Czech Tycoon Takes PM Office, Vowing to Sever Business Interests

Tycoon Andrej Babis has been sworn in as the nation's new premier, with his government slated to be appointed in the coming days.

His appointment came after a fundamental condition from President Petr Pavel – a public vow by Babis to relinquish oversight over his sprawling food-processing, agriculture and chemicals conglomerate, Agrofert.

"I vow to be a prime minister who defends the interests of the entire populace, domestically and internationally," affirmed Babis following the event at Prague Castle.

"A leader who will work to make the Czech Republic the best place to live on the whole globe."

High Aspirations and a Far-Reaching Business Presence

These are lofty ambitions, but Babis, 71, is familiar with thinking big.

Agrofert is so firmly entrenched in the Czech commercial ecosystem that there is even a specialized application to help shoppers steer clear of 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 – belongs to an Agrofert company, a negative symbol is displayed.

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

The Commitment of Withdrawal

If he upholds his vow to divest from the company he built from scratch, he will cease to profit from the sale of any Agrofert product – ranging from processed meats to agricultural chemicals.

As prime minister, he asserts he will have no insight of the conglomerate's economic status, nor any ability to sway its prospects.

Administrative decisions on government procurement or subsidies – whether Czech or European – will be made without regard to 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 autonomous trustee, where it will remain until his death. At that point, it will be inherited by his children.

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

Unanswered Questions

The legal nature of this trust is still uncertain – a Czech trust, or one based abroad? The legal framework of a "blind trust" has no basis in Czech legislation, and an battalion of attorneys will be needed to devise an solution that is functional.

Criticism from Watchdogs

Skeptics, including Transparency International, are still skeptical.

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

"The divide is insufficient. [Babis] is familiar with the managers. He knows Agrofert's portfolio. From an high office, even at a EU level, he could possibly act in matters that would affect the industry in which Agrofert is active," Kotora cautioned.

Wide-Ranging Interests 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 controlled 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 lingerie store chain, Astratex.

The influence of Babis into every facet of Czech life is extensive. And as prime minister, for the second occasion, it is about to get broader.