Czech Tycoon Secures PM Post, Promising to Disentangle Business Empire

Wealthy businessman Andrej Babis has taken office as the nation's new head of government, with his full cabinet anticipated to be appointed in the coming days.

His confirmation was contingent upon a fundamental stipulation from President Petr Pavel – a formal assurance by Babis to relinquish oversight over his extensive agribusiness and chemical holding company, Agrofert.

"I commit to be a prime minister who champions the interests of every citizen, both locally and globally," declared Babis following the swearing-in at Prague Castle.

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

Grand Visions and a Pervasive Business Presence

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

Agrofert is so thoroughly integrated in the Czech business landscape that there is even a mobile tool to help shoppers avoid 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 – falls under an Agrofert company, a negative symbol shows up.

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 right-wing SPD party and the EU-skeptical "Motorists for Themselves" party.

The Pledge of Divestment

If he honors his vow to withdraw from the company he established, he will cease to profit from the sale of a single Agrofert product – from frankfurters to fertiliser.

As prime minister, he asserts he will have no information of the conglomerate's financial health, nor any ability to affect its performance.

Governmental decisions on government procurement or subsidies – whether national or EU-funded – will be made independently of a company he will no longer own or gain financially from, he further notes.

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

This arrangement, he stated in a online address, went "far beyond" the stipulations of Czech law.

Unanswered Questions

What kind of trust is still uncertain – a domestic trust, or one based abroad? The concept of a "fully independent trust" does not exist in Czech legislation, and an army of lawyers will be necessary to craft an arrangement that is legally sound.

Criticism from Watchdogs

Critics, including Transparency International, are still skeptical.

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

"The divide is insufficient. He obviously knows the managers. He knows Agrofert's holdings. From an executive position, even at a European level, he could theoretically intervene in matters that would impact the sector in which Agrofert functions," Kotora cautioned.

Broad Reach Extending Past Agrofert

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

In the eastern suburbs 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 runs a network of reproductive clinics, as well as a flower shop network, Flamengo, and an lingerie store chain, Astratex.

The influence of Babis into multiple areas of Czech life is wide. And as prime minister, for the second time, it is set to grow more extensive.