Czech Wealthy Magnate Assumes Prime Ministerial Office, Vowing to Cut Business Holdings

Entrepreneur Andrej Babis has officially become the nation's new prime minister, with his complete ministerial team anticipated to assume their roles within days.

His appointment followed a central stipulation from President Petr Pavel – a formal vow by Babis to give up control over his vast agribusiness and chemical conglomerate, Agrofert.

"I vow to be a prime minister who upholds the interests of every citizen, domestically and internationally," declared Babis after the ceremony at Prague Castle.

"A leader who will work to establish the Czech Republic the best place to live on the whole globe."

Grand Visions and a Vast Business Presence

These are grandiose goals, but Babis, 71, is accustomed to thinking big.

Agrofert is so firmly entrenched in the Czech economic fabric 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, Viennese-style sausages from Kostelecké uzeniny or packaged bread from Penam – falls under an Agrofert company, a thumbs-down symbol is displayed.

Babis, who held the role of prime minister for four years until 2021, has shifted to the right in recent years and his cabinet will feature members of the far-right SPD and the EU-skeptical "Motorists for Themselves" party.

The Commitment of Separation

If he upholds his vow to withdraw from the company he built from scratch, he will stop gaining from the sale of any Agrofert product – ranging from processed meats to agricultural chemicals.

As prime minister, he claims he will have no information of the conglomerate's economic status, nor any ability to affect its prospects.

Governmental decisions on state contracts or subsidies – whether Czech or European – will be made without regard to a company he will have relinquished ownership of or gain financially from, he further notes.

Instead, he explains that Agrofert, valued at $4.3bn (£3.3bn), will be placed in a fiduciary structure managed by an independent administrator, where it will stay until his death. Upon that event, it will transfer to his children.

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

Clarification Needed

The specific type of trust remains unclear – a domestic trust, or one established overseas? The legal framework of a "blind trust" does not exist in Czech statutory law, and an team of legal experts will be necessary to design an structure that is legally sound.

Criticism from Watchdogs

Skeptics, including Transparency International, remain unconvinced.

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

"The divide is insufficient. [Babis] undoubtedly is acquainted with 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 industry in which Agrofert is active," Kotora advised.

Broad Reach Extending Past Agrofert

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

In the outskirts of Prague, a medical facility towers over the O2 arena. While it is the property of a company called FutureLife a.s, that company is controlled by Hartenberg Holding, and Hartenberg Holding is, in turn, controlled by Babis.

Hartenberg also runs a chain of fertility centers, as well as a florist chain, Flamengo, and an lingerie store chain, Astratex.

The influence of Babis into every facet of Czech life is wide. And as prime minister, for the second occasion, it is about to get broader.