A Czech Billionaire Assumes Prime Ministerial Role, Pledging to Disentangle Corporate Holdings

Tycoon Andrej Babis has been sworn in as the nation's new prime minister, with his full cabinet slated to be appointed shortly.

His appointment came after a key demand from President Petr Pavel – a formal vow by Babis to cede control over his sprawling agribusiness and chemical group, Agrofert.

"I promise to be a prime minister who defends the interests of the entire populace, domestically and internationally," affirmed Babis after the ceremony at Prague Castle.

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

High Aspirations and a Far-Reaching Business Presence

These are grandiose goals, but Babis, 71, is accustomed to large-scale thinking.

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 sliced bread from Penam – falls under an Agrofert company, a thumbs-down symbol is displayed.

Babis, who previously served as prime minister for four years until 2021, has moved rightward in recent years and his cabinet will incorporate members of the far-right SPD and the Eurosceptic "Motorists for Themselves" party.

The Promise of Withdrawal

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

As prime minister, he claims he will have no knowledge of the conglomerate's fiscal condition, nor any power to influence its prospects.

Administrative decisions on state contracts or subsidies – whether national or EU-funded – will be made with no consideration for a company he will have relinquished ownership of or gain financially from, he emphasizes.

Instead, he says that Agrofert, valued at $4.3bn (£3.3bn), will be placed in a fiduciary structure managed by an autonomous trustee, where it will stay until his death. Upon that event, it will transfer to his children.

This arrangement, he stated in a online address, went "far beyond" the requirements 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 legal framework of a "fully independent trust" has no basis in Czech legislation, and an battalion of attorneys will be needed to design an arrangement that is legally sound.

Doubts from Anti-Corruption Groups

Critics, including Transparency International, are still skeptical.

"Such a trust is an inadequate measure," said David Kotora, the head of Transparency International's Czech branch, in an interview.

"True separation is absent. [Babis] obviously knows the managers. He knows Agrofert's range of businesses. From an position of power, even at a EU level, he could potentially influence in matters that would impact the industry in which Agrofert functions," Kotora advised.

Broad Reach Beyond 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, controlled by Babis.

Hartenberg also manages a network of reproductive clinics, as well as a flower shop network, Flamengo, and an lingerie store chain, Astratex.

The reach of Babis into multiple areas of Czech life is wide. And as prime minister, for the second occasion, it is set to grow more extensive.