A Czech Tycoon Secures PM Role, Pledging to Sever Corporate Empire

Entrepreneur Andrej Babis has officially become the nation's new head of government, with his government anticipated to assume their roles shortly.

His confirmation came after a key demand from President Petr Pavel – a official vow by Babis to give up command over his extensive food-processing, agriculture and chemicals conglomerate, Agrofert.

"I vow to be a prime minister who upholds the interests of all our citizens, at home and abroad," stated Babis following the ceremony at Prague Castle.

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

Grand Visions and a Far-Reaching Business Presence

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

Agrofert is so firmly entrenched in the Czech economic fabric that there is even a specialized application to help shoppers steer clear of purchasing products made by the group's numerous subsidiaries.

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

Babis, who was formerly prime minister for four years until 2021, has shifted to the right in recent years and his cabinet will include members of the far-right SPD and the EU-skeptical "Motorists for Themselves" party.

The Commitment of Withdrawal

If he fulfills his vow to withdraw 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 claims he will have no insight of the conglomerate's economic status, nor any power to affect its fortunes.

Governmental decisions on government procurement or subsidies – whether Czech or European – will be made independently of 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 placed in a fiduciary structure managed by an third-party manager, where it will stay until his death. At that point, it will be inherited by his children.

This arrangement, he remarked in a Facebook video, went "far beyond" the requirements of Czech law.

Clarification Needed

What kind of trust is still uncertain – a trust under Czech law, or one in a foreign jurisdiction? The concept of a "blind trust" has no basis in Czech legislation, and an team of legal experts will be required to devise an solution that is legally sound.

Criticism from Observers

Skeptics, including Transparency International, are still skeptical.

"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. [Babis] obviously knows the managers. He knows Agrofert's range of businesses. From an high office, even at a EU level, he could potentially influence in matters that would affect the sector in which Agrofert operates," Kotora cautioned.

Extensive Influence Beyond Agrofert

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

In the outskirts 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 manages a chain of fertility centers, as well as a flower shop network, Flamengo, and an lingerie store chain, Astratex.

The influence 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.