Agrofert.
In the eastern suburbs of Prague, a private health clinic towers over 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 manages a network of fertility centers, as well as a florist chain, Flamengo, and an underwear retailer, Astratex.
The influence of Babis into multiple areas of Czech life is extensive. And as prime minister, for the second occasion, it is poised to become more extensive.