A Czech Tycoon Takes Prime Ministerial Post, Promising to Cut Corporate Empire

Entrepreneur Andrej Babis has been sworn in as the Czech Republic's new premier, with his complete ministerial team anticipated to assume their roles shortly.

His appointment came after a key condition from President Petr Pavel – a formal vow by Babis to cede command over his vast agribusiness and chemical group, Agrofert.

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

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

High Aspirations and a Vast Corporate Footprint

These are high-reaching aspirations, but Babis, 71, is accustomed to thinking big.

Agrofert is so deeply embedded in the Czech business landscape 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, frankfurters from Kostelecké uzeniny or sliced bread from Penam – belongs to an Agrofert company, a warning symbol appears.

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

The Promise of Separation

If he upholds his promise to withdraw from the company he founded and grew, he will cease to profit from the sale of a single Agrofert product – from frankfurters to fertiliser.

As prime minister, he states he will have no insight of the conglomerate's economic status, nor any power to sway its prospects.

Administrative decisions on public tenders or subsidies – whether national or EU-funded – will be made with no consideration for a company he will have severed ties with or profit from, he further notes.

Instead, he explains that Agrofert, valued at $4.3bn (£3.3bn), will be placed in a trust managed by an third-party manager, where it will remain until his death. Upon that event, it will be inherited by his children.

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

Clarification Needed

The specific type of trust has yet to be clarified – a Czech trust, or one in a foreign jurisdiction? The legal framework of a "blind trust" does not exist in Czech statutory law, and an army of lawyers will be necessary to devise an structure that works.

Skepticism from Observers

Watchdog organizations, including Transparency International, remain unconvinced.

"A blind trust is an inadequate measure," said David Kotora, the head of Transparency International's Czech branch, in an interview.

"True separation is absent. He is familiar with the managers. He knows Agrofert's holdings. From an position of power, even at a EU level, he could potentially influence in matters that would impact the industry in which Agrofert operates," Kotora advised.

Extensive Influence Extending Past Agrofert

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

In the outskirts of Prague, a medical facility 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 network of reproductive clinics, as well as a flower shop network, Flamengo, and an lingerie store chain, Astratex.

The reach of Babis into multiple areas of Czech life is extensive. And as prime minister, for the second time, it is about to get even wider.