Czech Tycoon Secures PM Office, Vowing to Disentangle Commercial Holdings

Tycoon Andrej Babis has been sworn in as the Czech Republic's new head of government, with his complete ministerial team expected to be appointed in the coming days.

His appointment was contingent upon a fundamental demand from President Petr Pavel – a formal vow by Babis to cede command over his vast agribusiness and chemical conglomerate, Agrofert.

"I vow to be a prime minister who upholds the interests of every citizen, at home and abroad," declared Babis after the event at Prague Castle.

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

Lofty Ambitions and a Vast Corporate Footprint

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

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

If a product – for example, frankfurters from Kostelecké uzeniny or packaged bread from Penam – falls under an Agrofert company, a warning symbol is displayed.

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 right-wing SPD party and the Eurosceptic "Drivers for Themselves" party.

The Promise of Divestment

If he upholds his vow to separate himself from the company he built from scratch, he will no longer benefit 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 power to sway its prospects.

Administrative decisions on state contracts or subsidies – whether national or EU-funded – will be made with no consideration for a company he will have severed ties with or profit from, he adds.

Instead, he says that Agrofert, valued at $4.3bn (£3.3bn), will be transferred to a trust managed by an autonomous trustee, where it will remain until his death. Upon that event, it will transfer to his children.

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

Outstanding Issues

What kind of trust is still uncertain – a trust under Czech law, or one established overseas? The notion of a "blind trust" does not exist in Czech legislation, and an team of legal experts will be required to design an structure that works.

Criticism from Observers

Critics, including Transparency International, remain unconvinced.

"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. He obviously knows the managers. He knows Agrofert's holdings. From an executive position, even at a European level, he could potentially influence in matters that would impact the industry in which Agrofert functions," Kotora advised.

Extensive Influence Beyond Agrofert

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

In the eastern suburbs of Prague, a medical facility towers over the O2 arena. While it is owned by 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 manages a chain of reproductive clinics, as well as a flower shop network, Flamengo, and an underwear retailer, Astratex.

The footprint of Babis into multiple areas of Czech life is extensive. And as prime minister, for the second time, it is about to get broader.