A Czech Tycoon Assumes Prime Ministerial Role, Vowing to Sever Corporate Interests

Tycoon Andrej Babis has taken office as the Czech Republic's new head of government, with his full cabinet slated to be appointed within days.

His selection was contingent upon a central stipulation from President Petr Pavel – a official assurance by Babis to give up command over his extensive agribusiness and chemical conglomerate, Agrofert.

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

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

High Aspirations and a Vast Corporate Footprint

These are grandiose goals, but Babis, 71, is used to large-scale thinking.

Agrofert is so thoroughly integrated in the Czech economic fabric that there is even a specialized application to help shoppers steer clear of 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 – belongs to 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 incorporate members of the far-right SPD and the Eurosceptic "Drivers for Themselves" party.

The Pledge of Separation

If he honors his promise to divest from the company he built from scratch, he will cease to profit from the sale of any Agrofert product – ranging from processed meats to agricultural chemicals.

As prime minister, he states he will have no insight of the conglomerate's financial health, nor any ability to affect its performance.

Governmental decisions on government procurement or subsidies – whether Czech or European – will be made independently of a company he will have severed ties with or gain financially from, he adds.

Instead, he explains that Agrofert, valued at $4.3bn (£3.3bn), will be transferred to a fiduciary structure managed by an independent administrator, where it will stay until his death. Upon that event, it will be inherited by his children.

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

Unanswered Questions

What kind of trust has yet to be clarified – a domestic trust, or one based abroad? The notion of a "blind trust" is not recognized in Czech legislation, and an battalion of attorneys will be required to design an arrangement that is functional.

Skepticism from Observers

Skeptics, including Transparency International, continue to doubt.

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

"The divide is insufficient. He obviously knows 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 functions," Kotora advised.

Extensive Influence Extending Past 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 the property of 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 operates a network of fertility centers, as well as a florist chain, Flamengo, and an lingerie store chain, Astratex.

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