A Czech Tycoon Takes Prime Ministerial Post, Pledging to Sever Commercial Empire

Entrepreneur Andrej Babis has officially become the nation's new head of government, with his complete ministerial team expected to take their posts shortly.

His appointment followed a fundamental stipulation from President Petr Pavel – a public vow by Babis to give up oversight over his vast agribusiness and chemical group, Agrofert.

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

"A prime minister who will work to transform the Czech Republic the finest location to live on the whole globe."

Grand Visions and a Vast Corporate Footprint

These are grandiose goals, but Babis, 71, is familiar with thinking big.

Agrofert is so thoroughly integrated in the Czech economic fabric that there is even a dedicated app to help shoppers avoid purchasing products made by the group's numerous subsidiaries.

If a product – for example, frankfurters from Kostelecké uzeniny or packaged bread from Penam – falls under an Agrofert company, a negative symbol shows up.

Babis, who previously served as prime minister for four years until 2021, has moved rightward in recent years and his cabinet will feature members of the right-wing SPD party and the EU-skeptical "Drivers for Themselves" party.

The Commitment of Divestment

If he upholds his promise to withdraw 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 claims he will have no information of the conglomerate's financial health, nor any ability to affect its prospects.

Governmental decisions on government procurement or subsidies – whether Czech or European – will be made independently of a company he will have severed ties with or profit from, he emphasizes.

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

This arrangement, he commented in a Facebook video, went "far beyond" the stipulations of Czech law.

Unanswered Questions

What kind of trust is still uncertain – a Czech trust, or one based abroad? The legal framework of a "blind trust" has no basis in Czech legislation, and an army of lawyers will be required to design an structure that is functional.

Criticism from Observers

Skeptics, including Transparency International, are still skeptical.

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

"There's no separation. [Babis] is familiar with the managers. He knows Agrofert's portfolio. From an position of power, even at a EU level, he could theoretically intervene in matters that would affect the sector in which Agrofert is active," Kotora advised.

Extensive Influence Extending Past Agrofert

But it's not only 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, controlled by Babis.

Hartenberg also operates a network of fertility centers, as well as a flower shop network, Flamengo, and an underwear retailer, Astratex.

The influence of Babis into all corners of Czech life is extensive. And as prime minister, for the second time, it is about to get broader.