Czech Tycoon Assumes PM Office, Vowing to Disentangle Business Empire

Entrepreneur Andrej Babis has officially become the nation's new premier, with his government slated to assume their roles within days.

His selection followed a central demand from President Petr Pavel – a official vow by Babis to cede oversight over his sprawling food-processing, agriculture and chemicals conglomerate, Agrofert.

"I promise to be a prime minister who upholds the interests of every citizen, domestically and internationally," stated Babis following the ceremony at Prague Castle.

"A leader who will work to transform the Czech Republic the top destination to live on the entire planet."

Grand Visions and a Far-Reaching Corporate Footprint

These are lofty ambitions, but Babis, 71, is accustomed to large-scale thinking.

Agrofert is so firmly entrenched in the Czech economic fabric 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 sliced bread from Penam – is part of an Agrofert company, a thumbs-down symbol appears.

Babis, who was formerly prime minister for four years until 2021, has moved rightward in recent years and his cabinet will include members of the far-right SPD and the Eurosceptic "Drivers for Themselves" party.

The Promise of Separation

If he fulfills his vow to withdraw from the company he founded and grew, he will no longer benefit from the sale of a single Agrofert product – from frankfurters to fertiliser.

As prime minister, he claims he will have no information of the conglomerate's economic status, nor any capacity to affect its performance.

State decisions on government procurement or subsidies – whether Czech or European – will be made without regard to a company he will no longer own or gain financially from, he adds.

Instead, he says that Agrofert, valued at $4.3bn (£3.3bn), will be transferred to a fiduciary structure managed by an third-party manager, where it will remain until his death. Then, it will be inherited by his children.

This arrangement, he commented in a Facebook video, went "well above" the demands of Czech law.

Clarification Needed

The specific type of trust has yet to be clarified – a trust under Czech law, or one in a foreign jurisdiction? The concept of a "fully independent trust" is not recognized in Czech statutory law, and an battalion of attorneys will be required to design an structure that is functional.

Criticism from Anti-Corruption Groups

Watchdog organizations, including Transparency International, are still skeptical.

"Such a trust is an inadequate measure," argued David Kotora, the head of Transparency International's Czech branch, in an comment.

"True separation is absent. [Babis] undoubtedly is acquainted with the managers. He knows Agrofert's portfolio. From an high office, even at a EU level, he could theoretically intervene in matters that would affect the sector in which Agrofert operates," Kotora warned.

Broad Reach Extending Past Agrofert

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

In the outskirts of Prague, a private health clinic 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 manages a network of reproductive clinics, as well as a florist chain, Flamengo, and an underwear retailer, Astratex.

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