Czech Tycoon Takes PM Post, Promising to Sever Business Interests

Wealthy businessman Andrej Babis has officially become the Czech Republic's new premier, with his full cabinet expected to assume their roles shortly.

His selection came after a fundamental demand from President Petr Pavel – a public assurance by Babis to cede oversight over his vast food-processing, agriculture and chemicals holding company, Agrofert.

"I vow to be a prime minister who upholds the interests of all our citizens, at home and abroad," affirmed Babis following the event at Prague Castle.

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

Lofty Ambitions and a Pervasive Business Presence

These are high-reaching aspirations, but Babis, 71, is accustomed to thinking big.

Agrofert is so thoroughly integrated in the Czech economic fabric that there is even a mobile tool 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 – falls under an Agrofert company, a negative symbol shows up.

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

The Pledge of Divestment

If he fulfills his pledge to separate himself from the company he founded and grew, he will no longer benefit from the sale of a single Agrofert product – ranging from processed meats to agricultural chemicals.

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

State decisions on government procurement or subsidies – whether Czech or European – will be made without regard to a company he will have severed ties with or gain financially from, he adds.

Instead, he proposes that Agrofert, valued at $4.3bn (£3.3bn), will be transferred to a trust 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 commented in a social media post, went "far beyond" the requirements of Czech law.

Clarification Needed

The specific type of trust remains unclear – a Czech trust, or one based abroad? The concept of a "fully independent trust" is not recognized in Czech statutory law, and an army of lawyers will be necessary to craft an structure that is functional.

Skepticism from Watchdogs

Watchdog organizations, including Transparency International, are still skeptical.

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

"There's no separation. 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 possibly act in matters that would impact the industry in which Agrofert functions," Kotora advised.

Wide-Ranging Interests Extending Past Agrofert

But it's not only 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 majority-owned by Hartenberg Holding, and Hartenberg Holding is, in turn, controlled by Babis.

Hartenberg also operates a chain of fertility centers, as well as a florist chain, Flamengo, and an underwear retailer, Astratex.

The influence of Babis into multiple areas of Czech life is broad. And as prime minister, for the second time, it is set to grow broader.