A Czech Tycoon Secures PM Role, Promising to Sever Commercial Empire

Wealthy businessman Andrej Babis has taken office as the nation's new prime minister, with his complete ministerial team anticipated to be appointed in the coming days.

His appointment followed a key condition from President Petr Pavel – a formal assurance by Babis to relinquish control over his sprawling agribusiness and chemical holding company, Agrofert.

"I commit to be a prime minister who champions the interests of every citizen, both locally and globally," declared Babis after the swearing-in at Prague Castle.

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

Grand Visions and a Vast Corporate Footprint

These are high-reaching aspirations, but Babis, 71, is used to large-scale thinking.

Agrofert is so firmly entrenched in the Czech commercial ecosystem that there is even a dedicated app to help shoppers avoid purchasing products made by the group's more than 200 subsidiaries.

If a product – for example, frankfurters from Kostelecké uzeniny or sliced bread from Penam – falls under an Agrofert company, a negative symbol shows up.

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

The Pledge of Withdrawal

If he fulfills his vow to withdraw from the company he founded and grew, he will stop gaining from the sale of a single Agrofert product – from frankfurters to fertiliser.

As prime minister, he claims he will have no insight of the conglomerate's fiscal condition, nor any power to affect its prospects.

State decisions on government procurement or subsidies – whether national or EU-funded – will be made independently of a company he will no longer own or profit from, he emphasizes.

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

This arrangement, he stated in a social media post, went "exceeded" the stipulations of Czech law.

Unanswered Questions

The legal nature of this trust remains unclear – a Czech trust, or one in a foreign jurisdiction? The legal framework of a "blind trust" does not exist in Czech legislation, and an army of lawyers will be needed to craft an structure that works.

Skepticism from Watchdogs

Skeptics, including Transparency International, are still skeptical.

"A blind trust is an inadequate measure," said David Kotora, the head of Transparency International's Czech branch, in an statement.

"The divide is insufficient. He is familiar with the managers. He knows Agrofert's portfolio. From an executive position, even at a EU level, he could possibly act in matters that would impact the industry in which Agrofert is active," Kotora advised.

Wide-Ranging Interests Beyond Agrofert

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

In the eastern suburbs of Prague, a private health clinic 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, majority-owned by Babis.

Hartenberg also runs a network of fertility centers, as well as a flower shop network, Flamengo, and an underwear retailer, Astratex.

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