Czech Tycoon Assumes PM Office, Promising to Sever Corporate Interests

Tycoon Andrej Babis has taken office as the nation's new head of government, with his government slated to be appointed shortly.

His confirmation was contingent upon a central condition from President Petr Pavel – a public vow by Babis to relinquish oversight over his sprawling food-processing, agriculture and chemicals holding company, Agrofert.

"I vow to be a prime minister who upholds the interests of every citizen, at home and abroad," declared Babis following the swearing-in at Prague Castle.

"A leader who will work to make the Czech Republic the finest location to live on the whole globe."

Lofty Ambitions and a Vast Corporate Footprint

These are high-reaching aspirations, but Babis, 71, is used to large-scale thinking.

Agrofert is so firmly entrenched in the Czech commercial ecosystem that there is even a dedicated app 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 – belongs to an Agrofert company, a thumbs-down symbol shows up.

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

The Promise of Divestment

If he upholds his promise to separate himself from the company he founded and grew, he will cease to profit from the sale of a single Agrofert product – ranging from processed meats to agricultural chemicals.

As prime minister, he states he will have no insight of the conglomerate's economic status, nor any power to sway its prospects.

Administrative 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 emphasizes.

Instead, he says that Agrofert, worth an estimated $4.3bn (£3.3bn), will be placed in a fiduciary structure managed by an autonomous trustee, where it will remain until his death. Then, it will transfer to his children.

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

Outstanding Issues

What kind of trust has yet to be clarified – a Czech trust, or one established overseas? The concept of a "fully independent trust" is not recognized in Czech legislation, and an army of lawyers will be necessary to design an arrangement that is functional.

Doubts from Watchdogs

Critics, including Transparency International, continue to doubt.

"Such a trust is not a solution," argued David Kotora, the head of Transparency International's Czech branch, in an interview.

"The divide is insufficient. [Babis] undoubtedly is acquainted with the managers. He knows Agrofert's holdings. From an executive position, even at a European level, he could potentially influence in matters that would impact the sector in which Agrofert functions," 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 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, majority-owned by Babis.

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

The reach of Babis into all corners of Czech life is wide. And as prime minister, for the second time, it is set to grow broader.