A Czech Tycoon Assumes Prime Ministerial Post, Promising to Cut Business Interests

Entrepreneur Andrej Babis has been sworn in as the nation's new head of government, with his full cabinet anticipated to assume their roles shortly.

His appointment followed a key condition from President Petr Pavel – a public commitment by Babis to relinquish oversight over his vast agribusiness and chemical group, Agrofert.

"I vow to be a prime minister who defends the interests of every citizen, at home and abroad," stated Babis following the event at Prague Castle.

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

High Aspirations and a Pervasive Corporate Footprint

These are grandiose goals, but Babis, 71, is familiar with large-scale thinking.

Agrofert is so deeply embedded in the Czech commercial ecosystem that there is even a specialized application to help shoppers bypass purchasing products made by the group's numerous subsidiaries.

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

Babis, who held the role of prime minister for four years until 2021, has adopted more right-leaning positions in recent years and his cabinet will include members of the right-wing SPD party and the EU-skeptical "Drivers for Themselves" party.

The Commitment of Divestment

If he fulfills his vow to separate himself from the company he established, he will stop gaining from the sale of any Agrofert product – ranging from processed meats to agricultural chemicals.

As prime minister, he asserts he will have no insight of the conglomerate's fiscal condition, nor any ability to sway its prospects.

Governmental decisions on public tenders or subsidies – whether national or EU-funded – will be made with no consideration for a company he will no longer own or gain financially from, he emphasizes.

Instead, he says that Agrofert, worth an estimated $4.3bn (£3.3bn), will be placed in a fiduciary structure managed by an autonomous trustee, where it will stay until his death. Upon that event, it will pass to his children.

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

Unanswered Questions

The legal nature of this trust has yet to be clarified – a trust under Czech law, or one based abroad? The legal framework of a "fully independent trust" has no basis in Czech statutory law, and an army of lawyers will be needed to design an arrangement that works.

Criticism from Watchdogs

Skeptics, including Transparency International, are still skeptical.

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

"There's no separation. He undoubtedly is acquainted with the managers. He knows Agrofert's range of businesses. From an high office, even at a EU level, he could possibly act in matters that would affect the sector in which Agrofert is active," Kotora warned.

Wide-Ranging Interests Extending Past Agrofert

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

In the outskirts 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 majority-owned by Hartenberg Holding, and Hartenberg Holding is, in turn, controlled by Babis.

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

The influence of Babis into multiple areas of Czech life is extensive. And as prime minister, for the second time, it is set to grow more extensive.