Czech Tycoon Assumes Prime Ministerial Role, Promising to Cut Business Empire

Tycoon Andrej Babis has officially become the Czech Republic's new prime minister, with his full cabinet expected to take their posts within days.

His appointment came after a fundamental stipulation from President Petr Pavel – a public vow by Babis to give up control over his vast food-processing, agriculture and chemicals group, Agrofert.

"I vow to be a prime minister who upholds the interests of every citizen, at home and abroad," stated Babis after the ceremony at Prague Castle.

"A leader who will work to make the Czech Republic the best place to live on the face of the Earth."

Lofty Ambitions and a Pervasive Business Presence

These are grandiose goals, but Babis, 71, is used to large-scale thinking.

Agrofert is so firmly entrenched in the Czech commercial ecosystem that there is even a specialized application to help shoppers bypass purchasing products made by the group's numerous subsidiaries.

If a product – for example, Viennese-style sausages 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 incorporate members of the right-wing SPD party and the EU-skeptical "Drivers for Themselves" party.

The Pledge of Withdrawal

If he fulfills his vow to divest from the company he built from scratch, 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 information of the conglomerate's economic status, nor any ability to influence its fortunes.

Administrative decisions on public tenders or subsidies – whether Czech or European – will be made independently of 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 transferred to a fiduciary structure managed by an independent administrator, where it will remain until his death. Upon that event, it will transfer to his children.

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

Outstanding Issues

The legal nature of this trust is still uncertain – a domestic trust, or one established overseas? The notion of a "fully independent trust" has no basis in Czech legislation, and an team of legal experts will be necessary to craft an arrangement that works.

Doubts from Watchdogs

Watchdog organizations, including Transparency International, remain unconvinced.

"A blind trust is an inadequate measure," stated David Kotora, the head of Transparency International's Czech branch, in an statement.

"There's no separation. He obviously knows the managers. He knows Agrofert's range of businesses. From an high office, even at a European level, he could possibly act in matters that would impact the sector in which Agrofert is active," Kotora cautioned.

Broad Reach Beyond Agrofert

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

In the outskirts of Prague, a medical facility towers over 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 manages a chain of reproductive clinics, as well as a flower shop network, Flamengo, and an lingerie store chain, Astratex.

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