Czech Tycoon Takes Prime Ministerial Post, Promising to Disentangle Business Holdings

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

His appointment was contingent upon a fundamental condition from President Petr Pavel – a public commitment by Babis to give up oversight over his extensive agribusiness and chemical conglomerate, Agrofert.

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

"A leader who will work to make the Czech Republic the best place to live on the face of the Earth."

High Aspirations and a Vast Business Presence

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

Agrofert is so thoroughly integrated in the Czech commercial ecosystem that there is even a specialized application to help shoppers avoid purchasing products made by the group's over two hundred subsidiaries.

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

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 "Motorists for Themselves" party.

The Commitment of Withdrawal

If he honors his pledge to withdraw from the company he built from scratch, he will no longer benefit from the sale of any Agrofert product – from frankfurters to fertiliser.

As prime minister, he asserts he will have no knowledge of the conglomerate's fiscal condition, nor any capacity to influence its prospects.

Administrative decisions on public tenders or subsidies – whether Czech or European – will be made with no consideration for a company he will have severed ties with or gain financially from, he adds.

Instead, he proposes 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 pass to his children.

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

Outstanding Issues

What kind of trust has yet to be clarified – a Czech trust, or one established overseas? 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 works.

Skepticism from Anti-Corruption Groups

Critics, including Transparency International, are still skeptical.

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

"There's no separation. [Babis] is familiar with the managers. He knows Agrofert's range of businesses. From an high office, even at a European level, he could possibly act in matters that would affect the industry in which Agrofert functions," Kotora cautioned.

Wide-Ranging Interests Beyond Agrofert

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

In the eastern suburbs of Prague, a private health clinic stands near 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 operates a chain of fertility centers, as well as a florist chain, Flamengo, and an lingerie store chain, Astratex.

The reach of Babis into all corners of Czech life is broad. And as prime minister, for the second time, it is poised to become broader.