Czech Tycoon Assumes Prime Ministerial Role, Vowing to Disentangle Business Empire

Wealthy businessman Andrej Babis has officially become the nation's new prime minister, with his full cabinet slated to assume their roles within days.

His appointment followed a central stipulation from President Petr Pavel – a formal assurance by Babis to give up oversight over his vast food-processing, agriculture and chemicals group, Agrofert.

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

"A leader who will work to transform the Czech Republic the finest location to live on the entire planet."

Grand Visions and a Far-Reaching Business Presence

These are lofty ambitions, but Babis, 71, is accustomed to ambitious plans.

Agrofert is so thoroughly integrated in the Czech economic fabric that there is even a mobile tool 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 packaged bread from Penam – is part of an Agrofert company, a warning symbol appears.

Babis, who held the role of 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 EU-skeptical "Motorists for Themselves" party.

The Commitment of Separation

If he upholds his promise to divest from the company he established, he will no longer benefit 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 economic status, nor any capacity to sway its performance.

Administrative decisions on government procurement or subsidies – whether Czech or European – will be made independently of a company he will have severed ties with or profit from, he emphasizes.

Instead, he explains that Agrofert, valued at $4.3bn (£3.3bn), will be transferred to a trust 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 Facebook video, went "exceeded" the demands of Czech law.

Clarification Needed

The legal nature of this trust remains unclear – a domestic trust, or one in a foreign jurisdiction? The legal framework of a "fully independent trust" has no basis in Czech legislation, and an team of legal experts will be required to devise an solution that is legally sound.

Doubts from Observers

Watchdog organizations, including Transparency International, continue to doubt.

"A blind trust is not the answer," stated David Kotora, the head of Transparency International's Czech branch, in an comment.

"True separation is absent. [Babis] 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 affect the sector in which Agrofert functions," Kotora advised.

Wide-Ranging Interests Extending Past 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 the property of 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 fertility centers, as well as a florist chain, Flamengo, and an lingerie store chain, Astratex.

The reach of Babis into multiple areas of Czech life is broad. And as prime minister, for the second occasion, it is poised to become even wider.