Czech Tycoon Assumes PM Role, Promising to Sever Business Empire

Wealthy businessman Andrej Babis has been sworn in as the Czech Republic's new premier, with his full cabinet slated to be appointed in the coming days.

His appointment came after a fundamental stipulation from President Petr Pavel – a formal vow by Babis to give up command over his sprawling food-processing, agriculture and chemicals group, Agrofert.

"I vow to be a prime minister who upholds the interests of every citizen, at home and abroad," affirmed Babis following the event at Prague Castle.

"A prime minister who will work to transform the Czech Republic the finest location to live on the whole globe."

Lofty Ambitions and a Pervasive Corporate Footprint

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

Agrofert is so deeply embedded 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 numerous subsidiaries.

If a product – for example, Viennese-style sausages from Kostelecké uzeniny or packaged bread from Penam – belongs to an Agrofert company, a warning symbol appears.

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

The Commitment of Withdrawal

If he honors his promise to separate himself from the company he established, he will no longer benefit from the sale of any Agrofert product – from frankfurters to fertiliser.

As prime minister, he states he will have no knowledge of the conglomerate's financial health, nor any capacity to influence its prospects.

State decisions on state contracts or subsidies – whether national or EU-funded – will be made without regard to a company he will have severed ties with or profit from, he adds.

Instead, he explains that Agrofert, worth an estimated $4.3bn (£3.3bn), will be placed in a fiduciary structure managed by an third-party manager, 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 legal nature of this trust is still uncertain – a domestic trust, or one established overseas? The concept of a "fully independent trust" has no basis in Czech statutory law, and an army of lawyers will be required to design an arrangement that is legally sound.

Criticism from Anti-Corruption Groups

Skeptics, including Transparency International, remain unconvinced.

"A blind trust is an inadequate measure," argued David Kotora, the head of Transparency International's Czech branch, in an statement.

"The divide is insufficient. [Babis] is familiar with the managers. He knows Agrofert's range of businesses. From an executive position, even at a EU level, he could possibly act in matters that would affect the sector in which Agrofert operates," Kotora advised.

Wide-Ranging Interests Beyond Agrofert

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

In the outskirts of Prague, a medical facility 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, controlled by Babis.

Hartenberg also runs a chain of reproductive clinics, as well as a florist chain, Flamengo, and an underwear retailer, Astratex.

The reach of Babis into all corners of Czech life is extensive. And as prime minister, for the second time, it is about to get more extensive.