A Czech Tycoon Assumes Prime Ministerial Post, Promising to Sever Commercial Holdings

Tycoon Andrej Babis has taken office as the nation's new prime minister, with his government expected to be appointed shortly.

His appointment followed a central demand from President Petr Pavel – a official commitment by Babis to relinquish oversight over his sprawling food-processing, agriculture and chemicals group, Agrofert.

"I vow 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 transform the Czech Republic the finest location to live on the face of the Earth."

High Aspirations and a Pervasive Corporate Footprint

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

Agrofert is so thoroughly integrated in the Czech economic fabric 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 – belongs to an Agrofert company, a thumbs-down 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 feature members of the right-wing SPD party and the EU-skeptical "Drivers for Themselves" party.

The Pledge of Withdrawal

If he honors his vow to separate himself from the company he founded and grew, he will cease to profit from the sale of a single Agrofert product – from frankfurters to fertiliser.

As prime minister, he states he will have no insight of the conglomerate's financial health, nor any ability to influence its fortunes.

State decisions on government procurement or subsidies – whether Czech or European – will be made without regard to a company he will no longer own or gain financially from, he adds.

Instead, he explains that Agrofert, worth an estimated $4.3bn (£3.3bn), will be transferred to 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 stated in a social media post, went "exceeded" the stipulations of Czech law.

Clarification Needed

The specific type of trust is still uncertain – a trust under Czech law, or one established overseas? The notion of a "blind trust" has no basis in Czech statutory law, and an army of lawyers will be needed to craft an arrangement that works.

Criticism from Anti-Corruption Groups

Critics, including Transparency International, continue to doubt.

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

"There's no separation. [Babis] is familiar with the managers. He knows Agrofert's holdings. From an executive position, even at a European level, he could possibly act in matters that would affect the industry in which Agrofert operates," Kotora advised.

Broad Reach Beyond Agrofert

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

In the eastern suburbs 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, controlled by Babis.

Hartenberg also runs a chain of fertility centers, as well as a florist chain, Flamengo, and an lingerie store chain, Astratex.

The footprint of Babis into every facet of Czech life is broad. And as prime minister, for the second time, it is poised to become broader.