Czech Tycoon Secures Prime Ministerial Office, Promising to Cut Corporate Interests

Entrepreneur Andrej Babis has taken office as the Czech Republic's new premier, with his complete ministerial team anticipated to take their posts in the coming days.

His confirmation came after a central demand from President Petr Pavel – a public commitment by Babis to give up control over his extensive agribusiness and chemical conglomerate, Agrofert.

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

"A prime minister who will work to establish the Czech Republic the finest location to live on the whole globe."

Lofty Ambitions and a Far-Reaching Business Presence

These are grandiose goals, but Babis, 71, is familiar with thinking big.

Agrofert is so firmly entrenched in the Czech economic fabric that there is even a dedicated app 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 sliced bread from Penam – falls under an Agrofert company, a warning symbol is displayed.

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 "Drivers for Themselves" party.

The Promise of Withdrawal

If he upholds his promise to divest 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 asserts he will have no information of the conglomerate's fiscal condition, nor any power 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 severed ties with or gain financially from, he further notes.

Instead, he explains that Agrofert, worth an estimated $4.3bn (£3.3bn), will be transferred to 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 stated in a online address, went "far beyond" the requirements of Czech law.

Clarification Needed

The specific type of trust remains unclear – a domestic trust, or one in a foreign jurisdiction? The concept of a "blind trust" is not recognized in Czech legislation, and an army of lawyers will be needed to design an structure that works.

Doubts from Watchdogs

Watchdog organizations, including Transparency International, are still skeptical.

"Such a trust is an inadequate measure," argued 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 EU level, he could possibly act in matters that would impact the sector in which Agrofert operates," Kotora advised.

Broad Reach 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 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 reproductive clinics, as well as a florist chain, Flamengo, and an underwear retailer, Astratex.

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