Czech Tycoon Assumes PM Office, Vowing to Disentangle Business Empire

Wealthy businessman Andrej Babis has taken office as the Czech Republic's new prime minister, with his government slated to be appointed shortly.

His confirmation was contingent upon a central condition from President Petr Pavel – a public commitment by Babis to give up command over his extensive agribusiness and chemical holding company, Agrofert.

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

"A leader who will work to make the Czech Republic the top destination to live on the entire planet."

High Aspirations and a Pervasive Business Presence

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

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

If a product – for example, frankfurters from Kostelecké uzeniny or sliced bread from Penam – belongs to an Agrofert company, a thumbs-down symbol appears.

Babis, who previously served as prime minister for four years until 2021, has shifted to the right in recent years and his cabinet will incorporate members of the far-right SPD and the EU-skeptical "Motorists for Themselves" party.

The Promise of Separation

If he fulfills his pledge to separate himself from the company he built from scratch, he will cease to profit from the sale of any Agrofert product – from frankfurters to fertiliser.

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

Administrative 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 proposes that Agrofert, valued at $4.3bn (£3.3bn), will be transferred to a fiduciary structure managed by an third-party manager, where it will remain until his death. At that point, it will transfer to his children.

This arrangement, he remarked in a Facebook video, went "well above" the stipulations of Czech law.

Clarification Needed

The specific type of trust has yet to be clarified – a domestic trust, or one in a foreign jurisdiction? The notion of a "fully independent trust" does not exist in Czech legislation, and an team of legal experts will be required to craft an structure that is legally sound.

Criticism from Watchdogs

Skeptics, including Transparency International, continue to doubt.

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

"True separation is absent. He undoubtedly is acquainted with the managers. He knows Agrofert's range of businesses. From an high office, even at a European level, he could theoretically intervene in matters that would impact the industry in which Agrofert operates," Kotora advised.

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 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, majority-owned by Babis.

Hartenberg also operates a chain of fertility centers, as well as a flower shop network, Flamengo, and an lingerie store chain, Astratex.

The influence of Babis into all corners of Czech life is extensive. And as prime minister, for the second time, it is about to get even wider.