A Czech Tycoon Assumes Prime Ministerial Post, Pledging to Sever Business Holdings

Entrepreneur Andrej Babis has been sworn in as the nation's new prime minister, with his government slated to be appointed shortly.

His selection came after a fundamental condition from President Petr Pavel – a official assurance by Babis to relinquish oversight over his sprawling food-processing, agriculture and chemicals group, Agrofert.

"I promise to be a prime minister who upholds the interests of the entire populace, at home and abroad," stated Babis after the ceremony at Prague Castle.

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

High Aspirations and a Far-Reaching Business Presence

These are grandiose goals, but Babis, 71, is used to thinking big.

Agrofert is so thoroughly integrated in the Czech economic fabric that there is even a dedicated app to help shoppers avoid 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 warning symbol is displayed.

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

The Promise of Divestment

If he upholds 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 states he will have no knowledge of the conglomerate's financial health, nor any ability to influence its fortunes.

State decisions on government procurement or subsidies – whether national or EU-funded – will be made without regard to a company he will have severed ties with or gain financially from, he emphasizes.

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

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

Outstanding Issues

What kind of trust is still uncertain – a Czech trust, or one in a foreign jurisdiction? The notion of a "blind trust" has no basis in Czech legislation, and an battalion of attorneys will be necessary to devise an solution that is functional.

Doubts from Watchdogs

Skeptics, including Transparency International, continue to doubt.

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

"There's no separation. He obviously knows the managers. He knows Agrofert's holdings. From an executive position, even at a EU level, he could potentially influence in matters that would impact the industry in which Agrofert is active," 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 private health clinic stands near the O2 arena. While it is the property of 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 runs a network of reproductive clinics, as well as a flower shop network, Flamengo, and an lingerie store chain, Astratex.

The reach of Babis into all corners of Czech life is broad. And as prime minister, for the second time, it is poised to become more extensive.