A Czech Tycoon Assumes PM Office, Pledging to Disentangle Corporate Empire
Wealthy businessman Andrej Babis has officially become the nation's new premier, with his full cabinet anticipated to assume their roles in the coming days.
His confirmation followed a central demand from President Petr Pavel – a formal vow by Babis to give up control over his extensive agribusiness and chemical group, Agrofert.
"I promise to be a prime minister who champions the interests of every citizen, at home and abroad," declared Babis following the event at Prague Castle.
"A leader who will work to establish the Czech Republic the finest location to live on the face of the Earth."
High Aspirations and a Pervasive Corporate Footprint
These are lofty ambitions, but Babis, 71, is accustomed to large-scale thinking.
Agrofert is so thoroughly integrated in the Czech economic fabric that there is even a mobile tool to help shoppers avoid purchasing products made by the group's more than 200 subsidiaries.
If a product – for example, frankfurters from Kostelecké uzeniny or sliced bread from Penam – falls under an Agrofert company, a thumbs-down symbol shows up.
Babis, who held the role of 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 Commitment of Divestment
If he fulfills his pledge to separate himself from the company he established, he will stop gaining from the sale of any Agrofert product – ranging from processed meats to agricultural chemicals.
As prime minister, he states he will have no knowledge of the conglomerate's fiscal condition, nor any ability to sway its fortunes.
Governmental decisions on public tenders or subsidies – whether national or EU-funded – will be made with no consideration for a company he will have severed ties with or gain financially from, he further notes.
Instead, he explains 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. Upon that event, it will transfer to his children.
This arrangement, he stated in a Facebook video, went "well above" the requirements of Czech law.
Clarification Needed
The specific type of trust remains unclear – a domestic trust, or one based abroad? The legal framework of a "blind trust" does not exist in Czech legislation, and an army of lawyers will be required to craft an structure that is functional.
Criticism from Watchdogs
Watchdog organizations, including Transparency International, are still skeptical.
"Such a trust is an inadequate measure," argued David Kotora, the head of Transparency International's Czech branch, in an statement.
"True separation is absent. He is familiar with 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 impact the sector in which Agrofert operates," Kotora warned.
Wide-Ranging Interests Extending Past Agrofert
But it's not only food – and it's not just 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 controlled by Hartenberg Holding, and Hartenberg Holding is, in turn, majority-owned 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 influence of Babis into every facet of Czech life is extensive. And as prime minister, for the second occasion, it is set to grow even wider.
