A Czech Tycoon Assumes PM Post, Promising to Disentangle Commercial Holdings

Entrepreneur Andrej Babis has taken office as the nation's new head of government, with his government expected to be appointed shortly.

His confirmation was contingent upon a fundamental stipulation from President Petr Pavel – a public assurance by Babis to relinquish control over his extensive food-processing, agriculture and chemicals conglomerate, Agrofert.

"I promise to be a prime minister who defends the interests of all our citizens, domestically and internationally," stated Babis following the swearing-in at Prague Castle.

"A prime minister who will work to transform the Czech Republic the finest location to live on the entire planet."

Lofty Ambitions and a Pervasive Corporate Footprint

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

Agrofert is so thoroughly integrated in the Czech business landscape 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, frankfurters from Kostelecké uzeniny or packaged bread from Penam – belongs to 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 include members of the far-right SPD and the Eurosceptic "Drivers for Themselves" party.

The Pledge of Withdrawal

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 – from frankfurters to fertiliser.

As prime minister, he claims he will have no knowledge of the conglomerate's economic status, nor any ability to sway its fortunes.

Governmental decisions on state contracts 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 says 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 commented in a Facebook video, went "exceeded" the stipulations of Czech law.

Clarification Needed

What kind of trust remains unclear – a trust under Czech law, or one established overseas? The legal framework of a "fully independent trust" has no basis in Czech statutory law, and an army of lawyers will be necessary to design an arrangement that is functional.

Doubts from Watchdogs

Critics, including Transparency International, remain unconvinced.

"Such a trust is an inadequate measure," argued David Kotora, the head of Transparency International's Czech branch, in an statement.

"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 functions," Kotora warned.

Broad Reach Extending Past Agrofert

But it's not just food – and it's not just 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 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 flower shop network, Flamengo, and an lingerie store chain, Astratex.

The reach of Babis into all corners of Czech life is broad. And as prime minister, for the second time, it is set to grow broader.