A Czech Tycoon Assumes Prime Ministerial Office, Vowing to Sever Commercial Holdings
Entrepreneur Andrej Babis has been sworn in as the Czech Republic's new head of government, with his government anticipated to be appointed in the coming days.
His selection came after a key condition from President Petr Pavel – a official vow by Babis to cede control over his sprawling agribusiness and chemical holding company, Agrofert.
"I promise to be a prime minister who upholds the interests of the entire populace, at home and abroad," affirmed Babis following the swearing-in at Prague Castle.
"A leader who will work to transform the Czech Republic the top destination to live on the face of the Earth."
Grand Visions and a Far-Reaching Corporate Footprint
These are high-reaching aspirations, but Babis, 71, is accustomed to ambitious plans.
Agrofert is so firmly entrenched in the Czech business landscape that there is even a mobile tool 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 warning symbol appears.
Babis, who was formerly 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 EU-skeptical "Motorists for Themselves" party.
The Promise of Withdrawal
If he upholds his vow to divest from the company he built from scratch, he will stop gaining from the sale of a single Agrofert product – ranging from processed meats to agricultural chemicals.
As prime minister, he asserts he will have no knowledge of the conglomerate's financial health, nor any ability to influence its performance.
Governmental decisions on government procurement or subsidies – whether national or EU-funded – will be made independently of a company he will have severed ties with or gain financially from, he further notes.
Instead, he proposes that Agrofert, valued at $4.3bn (£3.3bn), will be transferred to a trust managed by an independent administrator, where it will stay until his death. Upon that event, it will transfer to his children.
This arrangement, he remarked in a online address, went "far beyond" the requirements of Czech law.
Outstanding Issues
What kind of trust has yet to be clarified – a trust under Czech law, or one based abroad? The notion of a "fully independent trust" has no basis in Czech statutory law, and an army of lawyers will be necessary to devise an structure that works.
Criticism from Observers
Skeptics, including Transparency International, continue to doubt.
"A blind trust is not the answer," argued David Kotora, the head of Transparency International's Czech branch, in an statement.
"The divide is insufficient. [Babis] is familiar with the managers. He knows Agrofert's portfolio. From an executive position, even at a EU level, he could possibly act in matters that would affect the sector in which Agrofert functions," Kotora advised.
Extensive Influence 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, majority-owned by Babis.
Hartenberg also manages a chain of fertility centers, as well as a flower shop network, Flamengo, and an lingerie store chain, Astratex.
The influence of Babis into multiple areas of Czech life is broad. And as prime minister, for the second occasion, it is set to grow more extensive.
