Czech Tycoon Secures PM Role, Promising to Sever Commercial Holdings

Entrepreneur Andrej Babis has taken office as the Czech Republic's new head of government, with his complete ministerial team expected to assume their roles shortly.

His appointment followed a fundamental condition from President Petr Pavel – a official commitment by Babis to give up control over his sprawling agribusiness and chemical conglomerate, Agrofert.

"I commit to be a prime minister who upholds the interests of all our citizens, at home and abroad," stated Babis after the event at Prague Castle.

"A prime minister who will work to establish the Czech Republic the top destination to live on the face of the Earth."

Grand Visions and a Pervasive Business Presence

These are lofty ambitions, but Babis, 71, is familiar with large-scale thinking.

Agrofert is so firmly entrenched in the Czech economic fabric that there is even a mobile tool to help shoppers avoid purchasing products made by the group's numerous subsidiaries.

If a product – for example, frankfurters from Kostelecké uzeniny or sliced 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 adopted more right-leaning positions in recent years and his cabinet will feature members of the far-right SPD and the Eurosceptic "Drivers for Themselves" party.

The Pledge of Withdrawal

If he honors his pledge to separate himself from the company he built from scratch, he will stop gaining from the sale of a single Agrofert product – from frankfurters to fertiliser.

As prime minister, he asserts he will have no knowledge of the conglomerate's economic status, nor any power to influence its performance.

Administrative decisions on government procurement or subsidies – whether national or EU-funded – will be made with no consideration for a company he will have severed ties with or gain financially from, he emphasizes.

Instead, he says that Agrofert, valued at $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 pass to his children.

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

Unanswered Questions

What kind of trust has yet to be clarified – a Czech trust, or one in a foreign jurisdiction? The concept of a "fully independent trust" does not exist in Czech legislation, and an battalion of attorneys will be required to craft an solution that is functional.

Criticism from Watchdogs

Watchdog organizations, including Transparency International, are still skeptical.

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

"There's no separation. [Babis] obviously knows the managers. He knows Agrofert's holdings. From an position of power, even at a EU level, he could theoretically intervene in matters that would affect the sector in which Agrofert is active," Kotora advised.

Broad Reach Extending Past Agrofert

But it's not just 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, controlled by Babis.

Hartenberg also operates a network of reproductive clinics, as well as a flower shop network, Flamengo, and an lingerie store chain, Astratex.

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