A Czech Wealthy Magnate Takes PM Office, Promising to Disentangle Commercial Holdings
Tycoon Andrej Babis has taken office as the Czech Republic's new prime minister, with his full cabinet anticipated to assume their roles shortly.
His confirmation followed a fundamental condition from President Petr Pavel – a public vow by Babis to cede control over his vast food-processing, agriculture and chemicals conglomerate, Agrofert.
"I promise to be a prime minister who defends the interests of every citizen, domestically and internationally," declared Babis after the ceremony at Prague Castle.
"A prime minister who will work to transform the Czech Republic the finest location to live on the whole globe."
Grand Visions and a Pervasive Business Presence
These are lofty ambitions, but Babis, 71, is accustomed to thinking big.
Agrofert is so thoroughly integrated in the Czech economic fabric that there is even a specialized application to help shoppers bypass purchasing products made by the group's over two hundred subsidiaries.
If a product – for example, Viennese-style sausages from Kostelecké uzeniny or sliced bread from Penam – belongs to an Agrofert company, a negative symbol appears.
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 incorporate members of the far-right SPD and the EU-skeptical "Motorists for Themselves" party.
The Pledge of Withdrawal
If he fulfills his vow to divest from the company he founded and grew, 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 information of the conglomerate's economic status, nor any capacity to influence its fortunes.
State decisions on government procurement or subsidies – whether Czech or European – will be made without regard to a company he will no longer own or profit from, he further notes.
Instead, he proposes that Agrofert, valued at $4.3bn (£3.3bn), will be placed in a trust managed by an third-party manager, where it will stay until his death. Then, it will pass to his children.
This arrangement, he stated in a online address, went "far beyond" the demands of Czech law.
Unanswered Questions
What kind of trust is still uncertain – a trust under Czech law, or one established overseas? The legal framework of a "blind trust" is not recognized in Czech legislation, and an team of legal experts will be necessary to devise an solution that is legally sound.
Doubts from Watchdogs
Watchdog organizations, including Transparency International, are still skeptical.
"A blind trust is an inadequate measure," argued David Kotora, the head of Transparency International's Czech branch, in an statement.
"True separation is absent. [Babis] is familiar with the managers. He knows Agrofert's range of businesses. From an high office, even at a European level, he could possibly act in matters that would impact the sector in which Agrofert is active," Kotora warned.
Extensive Influence Extending Past Agrofert
But it's not just 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 majority-owned by Hartenberg Holding, and Hartenberg Holding is, in turn, controlled by Babis.
Hartenberg also runs a network of reproductive clinics, 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 wide. And as prime minister, for the second occasion, it is poised to become more extensive.
