Czech Tycoon Takes Prime Ministerial Role, Pledging to Disentangle Business Holdings

Entrepreneur Andrej Babis has officially become the Czech Republic's new premier, with his full cabinet expected to assume their roles shortly.

His appointment came after a key demand from President Petr Pavel – a public commitment by Babis to give up control over his extensive food-processing, agriculture and chemicals conglomerate, Agrofert.

"I promise to be a prime minister who defends the interests of the entire populace, domestically and internationally," affirmed Babis after the swearing-in at Prague Castle.

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

Grand Visions and a Pervasive Business Presence

These are grandiose goals, but Babis, 71, is familiar with large-scale thinking.

Agrofert is so firmly entrenched in the Czech commercial ecosystem that there is even a specialized application to help shoppers steer clear of purchasing products made by the group's over two hundred subsidiaries.

If a product – for example, Viennese-style sausages from Kostelecké uzeniny or sliced bread from Penam – falls under an Agrofert company, a negative symbol shows up.

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 right-wing SPD party and the Eurosceptic "Drivers for Themselves" party.

The Commitment of Divestment

If he upholds his vow to divest from the company he built from scratch, he will stop gaining from the sale of any Agrofert product – ranging from processed meats to agricultural chemicals.

As prime minister, he asserts he will have no insight of the conglomerate's fiscal condition, nor any ability to influence its fortunes.

Administrative decisions on government procurement or subsidies – whether national or EU-funded – will be made with no consideration for a company he will have relinquished ownership of or profit from, he adds.

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

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

Outstanding Issues

The legal nature of this trust has yet to be clarified – a domestic trust, or one based abroad? The notion of a "fully independent trust" does not exist in Czech legislation, and an team of legal experts will be required to devise an structure that works.

Doubts from Observers

Watchdog organizations, including Transparency International, remain unconvinced.

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

"There's no separation. [Babis] undoubtedly is acquainted with the managers. He knows Agrofert's portfolio. From an high office, 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 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 majority-owned 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 florist chain, Flamengo, and an underwear retailer, Astratex.

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