Czech Tycoon Assumes PM Post, Pledging to Cut Corporate Holdings

Tycoon Andrej Babis has officially become the nation's new head of government, with his full cabinet expected to take their posts shortly.

His selection followed a central condition from President Petr Pavel – a formal assurance by Babis to give up command over his extensive food-processing, agriculture and chemicals holding company, Agrofert.

"I vow to be a prime minister who champions the interests of the entire populace, domestically and internationally," stated 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."

High Aspirations and a Pervasive Corporate Footprint

These are high-reaching aspirations, but Babis, 71, is familiar with ambitious plans.

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

If a product – for example, frankfurters from Kostelecké uzeniny or packaged bread from Penam – falls under an Agrofert company, a thumbs-down symbol shows up.

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 right-wing SPD party and the Eurosceptic "Drivers for Themselves" party.

The Pledge of Withdrawal

If he fulfills his pledge to withdraw from the company he established, he will cease to profit from the sale of any Agrofert product – from frankfurters to fertiliser.

As prime minister, he asserts he will have no knowledge of the conglomerate's economic status, nor any power to affect its prospects.

Administrative decisions on state contracts or subsidies – whether Czech or European – will be made without regard to a company he will have severed ties with or profit from, he emphasizes.

Instead, he proposes that Agrofert, valued at $4.3bn (£3.3bn), will be transferred to a trust managed by an independent administrator, where it will remain until his death. Upon that event, it will transfer to his children.

This arrangement, he commented in a online address, went "exceeded" the requirements of Czech law.

Clarification Needed

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

Doubts from Anti-Corruption Groups

Skeptics, including Transparency International, continue to doubt.

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

"There's no separation. He is familiar with the managers. He knows Agrofert's range of businesses. From an high office, even at a EU level, he could theoretically intervene in matters that would impact the industry in which Agrofert is active," Kotora warned.

Wide-Ranging Interests Extending Past Agrofert

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

In the eastern suburbs of Prague, a private health clinic towers over the O2 arena. While it is owned by a company called FutureLife a.s, that company is controlled 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 footprint of Babis into all corners of Czech life is extensive. And as prime minister, for the second time, it is about to get more extensive.