Czech Billionaire Secures Prime Ministerial Office, Vowing to Sever Business Holdings

Wealthy businessman Andrej Babis has taken office as the nation's new premier, with his full cabinet expected to be appointed in the coming days.

His selection was contingent upon a key condition from President Petr Pavel – a official commitment by Babis to relinquish command over his extensive food-processing, agriculture and chemicals conglomerate, Agrofert.

"I promise to be a prime minister who upholds the interests of every citizen, at home and abroad," declared Babis after the event at Prague Castle.

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

High Aspirations and a Vast Corporate Footprint

These are high-reaching aspirations, but Babis, 71, is familiar with thinking big.

Agrofert is so firmly entrenched in the Czech commercial ecosystem 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, Viennese-style sausages from Kostelecké uzeniny or sliced bread from Penam – belongs to an Agrofert company, a thumbs-down symbol shows up.

Babis, who held the role of prime minister for four years until 2021, has adopted more right-leaning positions in recent years and his cabinet will include members of the far-right SPD and the EU-skeptical "Motorists for Themselves" party.

The Pledge of Divestment

If he honors his pledge to divest from the company he founded and grew, he will stop gaining from the sale of a single Agrofert product – ranging from processed meats to agricultural chemicals.

As prime minister, he asserts he will have no insight of the conglomerate's fiscal condition, nor any capacity to sway its fortunes.

State decisions on government procurement or subsidies – whether national or EU-funded – will be made independently of a company he will have severed ties with or gain financially from, he further notes.

Instead, he proposes that Agrofert, worth an estimated $4.3bn (£3.3bn), will be transferred to a trust managed by an third-party manager, where it will stay until his death. At that point, it will pass to his children.

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

Outstanding Issues

The legal nature of this trust is still uncertain – a Czech trust, or one in a foreign jurisdiction? The notion of a "blind trust" is not recognized in Czech legislation, and an battalion of attorneys will be required to design an arrangement that works.

Skepticism from Watchdogs

Critics, including Transparency International, are still skeptical.

"Such a trust is not the answer," said David Kotora, the head of Transparency International's Czech branch, in an comment.

"There's no separation. [Babis] obviously knows the managers. He knows Agrofert's holdings. From an position of power, even at a European level, he could potentially influence in matters that would impact the sector in which Agrofert is active," Kotora warned.

Broad Reach Beyond 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 owned by 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 chain of reproductive clinics, as well as a florist chain, 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.