Czech Wealthy Magnate Secures PM Office, Promising to Sever Corporate Empire

Tycoon Andrej Babis has been sworn in as the nation's new premier, with his government anticipated to be appointed in the coming days.

His confirmation was contingent upon a central demand from President Petr Pavel – a formal assurance by Babis to give up control over his sprawling food-processing, agriculture and chemicals holding company, Agrofert.

"I vow to be a prime minister who upholds the interests of all our citizens, both locally and globally," affirmed Babis after the event at Prague Castle.

"A prime minister who will work to make the Czech Republic the best place to live on the entire planet."

Lofty Ambitions and a Far-Reaching Business Presence

These are high-reaching aspirations, but Babis, 71, is used to large-scale thinking.

Agrofert is so thoroughly integrated in the Czech commercial ecosystem that there is even a specialized application to help shoppers bypass purchasing products made by the group's numerous subsidiaries.

If a product – for example, Viennese-style sausages from Kostelecké uzeniny or sliced bread from Penam – belongs to an Agrofert company, a thumbs-down 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 include members of the far-right SPD and the Eurosceptic "Motorists for Themselves" party.

The Pledge of Withdrawal

If he fulfills his promise to separate himself from the company he built from scratch, he will no longer benefit from the sale of a single Agrofert product – ranging from processed meats to agricultural chemicals.

As prime minister, he states he will have no knowledge of the conglomerate's financial health, nor any capacity to influence its fortunes.

Administrative 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 profit from, he emphasizes.

Instead, he proposes that Agrofert, worth an estimated $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 be inherited by his children.

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

Outstanding Issues

The legal nature of this trust remains unclear – a domestic trust, or one established overseas? The concept of a "fully independent trust" has no basis in Czech statutory law, and an army of lawyers will be necessary to design an structure that works.

Skepticism from Watchdogs

Critics, including Transparency International, are still skeptical.

"A blind trust is an inadequate measure," said David Kotora, the head of Transparency International's Czech branch, in an statement.

"There's no separation. [Babis] obviously knows the managers. He knows Agrofert's range of businesses. From an high office, even at a EU level, he could potentially influence in matters that would affect the industry in which Agrofert is active," Kotora advised.

Wide-Ranging Interests Extending Past Agrofert

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

In the eastern suburbs of Prague, a medical facility stands near the O2 arena. While it is owned by 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 fertility centers, as well as a florist chain, Flamengo, and an lingerie store chain, Astratex.

The reach of Babis into every facet of Czech life is wide. And as prime minister, for the second occasion, it is poised to become even wider.