Czech Tycoon Takes PM Office, Vowing to Cut Corporate Holdings

Wealthy businessman Andrej Babis has been sworn in as the nation's new premier, with his complete ministerial team anticipated to be appointed shortly.

His confirmation followed a key stipulation from President Petr Pavel – a formal assurance by Babis to relinquish oversight over his sprawling agribusiness and chemical holding company, Agrofert.

"I promise to be a prime minister who defends the interests of all our citizens, both locally and globally," affirmed Babis after the swearing-in at Prague Castle.

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

Grand Visions and a Pervasive Business Presence

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

Agrofert is so firmly entrenched in the Czech commercial ecosystem that there is even a mobile tool to help shoppers steer clear of purchasing products made by the group's over two hundred subsidiaries.

If a product – for example, Viennese-style sausages from Kostelecké uzeniny or sliced bread from Penam – is part of an Agrofert company, a negative symbol is displayed.

Babis, who was formerly prime minister for four years until 2021, has adopted more right-leaning positions in recent years and his cabinet will incorporate members of the right-wing SPD party and the Eurosceptic "Motorists for Themselves" party.

The Commitment of Withdrawal

If he honors his vow to withdraw from the company he built from scratch, he will stop gaining from the sale of a single Agrofert product – from frankfurters to fertiliser.

As prime minister, he claims he will have no information of the conglomerate's fiscal condition, nor any power to affect its performance.

Administrative decisions on public tenders or subsidies – whether Czech or European – will be made independently of a company he will no longer own or profit from, he adds.

Instead, he explains that Agrofert, valued at $4.3bn (£3.3bn), will be placed in a trust managed by an independent administrator, where it will stay until his death. Then, it will transfer to his children.

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

Unanswered Questions

The legal nature of this trust remains unclear – a domestic trust, or one in a foreign jurisdiction? The notion of a "blind trust" has no basis in Czech statutory law, and an army of lawyers will be needed to devise an arrangement that works.

Skepticism from Watchdogs

Critics, including Transparency International, continue to doubt.

"Such a trust is an inadequate measure," stated David Kotora, the head of Transparency International's Czech branch, in an interview.

"The divide is insufficient. [Babis] obviously knows the managers. He knows Agrofert's portfolio. From an position of power, even at a European level, he could potentially influence in matters that would impact the industry in which Agrofert operates," Kotora advised.

Wide-Ranging Interests Beyond Agrofert

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

In the eastern suburbs 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, majority-owned by Babis.

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

The influence of Babis into multiple areas of Czech life is extensive. And as prime minister, for the second occasion, it is about to get broader.