Czech Tycoon Takes PM Role, Promising to Sever Business Interests

Entrepreneur Andrej Babis has been sworn in as the Czech Republic's new premier, with his complete ministerial team anticipated to be appointed shortly.

His selection was contingent upon a key demand from President Petr Pavel – a official vow by Babis to give up oversight over his sprawling food-processing, agriculture and chemicals group, Agrofert.

"I promise to be a prime minister who defends the interests of the entire populace, at home and abroad," affirmed Babis after the ceremony at Prague Castle.

"A prime minister who will work to make the Czech Republic the best place to live on the entire planet."

Lofty Ambitions and a Vast Corporate Footprint

These are lofty ambitions, but Babis, 71, is used to large-scale thinking.

Agrofert is so firmly entrenched 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, Viennese-style sausages from Kostelecké uzeniny or sliced bread from Penam – is part of an Agrofert company, a thumbs-down 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 far-right SPD and the EU-skeptical "Drivers for Themselves" party.

The Commitment of Separation

If he honors his vow to divest from the company he built from scratch, he will stop gaining 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 fiscal condition, nor any capacity to influence its fortunes.

State 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 emphasizes.

Instead, he proposes that Agrofert, worth an estimated $4.3bn (£3.3bn), will be transferred to a fiduciary structure managed by an autonomous trustee, where it will remain until his death. At that point, it will be inherited by his children.

This arrangement, he remarked in a Facebook video, went "far beyond" the demands of Czech law.

Clarification Needed

The specific type of trust remains unclear – a Czech trust, or one based abroad? The concept of a "blind trust" does not exist in Czech legislation, and an battalion of attorneys will be required to craft an solution that works.

Skepticism from Watchdogs

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 interview.

"The divide is insufficient. He is familiar with the managers. He knows Agrofert's range of businesses. From an high office, even at a European level, he could possibly act in matters that would impact the sector in which Agrofert operates," Kotora cautioned.

Extensive Influence Beyond Agrofert

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

In the outskirts 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 operates a chain of fertility centers, as well as a flower shop network, Flamengo, and an lingerie store chain, Astratex.

The footprint of Babis into every facet of Czech life is wide. And as prime minister, for the second time, it is about to get broader.