A Czech Tycoon Takes PM Office, Promising to Disentangle Business Interests

Tycoon Andrej Babis has officially become the nation's new premier, with his government expected to assume their roles in the coming days.

His appointment came after a key condition from President Petr Pavel – a public assurance by Babis to cede control over his sprawling agribusiness and chemical conglomerate, Agrofert.

"I vow to be a prime minister who upholds the interests of every citizen, both locally and globally," affirmed Babis following the ceremony at Prague Castle.

"A leader who will work to establish the Czech Republic the best place to live on the whole globe."

Grand Visions and a Far-Reaching Corporate Footprint

These are grandiose goals, but Babis, 71, is accustomed to ambitious plans.

Agrofert is so firmly entrenched in the Czech economic fabric that there is even a dedicated app to help shoppers steer clear of purchasing products made by the group's more than 200 subsidiaries.

If a product – for example, Viennese-style sausages from Kostelecké uzeniny or packaged bread from Penam – is part of an Agrofert company, a negative symbol appears.

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

The Pledge of Divestment

If he honors his pledge to withdraw 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 insight of the conglomerate's fiscal condition, nor any capacity to influence its fortunes.

Administrative decisions on state contracts or subsidies – whether Czech or European – will be made independently of a company he will have relinquished ownership of or gain financially from, he emphasizes.

Instead, he proposes 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. Upon that event, it will be inherited by his children.

This arrangement, he remarked in a Facebook video, went "exceeded" the requirements of Czech law.

Unanswered Questions

The legal nature of this trust remains unclear – a domestic trust, or one established overseas? The notion of a "blind trust" has no basis in Czech statutory law, and an team of legal experts will be needed to design an solution that is legally sound.

Doubts from Observers

Watchdog organizations, including Transparency International, remain unconvinced.

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

"There's no separation. He is familiar with the managers. He knows Agrofert's range of businesses. From an executive position, 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 only Agrofert.

In the outskirts of Prague, a private health clinic towers over the O2 arena. While it is owned by 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 manages a chain of fertility centers, as well as a florist chain, Flamengo, and an lingerie store chain, Astratex.

The footprint of Babis into all corners of Czech life is extensive. And as prime minister, for the second occasion, it is poised to become more extensive.