A Czech Tycoon Secures PM Office, Vowing to Cut Business Interests

Entrepreneur Andrej Babis has been sworn in as the Czech Republic's new prime minister, with his government expected to be appointed in the coming days.

His confirmation followed a key demand from President Petr Pavel – a official vow by Babis to cede command over his extensive agribusiness and chemical holding company, Agrofert.

"I commit to be a prime minister who defends the interests of every citizen, both locally and globally," stated Babis after the swearing-in at Prague Castle.

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

High Aspirations and a Far-Reaching Corporate Footprint

These are lofty ambitions, but Babis, 71, is accustomed to thinking big.

Agrofert is so deeply embedded in the Czech commercial ecosystem that there is even a dedicated app to help shoppers steer clear of purchasing products made by the group's over two hundred subsidiaries.

If a product – for example, frankfurters from Kostelecké uzeniny or sliced bread from Penam – falls under an Agrofert company, a warning symbol appears.

Babis, who was formerly prime minister for four years until 2021, has adopted more right-leaning positions in recent years and his cabinet will include members of the far-right SPD and the Eurosceptic "Motorists for Themselves" party.

The Pledge of Separation

If he honors his promise to separate himself 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 claims he will have no knowledge of the conglomerate's fiscal condition, nor any ability to affect its performance.

Administrative decisions on government procurement or subsidies – whether Czech or European – will be made with no consideration for a company he will have relinquished ownership of or profit from, he further notes.

Instead, he says that Agrofert, worth an estimated $4.3bn (£3.3bn), will be placed in a trust managed by an independent administrator, where it will remain until his death. At that point, it will be inherited by his children.

This arrangement, he remarked in a Facebook video, went "well above" the requirements of Czech law.

Unanswered Questions

What kind of trust remains unclear – a domestic trust, or one in a foreign jurisdiction? The concept of a "fully independent trust" has no basis in Czech legislation, and an army of lawyers will be needed to design an arrangement that works.

Skepticism from Observers

Skeptics, including Transparency International, continue to doubt.

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

"There's no separation. He obviously knows the managers. He knows Agrofert's holdings. From an executive position, even at a European level, he could theoretically intervene in matters that would affect the industry in which Agrofert is active," Kotora warned.

Extensive Influence Extending Past Agrofert

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

In the eastern suburbs of Prague, a medical facility towers over the O2 arena. While it is owned by 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 operates a chain of fertility centers, as well as a flower shop network, Flamengo, and an underwear retailer, Astratex.

The reach of Babis into multiple areas of Czech life is wide. And as prime minister, for the second time, it is poised to become broader.