Czech Tycoon Takes PM Post, Vowing to Disentangle Commercial Interests

Wealthy businessman Andrej Babis has been sworn in as the Czech Republic's new premier, with his complete ministerial team anticipated to assume their roles in the coming days.

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

"I promise to be a prime minister who upholds the interests of all our citizens, both locally and globally," declared Babis after the event at Prague Castle.

"A leader who will work to transform the Czech Republic the finest location to live on the whole globe."

Lofty Ambitions and a Pervasive Corporate Footprint

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

Agrofert is so deeply embedded in the Czech business landscape that there is even a specialized application to help shoppers bypass 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 – is part of an Agrofert company, a warning symbol appears.

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 feature members of the right-wing SPD party and the EU-skeptical "Motorists for Themselves" party.

The Pledge of Separation

If he upholds his pledge to withdraw from the company he founded and grew, he will cease to profit from the sale of a single Agrofert product – ranging from processed meats to agricultural chemicals.

As prime minister, he claims he will have no insight of the conglomerate's economic status, nor any capacity to sway its fortunes.

State decisions on state contracts or subsidies – whether Czech or European – will be made without regard to a company he will no longer own 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 independent administrator, where it will remain until his death. Then, it will transfer to his children.

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

Unanswered Questions

The legal nature of this trust is still uncertain – a trust under Czech law, or one in a foreign jurisdiction? The notion of a "blind trust" has no basis in Czech statutory law, and an army of lawyers will be needed to design an solution that is functional.

Criticism from Watchdogs

Skeptics, including Transparency International, remain unconvinced.

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

"The divide is insufficient. [Babis] obviously knows the managers. He knows Agrofert's range of businesses. From an position of power, even at a EU level, he could possibly act in matters that would impact the sector in which Agrofert is active," Kotora advised.

Extensive Influence Extending Past 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 majority-owned 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 reach of Babis into all corners of Czech life is wide. And as prime minister, for the second occasion, it is poised to become even wider.