A Czech Wealthy Magnate Takes PM Office, Pledging to Disentangle Business Holdings
Entrepreneur Andrej Babis has taken office as the nation's new prime minister, with his government anticipated to take their posts shortly.
His confirmation came after a central stipulation from President Petr Pavel – a formal vow by Babis to give up oversight over his extensive agribusiness and chemical holding company, Agrofert.
"I vow to be a prime minister who champions the interests of all our citizens, both locally and globally," declared Babis following the event at Prague Castle.
"A leader who will work to make the Czech Republic the best place to live on the whole globe."
Lofty Ambitions and a Vast Corporate Footprint
These are high-reaching aspirations, but Babis, 71, is familiar with thinking big.
Agrofert is so firmly entrenched in the Czech business landscape that there is even a specialized application 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 – is part of an Agrofert company, a thumbs-down symbol appears.
Babis, who held the role of prime minister for four years until 2021, has moved rightward in recent years and his cabinet will feature members of the far-right SPD and the EU-skeptical "Motorists for Themselves" party.
The Pledge of Withdrawal
If he honors his vow to divest from the company he founded and grew, he will stop gaining from the sale of any Agrofert product – from frankfurters to fertiliser.
As prime minister, he claims he will have no insight of the conglomerate's economic status, nor any capacity to affect its fortunes.
Administrative decisions on public tenders or subsidies – whether national or EU-funded – will be made without regard to a company he will have relinquished ownership of or profit from, he emphasizes.
Instead, he explains that Agrofert, valued at $4.3bn (£3.3bn), will be transferred to a trust managed by an third-party manager, where it will stay until his death. At that point, it will transfer to his children.
This arrangement, he commented in a Facebook video, went "far beyond" the demands of Czech law.
Outstanding Issues
What kind of trust has yet to be clarified – a domestic trust, or one established overseas? The notion of a "fully independent trust" does not exist in Czech legislation, and an battalion of attorneys will be necessary to devise an arrangement that is legally sound.
Skepticism from Observers
Skeptics, including Transparency International, are still skeptical.
"A blind trust is not the answer," stated David Kotora, the head of Transparency International's Czech branch, in an interview.
"There's no separation. He obviously knows the managers. He knows Agrofert's holdings. From an executive position, even at a EU level, he could theoretically intervene in matters that would impact the sector in which Agrofert operates," Kotora cautioned.
Extensive Influence Beyond Agrofert
But it's not only food – and it's not only 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 controlled by Hartenberg Holding, and Hartenberg Holding is, in turn, controlled by Babis.
Hartenberg also operates a chain of reproductive clinics, as well as a flower shop network, Flamengo, and an underwear retailer, Astratex.
The reach of Babis into all corners of Czech life is extensive. And as prime minister, for the second time, it is set to grow even wider.