A Czech Tycoon Assumes PM Office, Vowing to Disentangle Business Interests

Wealthy businessman Andrej Babis has been sworn in as the Czech Republic's new head of government, with his complete ministerial team anticipated to assume their roles in the coming days.

His selection came after a central stipulation from President Petr Pavel – a public assurance by Babis to relinquish command over his extensive food-processing, agriculture and chemicals holding company, Agrofert.

"I commit to be a prime minister who defends the interests of the entire populace, both locally and globally," affirmed Babis following the event at Prague Castle.

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

Lofty Ambitions and a Far-Reaching Corporate Footprint

These are grandiose goals, but Babis, 71, is familiar with thinking big.

Agrofert is so deeply embedded in the Czech business landscape that there is even a dedicated app to help shoppers steer clear of purchasing products made by the group's more than 200 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 appears.

Babis, who held the role of prime minister for four years until 2021, has shifted to the right in recent years and his cabinet will include members of the far-right SPD and the Eurosceptic "Drivers for Themselves" party.

The Commitment of Separation

If he fulfills his pledge to withdraw from the company he founded and grew, 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 insight of the conglomerate's economic status, nor any power to influence its fortunes.

Governmental decisions on state contracts or subsidies – whether Czech or European – will be made independently of a company he will have relinquished ownership of or gain financially from, he emphasizes.

Instead, he explains that Agrofert, worth an estimated $4.3bn (£3.3bn), will be placed in a trust managed by an third-party manager, where it will stay until his death. Upon that event, it will be inherited by his children.

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

Outstanding Issues

The legal nature of this trust is still uncertain – a domestic trust, or one in a foreign jurisdiction? The legal framework of a "fully independent trust" does not exist in Czech statutory law, and an battalion of attorneys will be required to design an structure that works.

Skepticism from Watchdogs

Critics, including Transparency International, remain unconvinced.

"Such a trust is an inadequate measure," argued David Kotora, the head of Transparency International's Czech branch, in an interview.

"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 possibly act in matters that would impact the sector in which Agrofert is active," Kotora advised.

Broad Reach Beyond Agrofert

But it's not only 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, majority-owned by Babis.

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

The influence of Babis into every facet of Czech life is extensive. And as prime minister, for the second occasion, it is set to grow even wider.