A Czech Tycoon Secures PM Office, Pledging to Cut Business Interests

Tycoon Andrej Babis has been sworn in as the Czech Republic's new prime minister, with his full cabinet slated to take their posts within days.

His confirmation was contingent upon a key condition from President Petr Pavel – a formal assurance by Babis to relinquish control over his vast agribusiness and chemical holding company, Agrofert.

"I commit to be a prime minister who champions the interests of the entire populace, at home and abroad," declared Babis following the swearing-in at Prague Castle.

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

Grand Visions and a Vast Corporate Footprint

These are lofty ambitions, but Babis, 71, is used to ambitious plans.

Agrofert is so firmly entrenched in the Czech economic fabric that there is even a mobile tool to help shoppers avoid 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 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 Eurosceptic "Drivers for Themselves" party.

The Pledge of Divestment

If he fulfills his promise to separate himself from the company he founded and grew, he will cease to profit 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 financial health, nor any capacity to affect its prospects.

Administrative decisions on state contracts or subsidies – whether national or EU-funded – will be made independently of a company he will no longer own or profit from, he emphasizes.

Instead, he explains that Agrofert, worth an estimated $4.3bn (£3.3bn), will be transferred to a fiduciary structure managed by an autonomous trustee, where it will remain until his death. Then, it will be inherited by his children.

This arrangement, he commented in a social media post, went "well above" the requirements of Czech law.

Clarification Needed

What kind of trust is still uncertain – a trust under Czech law, or one based abroad? The notion of a "blind trust" is not recognized in Czech statutory law, and an army of lawyers will be needed to devise an solution that is legally sound.

Doubts from Observers

Watchdog organizations, including Transparency International, are still skeptical.

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

"There's no separation. [Babis] is familiar with the managers. He knows Agrofert's holdings. From an executive position, even at a EU level, he could potentially influence in matters that would affect the sector in which Agrofert operates," Kotora cautioned.

Extensive Influence Extending Past Agrofert

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

In the eastern suburbs 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 runs a chain of reproductive clinics, as well as a florist chain, Flamengo, and an lingerie store chain, Astratex.

The influence of Babis into every facet of Czech life is wide. And as prime minister, for the second time, it is set to grow even wider.