A Czech Tycoon Takes Prime Ministerial Office, Vowing to Cut Corporate Interests

Tycoon Andrej Babis has taken office as the nation's new premier, with his full cabinet slated to take their posts shortly.

His appointment was contingent upon a central stipulation from President Petr Pavel – a formal assurance by Babis to give up oversight over his vast agribusiness and chemical group, Agrofert.

"I commit to be a prime minister who upholds the interests of the entire populace, domestically and internationally," stated Babis after the ceremony at Prague Castle.

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

Grand Visions and a Vast Business Presence

These are high-reaching aspirations, but Babis, 71, is familiar with large-scale thinking.

Agrofert is so firmly entrenched in the Czech commercial ecosystem that there is even a specialized application 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 – is part of an Agrofert company, a thumbs-down symbol shows up.

Babis, who previously served as 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 EU-skeptical "Drivers for Themselves" party.

The Promise of Divestment

If he fulfills his pledge to separate himself from the company he built from scratch, he will cease to profit from the sale of a single Agrofert product – from frankfurters to fertiliser.

As prime minister, he asserts he will have no insight of the conglomerate's financial health, nor any ability to influence its fortunes.

State decisions on state contracts 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 says that Agrofert, valued at $4.3bn (£3.3bn), will be transferred to 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 stated in a Facebook video, went "well above" the requirements of Czech law.

Outstanding Issues

What kind of trust remains unclear – a domestic trust, or one based abroad? The legal framework of a "blind trust" is not recognized in Czech legislation, and an battalion of attorneys will be necessary to craft an structure that is functional.

Criticism from Anti-Corruption Groups

Watchdog organizations, including Transparency International, continue to doubt.

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

"There's no separation. [Babis] obviously knows the managers. He knows Agrofert's portfolio. From an position of power, even at a EU level, he could possibly act in matters that would impact the sector in which Agrofert is active," Kotora warned.

Broad Reach 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 majority-owned by Hartenberg Holding, and Hartenberg Holding is, in turn, controlled by Babis.

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

The influence of Babis into all corners of Czech life is broad. And as prime minister, for the second time, it is set to grow even wider.