Czech Tycoon Takes Prime Ministerial Role, Pledging to Disentangle Business Holdings

Wealthy businessman Andrej Babis has officially become the Czech Republic's new head of government, with his full cabinet anticipated to take their posts in the coming days.

His selection was contingent upon a central stipulation from President Petr Pavel – a formal assurance by Babis to give up control over his sprawling agribusiness and chemical holding company, Agrofert.

"I promise to be a prime minister who defends the interests of all our citizens, domestically and internationally," declared Babis after the swearing-in at Prague Castle.

"A prime minister who will work to transform the Czech Republic the best place to live on the entire planet."

Lofty Ambitions and a Far-Reaching Corporate Footprint

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

Agrofert is so deeply embedded in the Czech business landscape that there is even a specialized application to help shoppers avoid purchasing products made by the group's over two hundred subsidiaries.

If a product – for example, Viennese-style sausages from Kostelecké uzeniny or sliced bread from Penam – falls under an Agrofert company, a negative symbol appears.

Babis, who was formerly 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 "Motorists for Themselves" party.

The Promise of Separation

If he upholds his vow to separate himself from the company he founded and grew, he will no longer benefit from the sale of any Agrofert product – ranging from processed meats to agricultural chemicals.

As prime minister, he asserts he will have no knowledge of the conglomerate's financial health, nor any power to influence its performance.

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 emphasizes.

Instead, he proposes that Agrofert, worth an estimated $4.3bn (£3.3bn), will be transferred to 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 "far beyond" the requirements of Czech law.

Clarification Needed

The specific type of trust remains unclear – a trust under Czech law, or one established overseas? The legal framework of a "blind trust" does not exist in Czech statutory law, and an team of legal experts will be required to design an solution that works.

Doubts from Observers

Watchdog organizations, 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 interview.

"True separation is absent. [Babis] obviously knows the managers. He knows Agrofert's holdings. From an high office, even at a EU level, he could theoretically intervene in matters that would impact the sector in which Agrofert functions," Kotora warned.

Broad Reach Extending Past 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 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 network 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 broad. And as prime minister, for the second time, it is poised to become broader.