Czech Tycoon Assumes Prime Ministerial Role, Pledging to Cut Business Holdings

Entrepreneur Andrej Babis has officially become the Czech Republic's new premier, with his government expected to assume their roles shortly.

His selection was contingent upon a central stipulation from President Petr Pavel – a public assurance by Babis to relinquish command over his vast food-processing, agriculture and chemicals group, Agrofert.

"I vow to be a prime minister who champions the interests of every citizen, domestically and internationally," stated Babis after the swearing-in at Prague Castle.

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

Lofty Ambitions and a Far-Reaching Corporate Footprint

These are lofty ambitions, but Babis, 71, is familiar with thinking big.

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

If a product – for example, Viennese-style sausages from Kostelecké uzeniny or sliced bread from Penam – falls under an Agrofert company, a warning symbol is displayed.

Babis, who was formerly prime minister for four years until 2021, has moved rightward in recent years and his cabinet will feature members of the right-wing SPD party and the Eurosceptic "Motorists for Themselves" party.

The Pledge of Divestment

If he fulfills his promise to divest from the company he established, he will stop gaining from the sale of any Agrofert product – ranging from processed meats to agricultural chemicals.

As prime minister, he claims he will have no insight of the conglomerate's financial health, nor any power to affect its performance.

Governmental decisions on government procurement or subsidies – whether Czech or European – will be made independently of a company he will no longer own or profit from, he adds.

Instead, he says that Agrofert, valued at $4.3bn (£3.3bn), will be transferred to a trust managed by an independent administrator, where it will stay until his death. Upon that event, it will be inherited by his children.

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

Clarification Needed

The specific type of trust has yet to be clarified – a trust under Czech law, or one established overseas? The notion of a "fully independent trust" does not exist in Czech statutory law, and an battalion of attorneys will be required to design an solution that works.

Doubts from Anti-Corruption Groups

Skeptics, including Transparency International, continue to doubt.

"A blind trust is not a solution," said David Kotora, the head of Transparency International's Czech branch, in an statement.

"There's no separation. He 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 potentially influence in matters that would impact the industry in which Agrofert is active," Kotora warned.

Wide-Ranging Interests 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 majority-owned by Hartenberg Holding, and Hartenberg Holding is, in turn, majority-owned by Babis.

Hartenberg also operates a network of reproductive clinics, as well as a florist chain, Flamengo, and an underwear retailer, Astratex.

The influence of Babis into multiple areas of Czech life is broad. And as prime minister, for the second time, it is set to grow more extensive.