A Czech Tycoon Secures PM Post, Vowing to Cut Business Holdings

Entrepreneur Andrej Babis has officially become the nation's new head of government, with his full cabinet expected to assume their roles within days.

His appointment was contingent upon a central stipulation from President Petr Pavel – a official assurance by Babis to relinquish control over his sprawling agribusiness and chemical group, Agrofert.

"I commit to be a prime minister who champions the interests of the entire populace, domestically and internationally," affirmed Babis after the event at Prague Castle.

"A leader who will work to make the Czech Republic the best place to live on the face of the Earth."

Lofty Ambitions and a Vast Business Presence

These are grandiose goals, but Babis, 71, is familiar with ambitious plans.

Agrofert is so firmly entrenched in the Czech economic fabric that there is even a mobile tool to help shoppers bypass purchasing products made by the group's over two hundred subsidiaries.

If a product – for example, frankfurters from Kostelecké uzeniny or packaged bread from Penam – is part of an Agrofert company, a warning symbol shows up.

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 feature members of the right-wing SPD party and the EU-skeptical "Drivers for Themselves" party.

The Commitment of Separation

If he honors his pledge to separate himself from the company he founded and grew, he will stop gaining from the sale of a single Agrofert product – ranging from processed meats to agricultural chemicals.

As prime minister, he asserts he will have no insight of the conglomerate's financial health, nor any capacity to influence its performance.

Administrative decisions on state contracts or subsidies – whether national or EU-funded – will be made with no consideration for a company he will have relinquished ownership of or profit from, he adds.

Instead, he says that Agrofert, worth an estimated $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 transfer to his children.

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

Unanswered Questions

What kind of trust remains unclear – a domestic trust, or one based abroad? The legal framework of a "blind trust" is not recognized in Czech statutory law, and an battalion of attorneys will be required to craft an solution that is legally sound.

Doubts from Anti-Corruption Groups

Watchdog organizations, including Transparency International, remain unconvinced.

"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. [Babis] obviously knows the managers. He knows Agrofert's holdings. From an high office, even at a EU level, he could possibly act in matters that would impact the industry in which Agrofert is active," Kotora cautioned.

Wide-Ranging Interests Beyond Agrofert

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

In the outskirts of Prague, a medical facility stands near 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 chain of fertility centers, as well as a flower shop network, Flamengo, and an underwear retailer, Astratex.

The influence of Babis into all corners of Czech life is broad. And as prime minister, for the second occasion, it is poised to become broader.