A Czech Tycoon Secures Prime Ministerial Post, Promising to Sever Corporate Empire

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

His selection followed a central demand from President Petr Pavel – a public vow by Babis to give up command over his sprawling agribusiness and chemical holding company, Agrofert.

"I commit to be a prime minister who champions the interests of all our citizens, both locally and globally," affirmed Babis after the event at Prague Castle.

"A prime minister who will work to establish the Czech Republic the finest location to live on the face of the Earth."

Grand Visions and a Far-Reaching Corporate Footprint

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

Agrofert is so firmly entrenched in the Czech business landscape that there is even a dedicated app to help shoppers avoid purchasing products made by the group's more than 200 subsidiaries.

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

Babis, who was formerly prime minister for four years until 2021, has moved rightward in recent years and his cabinet will feature members of the right-wing SPD party and the EU-skeptical "Drivers for Themselves" party.

The Pledge of Separation

If he fulfills his promise to withdraw 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 states he will have no information of the conglomerate's financial health, nor any capacity to influence its prospects.

State decisions on state contracts or subsidies – whether Czech or European – will be made independently of a company he will no longer own or gain financially from, he adds.

Instead, he says that Agrofert, worth an estimated $4.3bn (£3.3bn), will be placed in a fiduciary structure managed by an autonomous trustee, where it will stay until his death. Then, it will transfer to his children.

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

Unanswered Questions

What kind of trust has yet to be clarified – a Czech trust, or one in a foreign jurisdiction? The notion of a "blind trust" does not exist in Czech legislation, and an army of lawyers will be required to design an arrangement that is legally sound.

Doubts from Observers

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 comment.

"The divide is insufficient. He undoubtedly is acquainted with the managers. He knows Agrofert's range of businesses. From an position of power, even at a EU level, he could theoretically intervene in matters that would impact the industry in which Agrofert operates," Kotora warned.

Wide-Ranging Interests Extending Past Agrofert

But it's not just 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 operates a network of reproductive clinics, 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 occasion, it is poised to become more extensive.