Czech Billionaire Secures PM Post, Promising to Disentangle Business Holdings
Wealthy businessman Andrej Babis has taken office as the Czech Republic's new prime minister, with his full cabinet slated to assume their roles within days.
His appointment was contingent upon a central stipulation from President Petr Pavel – a official assurance by Babis to relinquish command over his extensive agribusiness and chemical holding company, Agrofert.
"I promise to be a prime minister who defends the interests of the entire populace, domestically and internationally," stated Babis after the event at Prague Castle.
"A prime minister who will work to make the Czech Republic the finest location to live on the whole globe."
Lofty Ambitions and a Pervasive Business Presence
These are grandiose goals, but Babis, 71, is familiar with large-scale thinking.
Agrofert is so thoroughly integrated in the Czech business landscape that there is even a specialized application to help shoppers avoid purchasing products made by the group's numerous subsidiaries.
If a product – for example, frankfurters from Kostelecké uzeniny or packaged bread from Penam – falls under an Agrofert company, a warning 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 incorporate members of the far-right SPD and the EU-skeptical "Motorists for Themselves" party.
The Commitment of Divestment
If he fulfills his vow to separate himself from the company he built from scratch, he will cease to profit from the sale of a single Agrofert product – from frankfurters to fertiliser.
As prime minister, he claims he will have no insight of the conglomerate's financial health, nor any power to affect its prospects.
Governmental decisions on public tenders or subsidies – whether Czech or European – will be made with no consideration for a company he will have relinquished ownership of or gain financially from, he adds.
Instead, he says that Agrofert, valued at $4.3bn (ÂŁ3.3bn), will be transferred to a fiduciary structure managed by an independent administrator, where it will stay until his death. Upon that event, it will pass to his children.
This arrangement, he stated in a Facebook video, went "exceeded" the demands of Czech law.
Outstanding Issues
What kind of trust is still uncertain – a Czech trust, or one established overseas? The notion of a "blind trust" is not recognized in Czech legislation, and an battalion of attorneys will be necessary to design an structure that is legally sound.
Doubts from Watchdogs
Critics, including Transparency International, are still skeptical.
"Such a trust is not the answer," argued David Kotora, the head of Transparency International's Czech branch, in an comment.
"The divide is insufficient. [Babis] undoubtedly is acquainted 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 is active," Kotora warned.
Extensive Influence 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, controlled by Babis.
Hartenberg also runs a chain of fertility centers, as well as a flower shop network, 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.
