A Czech Tycoon Secures PM Role, Vowing to Disentangle Business Empire

Tycoon Andrej Babis has officially become the nation's new prime minister, with his full cabinet anticipated to assume their roles within days.

His confirmation followed a fundamental stipulation from President Petr Pavel – a official assurance by Babis to relinquish oversight over his extensive food-processing, agriculture and chemicals group, Agrofert.

"I vow to be a prime minister who champions the interests of every citizen, domestically and internationally," declared Babis after the event at Prague Castle.

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

Grand Visions and a Vast Corporate Footprint

These are grandiose goals, but Babis, 71, is accustomed to ambitious plans.

Agrofert is so firmly entrenched in the Czech economic fabric that there is even a specialized application to help shoppers bypass purchasing products made by the group's over two hundred subsidiaries.

If a product – for example, frankfurters from Kostelecké uzeniny or packaged bread from Penam – is part of an Agrofert company, a warning 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 feature members of the far-right SPD and the EU-skeptical "Drivers for Themselves" party.

The Pledge of Divestment

If he fulfills his pledge to withdraw from the company he established, he will stop gaining from the sale of a single Agrofert product – ranging from processed meats to agricultural chemicals.

As prime minister, he states he will have no knowledge of the conglomerate's financial health, nor any capacity to affect its prospects.

State decisions on public tenders or subsidies – whether Czech or European – will be made without regard to a company he will no longer own or gain financially from, he adds.

Instead, he explains that Agrofert, valued at $4.3bn (£3.3bn), will be placed in a trust managed by an third-party manager, where it will remain 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 demands of Czech law.

Clarification Needed

The specific type of trust is still uncertain – a domestic trust, or one in a foreign jurisdiction? The legal framework of a "fully independent trust" is not recognized in Czech legislation, and an battalion of attorneys will be needed to craft an arrangement that is functional.

Doubts from Anti-Corruption Groups

Critics, including Transparency International, are still skeptical.

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

"The divide is insufficient. [Babis] undoubtedly is acquainted with the managers. He knows Agrofert's range of businesses. From an executive position, even at a European level, he could possibly act in matters that would affect the sector in which Agrofert operates," Kotora cautioned.

Wide-Ranging Interests Extending Past Agrofert

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

In the outskirts of Prague, a medical facility stands near 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, 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 every facet of Czech life is wide. And as prime minister, for the second time, it is poised to become even wider.