A Czech Tycoon Takes PM Office, Promising to Disentangle Business Empire

Entrepreneur Andrej Babis has taken office as the nation's new premier, with his full cabinet expected to assume their roles in the coming days.

His appointment came after a fundamental condition from President Petr Pavel – a official assurance by Babis to cede command over his vast agribusiness and chemical conglomerate, Agrofert.

"I commit to be a prime minister who upholds the interests of every citizen, domestically and internationally," stated Babis after the swearing-in at Prague Castle.

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

High Aspirations and a Pervasive Business Presence

These are lofty ambitions, but Babis, 71, is familiar with large-scale thinking.

Agrofert is so deeply embedded in the Czech business landscape that there is even a mobile tool to help shoppers bypass purchasing products made by the group's over two hundred subsidiaries.

If a product – for example, Viennese-style sausages from Kostelecké uzeniny or packaged bread from Penam – is part of an Agrofert company, a negative symbol shows up.

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

The Promise of Withdrawal

If he honors his vow to separate himself 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 asserts he will have no information of the conglomerate's economic status, nor any power to affect its performance.

Governmental decisions on state contracts or subsidies – whether Czech or European – will be made without regard to a company he will no longer own or gain financially 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 third-party manager, where it will remain until his death. At that point, it will be inherited by his children.

This arrangement, he remarked in a social media post, went "well above" the requirements of Czech law.

Outstanding Issues

The legal nature of this trust has yet to be clarified – a Czech trust, or one established overseas? The notion of a "fully independent trust" does not exist in Czech legislation, and an team of legal experts will be required to devise an solution that is legally sound.

Doubts from Observers

Watchdog organizations, including Transparency International, continue to doubt.

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

"The divide is insufficient. [Babis] undoubtedly is acquainted with the managers. He knows Agrofert's portfolio. From an position of power, even at a European level, he could possibly act in matters that would impact the industry in which Agrofert is active," Kotora warned.

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 owned by a company called FutureLife a.s, that company is controlled by Hartenberg Holding, and Hartenberg Holding is, in turn, controlled by Babis.

Hartenberg also manages a network of reproductive clinics, as well as a florist chain, Flamengo, and an underwear retailer, Astratex.

The influence of Babis into multiple areas of Czech life is extensive. And as prime minister, for the second time, it is poised to become broader.