A Czech Tycoon Takes PM Office, Promising to Cut Commercial Empire

Wealthy businessman Andrej Babis has taken office as the nation's new prime minister, with his government expected to be appointed within days.

His appointment came after a key demand from President Petr Pavel – a formal vow by Babis to relinquish control over his vast food-processing, agriculture and chemicals group, Agrofert.

"I commit to be a prime minister who upholds the interests of every citizen, at home and abroad," stated Babis after the ceremony at Prague Castle.

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

Lofty Ambitions and a Pervasive Corporate Footprint

These are high-reaching aspirations, but Babis, 71, is familiar with ambitious plans.

Agrofert is so firmly entrenched in the Czech economic fabric that there is even a specialized application to help shoppers bypass purchasing products made by the group's over two hundred subsidiaries.

If a product – for example, frankfurters from Kostelecké uzeniny or packaged bread from Penam – falls under an Agrofert company, a warning symbol is displayed.

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

The Pledge of Divestment

If he upholds his promise to separate himself from the company he founded and grew, he will stop gaining from the sale of any Agrofert product – ranging from processed meats to agricultural chemicals.

As prime minister, he claims he will have no information of the conglomerate's financial health, nor any ability to affect its fortunes.

State decisions on government procurement or subsidies – whether Czech or European – will be made without regard to a company he will have severed ties with or gain financially from, he emphasizes.

Instead, he proposes that Agrofert, valued at $4.3bn (£3.3bn), will be transferred to a fiduciary structure managed by an autonomous trustee, where it will stay until his death. Upon that event, it will pass to his children.

This arrangement, he commented in a online address, went "exceeded" the stipulations of Czech law.

Outstanding Issues

The legal nature of this trust is still uncertain – a Czech trust, or one in a foreign jurisdiction? The concept of a "blind trust" does not exist in Czech statutory law, and an battalion of attorneys will be necessary to devise an solution that is legally sound.

Doubts from Observers

Skeptics, including Transparency International, continue to doubt.

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

"True separation is absent. [Babis] is familiar with the managers. He knows Agrofert's portfolio. From an executive position, even at a EU level, he could potentially influence in matters that would affect the sector in which Agrofert functions," Kotora warned.

Wide-Ranging Interests Beyond Agrofert

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

In the eastern suburbs of Prague, a medical facility 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 runs a network of fertility centers, as well as a flower shop network, Flamengo, and an underwear retailer, Astratex.

The reach of Babis into multiple areas of Czech life is wide. And as prime minister, for the second occasion, it is about to get broader.