Czech Tycoon Secures PM Office, Vowing to Sever Business Interests

Entrepreneur Andrej Babis has been sworn in as the nation's new premier, with his government slated to take their posts in the coming days.

His confirmation followed a fundamental stipulation from President Petr Pavel – a public vow by Babis to relinquish command over his vast agribusiness and chemical group, Agrofert.

"I promise to be a prime minister who champions the interests of the entire populace, domestically and internationally," declared Babis after the ceremony at Prague Castle.

"A leader who will work to transform the Czech Republic the best place to live on the entire planet."

Grand Visions and a Vast Corporate Footprint

These are high-reaching aspirations, but Babis, 71, is used to large-scale thinking.

Agrofert is so deeply embedded in the Czech business landscape that there is even a dedicated app to help shoppers bypass purchasing products made by the group's numerous subsidiaries.

If a product – for example, frankfurters from Kostelecké uzeniny or packaged bread from Penam – belongs to an Agrofert company, a thumbs-down symbol is displayed.

Babis, who was formerly prime minister for four years until 2021, has shifted to the right in recent years and his cabinet will include members of the right-wing SPD party and the EU-skeptical "Drivers for Themselves" party.

The Promise of Separation

If he fulfills his vow to separate himself from the company he founded and grew, he will no longer benefit from the sale of any Agrofert product – ranging from processed meats to agricultural chemicals.

As prime minister, he asserts he will have no knowledge of the conglomerate's economic status, nor any ability to sway its prospects.

Administrative decisions on public tenders or subsidies – whether Czech or European – will be made independently of a company he will no longer own or profit from, he emphasizes.

Instead, he proposes that Agrofert, valued at $4.3bn (£3.3bn), will be transferred to a fiduciary structure managed by an third-party manager, where it will remain until his death. Then, it will pass to his children.

This arrangement, he stated in a social media post, went "far beyond" the stipulations of Czech law.

Unanswered Questions

The specific type of trust is still uncertain – a domestic trust, or one in a foreign jurisdiction? The concept of a "fully independent trust" is not recognized in Czech legislation, and an battalion of attorneys will be needed to craft an structure that is functional.

Skepticism from Watchdogs

Critics, including Transparency International, continue to doubt.

"A blind trust is not the answer," stated David Kotora, the head of Transparency International's Czech branch, in an comment.

"The divide is insufficient. [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 affect the sector in which Agrofert functions," Kotora advised.

Broad Reach Extending Past Agrofert

But it's not only food – and it's not only Agrofert.

In the eastern suburbs of Prague, a private health clinic 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 runs a chain of fertility centers, as well as a flower shop network, Flamengo, and an underwear retailer, 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 more extensive.