A Czech Tycoon Takes Prime Ministerial Post, Vowing to Disentangle Corporate Interests
Tycoon Andrej Babis has taken office as the Czech Republic's new head of government, with his full cabinet anticipated to assume their roles in the coming days.
His appointment came after a fundamental stipulation from President Petr Pavel – a formal commitment by Babis to give up oversight over his sprawling food-processing, agriculture and chemicals holding company, Agrofert.
"I vow to be a prime minister who defends the interests of every citizen, at home and abroad," affirmed Babis after the event at Prague Castle.
"A leader who will work to establish the Czech Republic the best place to live on the face of the Earth."
Lofty Ambitions and a Pervasive Corporate Footprint
These are lofty ambitions, but Babis, 71, is used to ambitious plans.
Agrofert is so deeply embedded in the Czech business landscape that there is even a specialized application to help shoppers avoid purchasing products made by the group's numerous subsidiaries.
If a product – for example, frankfurters from Kostelecké uzeniny or sliced bread from Penam – falls under an Agrofert company, a warning 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 include members of the far-right SPD and the Eurosceptic "Motorists for Themselves" party.
The Commitment of Separation
If he fulfills his promise to separate himself 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 states he will have no insight of the conglomerate's financial health, nor any capacity to affect its prospects.
State decisions on public tenders or subsidies – whether Czech or European – will be made with no consideration for a company he will have severed ties with or profit from, he adds.
Instead, he says that Agrofert, worth an estimated $4.3bn (£3.3bn), will be placed in a fiduciary structure managed by an third-party manager, where it will remain until his death. At that point, it will be inherited by his children.
This arrangement, he stated in a online address, went "far beyond" the requirements of Czech law.
Unanswered Questions
The legal nature of this 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 statutory law, and an team of legal experts will be necessary to devise an arrangement that is functional.
Criticism from Anti-Corruption Groups
Critics, including Transparency International, remain unconvinced.
"A blind trust is not the answer," said David Kotora, the head of Transparency International's Czech branch, in an comment.
"There's no separation. [Babis] obviously knows the managers. He knows Agrofert's range of businesses. From an executive position, even at a European level, he could potentially influence in matters that would affect the sector in which Agrofert operates," Kotora advised.
Broad Reach Extending Past Agrofert
But it's not just food – and it's not only Agrofert.
In the eastern suburbs 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 majority-owned 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 lingerie store chain, Astratex.
The influence of Babis into all corners of Czech life is wide. And as prime minister, for the second occasion, it is poised to become broader.