A Czech Tycoon Takes PM Post, Pledging to Disentangle Business Interests

Wealthy businessman Andrej Babis has taken office as the Czech Republic's new premier, with his government expected to be appointed in the coming days.

His confirmation came after a central condition from President Petr Pavel – a official commitment by Babis to give up oversight over his vast food-processing, agriculture and chemicals group, Agrofert.

"I commit to be a prime minister who defends the interests of the entire populace, both locally and globally," declared Babis after the event at Prague Castle.

"A leader who will work to establish the Czech Republic the top destination to live on the whole globe."

Lofty Ambitions and a Far-Reaching Corporate Footprint

These are grandiose goals, but Babis, 71, is used to ambitious plans.

Agrofert is so firmly entrenched 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 – falls under an Agrofert company, a negative symbol appears.

Babis, who previously served as prime minister for four years until 2021, has adopted more right-leaning positions in recent years and his cabinet will incorporate members of the right-wing SPD party and the Eurosceptic "Motorists for Themselves" party.

The Commitment of Separation

If he upholds his promise to separate himself from the company he established, he will stop gaining from the sale of a single Agrofert product – ranging from processed meats to agricultural chemicals.

As prime minister, he claims he will have no knowledge of the conglomerate's financial health, nor any ability to influence its prospects.

Administrative decisions on government procurement or subsidies – whether Czech or European – will be made with no consideration for a company he will have relinquished ownership of or profit from, he emphasizes.

Instead, he explains that Agrofert, valued at $4.3bn (£3.3bn), will be placed in a fiduciary structure managed by an independent administrator, where it will stay until his death. At that point, it will be inherited by his children.

This arrangement, he stated in a online address, went "exceeded" the demands of Czech law.

Clarification Needed

What kind of trust is still uncertain – a domestic trust, or one in a foreign jurisdiction? The legal framework of a "blind trust" does not exist in Czech legislation, and an team of legal experts will be needed to design an solution that is functional.

Criticism from Watchdogs

Watchdog organizations, including Transparency International, remain unconvinced.

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

"The divide is insufficient. He undoubtedly is acquainted with the managers. He knows Agrofert's portfolio. 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 Beyond Agrofert

But it's not only 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 majority-owned by Hartenberg Holding, and Hartenberg Holding is, in turn, controlled by Babis.

Hartenberg also runs a chain of reproductive clinics, as well as a florist chain, Flamengo, and an lingerie store chain, Astratex.

The reach of Babis into every facet of Czech life is wide. And as prime minister, for the second time, it is poised to become even wider.