Czech Tycoon Assumes Prime Ministerial Office, Promising to Sever Business Empire

Entrepreneur Andrej Babis has officially become the nation's new prime minister, with his government slated to be appointed within days.

His selection was contingent upon a key condition from President Petr Pavel – a public assurance by Babis to cede command over his sprawling agribusiness and chemical conglomerate, Agrofert.

"I commit to be a prime minister who upholds the interests of all our citizens, domestically and internationally," affirmed Babis following the event at Prague Castle.

"A prime minister who will work to establish the Czech Republic the top destination to live on the face of the Earth."

Grand Visions and a Far-Reaching Business Presence

These are grandiose goals, but Babis, 71, is familiar with ambitious plans.

Agrofert is so thoroughly integrated in the Czech commercial ecosystem that there is even a mobile tool to help shoppers steer clear of purchasing products made by the group's more than 200 subsidiaries.

If a product – for example, frankfurters from Kostelecké uzeniny or packaged bread from Penam – belongs to an Agrofert company, a negative symbol appears.

Babis, who held the role of prime minister for four years until 2021, has moved rightward in recent years and his cabinet will incorporate members of the far-right SPD and the EU-skeptical "Motorists for Themselves" party.

The Pledge of Separation

If he honors his promise to divest from the company he founded and grew, he will stop gaining from the sale of any Agrofert product – ranging from processed meats to agricultural chemicals.

As prime minister, he asserts he will have no knowledge of the conglomerate's financial health, nor any power to sway its prospects.

State 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 profit from, he further notes.

Instead, he explains that Agrofert, worth an estimated $4.3bn (£3.3bn), will be transferred to a fiduciary structure managed by an autonomous trustee, where it will stay until his death. Upon that event, it will be inherited by his children.

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

Unanswered Questions

The specific type of trust remains unclear – a trust under Czech law, or one based abroad? The concept of a "fully independent trust" does not exist in Czech statutory law, and an battalion of attorneys will be necessary to design an arrangement that works.

Skepticism from Watchdogs

Skeptics, including Transparency International, remain unconvinced.

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

"There's no separation. [Babis] is familiar with the managers. He knows Agrofert's holdings. From an high office, even at a European level, he could potentially influence in matters that would impact the industry in which Agrofert functions," Kotora advised.

Broad Reach Extending Past 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 majority-owned by Hartenberg Holding, and Hartenberg Holding is, in turn, majority-owned by Babis.

Hartenberg also runs a chain 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 wide. And as prime minister, for the second time, it is about to get even wider.