A Czech Billionaire Takes PM Role, Pledging to Cut Commercial Empire
Entrepreneur Andrej Babis has been sworn in as the Czech Republic's new head of government, with his complete ministerial team slated to be appointed in the coming days.
His selection was contingent upon a fundamental condition from President Petr Pavel – a public assurance by Babis to relinquish control over his vast food-processing, agriculture and chemicals group, Agrofert.
"I vow to be a prime minister who defends the interests of every citizen, both locally and globally," affirmed Babis after the event at Prague Castle.
"A prime minister who will work to transform the Czech Republic the best place to live on the entire planet."
High Aspirations and a Far-Reaching Corporate Footprint
These are lofty ambitions, but Babis, 71, is accustomed to ambitious plans.
Agrofert is so firmly entrenched in the Czech business landscape 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 packaged bread from Penam – belongs to an Agrofert company, a thumbs-down 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 incorporate members of the right-wing SPD party and the EU-skeptical "Motorists for Themselves" party.
The Pledge of Withdrawal
If he upholds his promise to separate himself from the company he founded and grew, 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 insight of the conglomerate's economic status, nor any capacity to influence its prospects.
State decisions on state contracts or subsidies – whether Czech or European – will be made without regard to 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 fiduciary structure managed by an independent administrator, where it will remain until his death. Upon that event, it will pass to his children.
This arrangement, he remarked in a online address, went "far beyond" the stipulations of Czech law.
Outstanding Issues
The legal nature of this trust has yet to be clarified – a trust under Czech law, or one based abroad? The legal framework of a "blind trust" does not exist in Czech statutory law, and an army of lawyers will be required to craft an arrangement that works.
Criticism from Watchdogs
Critics, including Transparency International, remain unconvinced.
"A blind trust is not a solution," said David Kotora, the head of Transparency International's Czech branch, in an interview.
"There's no separation. [Babis] undoubtedly is acquainted with the managers. He knows Agrofert's portfolio. From an high office, even at a European level, he could theoretically intervene in matters that would affect the sector in which Agrofert is active," Kotora warned.
Wide-Ranging Interests 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 towers over the O2 arena. While it is owned by a company called FutureLife a.s, that company is controlled by Hartenberg Holding, and Hartenberg Holding is, in turn, controlled by Babis.
Hartenberg also operates a chain of fertility centers, as well as a flower shop network, Flamengo, and an lingerie store chain, Astratex.
The influence of Babis into every facet of Czech life is extensive. And as prime minister, for the second occasion, it is poised to become even wider.
