A Czech Wealthy Magnate Secures PM Office, Vowing to Sever Corporate Empire
Tycoon Andrej Babis has been sworn in as the nation's new prime minister, with his government anticipated to take their posts in the coming days.
His appointment followed a key stipulation from President Petr Pavel – a official vow by Babis to cede oversight over his vast food-processing, agriculture and chemicals conglomerate, Agrofert.
"I commit to be a prime minister who defends the interests of the entire populace, at home and abroad," declared Babis following the swearing-in at Prague Castle.
"A prime minister who will work to establish the Czech Republic the best place to live on the whole globe."
Lofty Ambitions and a Far-Reaching Corporate Footprint
These are high-reaching aspirations, but Babis, 71, is accustomed to thinking big.
Agrofert is so thoroughly integrated 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 over two hundred subsidiaries.
If a product – for example, frankfurters from Kostelecké uzeniny or packaged bread from Penam – falls under an Agrofert company, a warning symbol is displayed.
Babis, who was formerly 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 Eurosceptic "Motorists for Themselves" party.
The Promise of Divestment
If he fulfills his pledge to separate himself from the company he built from scratch, 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 financial health, nor any capacity to sway its fortunes.
Administrative decisions on government procurement or subsidies – whether Czech or European – will be made without regard to a company he will no longer own 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 autonomous trustee, where it will remain until his death. At that point, it will pass to his children.
This arrangement, he commented in a social media post, went "far beyond" the stipulations of Czech law.
Outstanding Issues
The specific type of trust has yet to be clarified – a trust under Czech law, or one in a foreign jurisdiction? The notion of a "fully independent trust" does not exist in Czech legislation, and an battalion of attorneys will be required to design an solution that is functional.
Doubts from Observers
Critics, including Transparency International, are still skeptical.
"Such a trust is not a solution," stated David Kotora, the head of Transparency International's Czech branch, in an statement.
"True separation is absent. [Babis] obviously knows the managers. He knows Agrofert's portfolio. From an executive position, even at a European level, he could theoretically intervene in matters that would affect the sector in which Agrofert functions," Kotora cautioned.
Wide-Ranging Interests Extending Past Agrofert
But it's not only food – and it's not only Agrofert.
In the outskirts of Prague, a private health clinic 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 operates a chain of fertility centers, as well as a flower shop network, Flamengo, and an underwear retailer, Astratex.
The footprint of Babis into every facet of Czech life is wide. And as prime minister, for the second time, it is set to grow even wider.