Czech Tycoon Takes Prime Ministerial Office, Promising to Sever Corporate Holdings

Entrepreneur Andrej Babis has officially become the nation's new head of government, with his government slated to take their posts within days.

His selection followed a key condition from President Petr Pavel – a formal vow by Babis to cede control over his extensive food-processing, agriculture and chemicals holding company, Agrofert.

"I commit to be a prime minister who defends the interests of all our citizens, at home and abroad," affirmed Babis following the ceremony 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 grandiose goals, but Babis, 71, is familiar with thinking big.

Agrofert is so deeply embedded in the Czech commercial ecosystem that there is even a specialized application to help shoppers avoid purchasing products made by the group's more than 200 subsidiaries.

If a product – for example, Viennese-style sausages 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 adopted more right-leaning positions in recent years and his cabinet will feature members of the far-right SPD and the EU-skeptical "Drivers for Themselves" party.

The Commitment of Separation

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 asserts he will have no information of the conglomerate's financial health, nor any ability to influence its fortunes.

State decisions on public tenders or subsidies – whether national or EU-funded – will be made with no consideration for a company he will have relinquished ownership of 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 third-party manager, where it will stay until his death. Then, it will transfer to his children.

This arrangement, he commented in a online address, went "well above" the demands of Czech law.

Clarification Needed

The specific type of trust has yet to be clarified – a trust under Czech law, or one established overseas? The concept of a "blind trust" is not recognized in Czech legislation, and an battalion of attorneys will be necessary to craft an arrangement that works.

Skepticism from Watchdogs

Skeptics, including Transparency International, continue to doubt.

"A blind trust is not a solution," said David Kotora, the head of Transparency International's Czech branch, in an statement.

"The divide is insufficient. He undoubtedly is acquainted with the managers. He knows Agrofert's portfolio. From an position of power, even at a EU level, he could possibly act in matters that would affect the industry in which Agrofert is active," Kotora advised.

Extensive Influence Beyond Agrofert

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

In the outskirts of Prague, a medical facility towers over the O2 arena. While it is owned by 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 manages a network of reproductive clinics, as well as a florist chain, Flamengo, and an underwear retailer, Astratex.

The footprint of Babis into all corners of Czech life is extensive. And as prime minister, for the second occasion, it is about to get more extensive.