A Czech Tycoon Takes PM Office, Promising to Disentangle Commercial Empire

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

His selection came after a key condition from President Petr Pavel – a formal assurance by Babis to give up oversight over his vast agribusiness and chemical group, Agrofert.

"I vow to be a prime minister who champions the interests of all our citizens, both locally and globally," stated Babis following the event at Prague Castle.

"A leader who will work to transform the Czech Republic the best place to live on the entire planet."

High Aspirations and a Vast Business Presence

These are grandiose goals, but Babis, 71, is familiar with ambitious plans.

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

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

The Commitment of Separation

If he fulfills his vow to withdraw from the company he built from scratch, he will cease to profit from the sale of any Agrofert product – from frankfurters to fertiliser.

As prime minister, he states he will have no insight of the conglomerate's fiscal condition, nor any power to affect its performance.

Governmental 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 gain financially from, he adds.

Instead, he explains that Agrofert, valued at $4.3bn (£3.3bn), will be placed in a fiduciary structure managed by an independent administrator, where it will stay until his death. At that point, it will transfer to his children.

This arrangement, he remarked in a online address, went "well above" the demands of Czech law.

Clarification Needed

The legal nature of this trust is still uncertain – a trust under Czech law, or one based abroad? The concept of a "blind trust" has no basis in Czech statutory law, and an team of legal experts will be needed to design an arrangement that is legally sound.

Criticism from Anti-Corruption Groups

Critics, including Transparency International, continue to doubt.

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

"The divide is insufficient. [Babis] obviously knows the managers. He knows Agrofert's range of businesses. From an high office, even at a European level, he could theoretically intervene 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 just Agrofert.

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

Hartenberg also operates a chain of fertility centers, as well as a florist chain, Flamengo, and an underwear retailer, Astratex.

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