A Czech Tycoon Assumes PM Role, Promising to Disentangle Commercial Interests

Tycoon Andrej Babis has officially become the nation's new premier, with his government expected to take their posts shortly.

His confirmation followed a key condition from President Petr Pavel – a official vow by Babis to relinquish command over his vast food-processing, agriculture and chemicals holding company, Agrofert.

"I vow to be a prime minister who champions the interests of all our citizens, at home and abroad," declared Babis following the event at Prague Castle.

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

Lofty Ambitions and a Pervasive Corporate Footprint

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

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 numerous subsidiaries.

If a product – for example, Viennese-style sausages from Kostelecké uzeniny or sliced bread from Penam – belongs to an Agrofert company, a warning 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 Promise of Divestment

If he honors 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 – ranging from processed meats to agricultural chemicals.

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

Governmental decisions on public tenders or subsidies – whether national or EU-funded – will be made independently of a company he will have severed ties with or profit from, he further notes.

Instead, he proposes that Agrofert, valued at $4.3bn (£3.3bn), will be placed in a fiduciary structure managed by an autonomous trustee, where it will stay until his death. At that point, it will transfer to his children.

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

Unanswered Questions

What kind of trust remains unclear – a trust under Czech law, or one in a foreign jurisdiction? The concept of a "fully independent trust" is not recognized in Czech legislation, and an team of legal experts will be needed to design an solution that is functional.

Criticism from Watchdogs

Critics, including Transparency International, are still skeptical.

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

"The divide is insufficient. He undoubtedly is acquainted with the managers. He knows Agrofert's holdings. From an executive position, even at a EU level, he could possibly act in matters that would affect the industry in which Agrofert operates," Kotora advised.

Extensive Influence Beyond Agrofert

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

In the eastern suburbs 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, majority-owned by Babis.

Hartenberg also runs a chain of fertility centers, as well as a florist chain, Flamengo, and an lingerie store chain, Astratex.

The footprint of Babis into every facet of Czech life is broad. And as prime minister, for the second occasion, it is about to get even wider.