Beware the cucking stool

   Public ridicule was the medieval method of punishing equivocators who couldn't follow through on deals. The householder who failed to pay the thatcher or the trader who short-changed the wool merchant were usually put in the stocks and pelted with rotten vegetables for a day or two. Sometimes punishment meted out was a lot worse.

   Last week it was the Polish government's turn on the cucking stool. By sacking the board of insurer Powszechny Zaklad Ubezpieczen (PZU) and cancelling the privatization of the country's largest sugar holding, Slaska Spolka Cukrowa (SSC), the government ended the week with cabbage all over its face.

   The controversy surrounding PZU is now well-known, but the treasury dug its heels in even further last week by going ahead with reversing an earlier high court decision and ousting the management of the insurer – yet again. The board was deemed too close to the foreign shareholder, Dutch-based insurer Eureko. Government insiders said it was a unique case, with the two parties blaming each other for underhanded dealing. Sadly it wasn't.

   Next up, the Interior Ministry threw out the sugar privatization deal signed with France's St. Louis Sucre (SLS) last December. The application to buy the 16 mills of SSC was thought to have been a formality. But the ministry was adamant that the French company had filled out the application form incorrectly. It said applications should have been made for each mill, as the land is owned by each one. The ministry even cited a law dating back to the 1920s to prove its point.

   What the ministry didn't say was that SLS had submitted the application form last May and seven months had elapsed until the deal was sealed, just before Christmas. But someone in the ministry no doubt decided it was a seasonal gift worth holding onto. Unfortunately, it could also spell the end of any goodwill from foreign investors looking to Poland as a safe haven for their investments. No doubt European Union (EU) bureaucrats are also taking note.

   However, the clumsy handling of both cases highlights some serious problems within the minority government. It says a lot about how the government is handling the privatization process – badly. Laws should be transparent sending out positive signals to foreign investors, but instead they're looking murky and inadequate. Investors, particularly from the EU, will simply look elsewhere if the business climate gets tough. Also, with the world's economy looking uncertain, it's not the time to be sending out bad signals.

   The government has often survived the past few years in power by equivocation and sycophancy, or pandering to popular sentiment while steering a course beset with muddle and scandal. It's no secret that there were workers' protests at the SSC mills when the privatization deal was inked last December. But pandering to the few will only harm the many in Poland. To observers, a government fugue is a dangerous diversion, but Poles never forget.