Czech billionaire Babis becomes prime minister, promising to cut ties with business empire

Billionaire Andrej Babis has been named the new prime minister of the Czech Republic, with his entire cabinet expected to take office within days.

His appointment follows a key demand from President Petr Pavel – a public commitment by Babis to give up control of his vast food processing, agriculture and chemicals group Agrofert.

“I promise to be a prime minister who defends the interests of all citizens at home and abroad,” Babis said after the ceremony at Prague Castle.

“A prime minister who will work to make the Czech Republic the best place to live in the world.”

These are lofty aspirations, but Babis, 71, is used to thinking big.

Agrofert is so deeply integrated into the Czech business ecosystem that it even has an app to help shoppers avoid products produced by the group’s more than 200 subsidiaries.

If a product (such as Viennese sausages from Kostelecké uzeniny or sliced ​​bread from Penam) belongs to the company Agrofert, a “thumbs down” symbol appears.

Babis, who served as prime minister for four years until 2021, has shifted to the right in recent years and his cabinet will include members of the far-right Social Democrats and the Eurosceptic Own Motorers party.

If he follows through on his promise to divest from the company he built from scratch, he will no longer benefit from the sale of any Agrofert products, from frankfurters to fertilizers.

He said that as prime minister he would have no knowledge of the group’s financial situation and no ability to influence its fate.

He added that decisions by Czech or European governments about public tenders or subsidies would not take into account companies he would no longer own or profit from.

Instead, he said Agrofert, worth an estimated $4.3bn (£3.3bn), would be placed in a trust managed by independent administrators until his death. At that point, it will be passed down to his children.

He said in a Facebook video that this went “far beyond” what Czech law requires.

It is not clear which trust is a Czech trust or a foreign trust? The concept of a “blind trust” does not exist in Czech legislation, and a large number of lawyers are needed to design a workable arrangement.

Critics, including Transparency International, remain unconvinced.

“Blind trust is not the solution,” David Kotora, head of Transparency International’s Czech branch, told news website Seznam Zpravy.

“There is no separation. (Babis) obviously knows the managers. He knows Agrofert’s portfolio. From an executive position, even at European level, he can theoretically intervene in matters that affect Agrofert’s operating units,” Kotola warned.

But it’s not just food – and it’s not just Agrofert.

On the eastern outskirts of Prague, a private clinic stands above the O2 Arena. Although it is owned by a company called FutureLife as, the company is majority-owned by Hartenberg Holding, which is majority-owned by Babis.

Hartenberg also runs a network of fertility clinics, a florist chain Flamengo and lingerie retailer Astratex.

Babis’ influence reached all corners of Czech life. As Prime Minister for the second time, its scope is about to expand.