Czech Tycoon Assumes PM Post, Vowing to Sever Corporate Interests

Tycoon Andrej Babis has been sworn in as the nation's new head of government, with his complete ministerial team slated to take their posts shortly.

His selection came after a central condition from President Petr Pavel – a official vow by Babis to cede command over his sprawling food-processing, agriculture and chemicals conglomerate, Agrofert.

"I commit to be a prime minister who upholds the interests of every citizen, domestically and internationally," declared Babis following the event at Prague Castle.

"A leader who will work to establish the Czech Republic the top destination to live on the face of the Earth."

Grand Visions and a Vast Business Presence

These are high-reaching aspirations, but Babis, 71, is accustomed to ambitious plans.

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

Babis, who previously served as prime minister for four years until 2021, has shifted to the right in recent years and his cabinet will feature members of the far-right SPD and the EU-skeptical "Drivers for Themselves" party.

The Commitment of Divestment

If he upholds his promise to separate himself from the company he established, he will stop gaining from the sale of any Agrofert product – from frankfurters to fertiliser.

As prime minister, he claims he will have no knowledge of the conglomerate's fiscal condition, nor any ability to influence its prospects.

Governmental decisions on state contracts or subsidies – whether national or EU-funded – will be made independently of a company he will no longer own or profit from, he further notes.

Instead, he proposes that Agrofert, worth an estimated $4.3bn (£3.3bn), will be placed in a trust managed by an autonomous trustee, where it will stay until his death. At that point, it will pass to his children.

This arrangement, he commented in a social media post, went "exceeded" the demands of Czech law.

Unanswered Questions

What kind of trust is still uncertain – a trust under Czech law, or one established overseas? The legal framework of a "blind trust" does not exist in Czech statutory law, and an army of lawyers will be needed to craft an arrangement that works.

Criticism from Observers

Critics, including Transparency International, are still skeptical.

"Such a trust is not a solution," argued David Kotora, the head of Transparency International's Czech branch, in an interview.

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

Broad Reach Extending Past Agrofert

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

In the outskirts of Prague, a private health clinic stands near 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 network of reproductive clinics, as well as a florist chain, Flamengo, and an underwear retailer, Astratex.

The influence of Babis into multiple areas of Czech life is wide. And as prime minister, for the second time, it is set to grow more extensive.