Corruption blight to steel mill’s profits

By : Greg Goodale

   Huta Pokój, one of only three profitable domestic steel mills, has been hit by a corruption scandal that could eat into its finances and damage its credibility among the company’s investors and creditors.

   Earlier this month, 10 charges were filed by the Katowice district prosecutor’s office against Józef Jędruch, chairman of the supervisory board of investment consortium Colloseum, based in Ornontowice, which has a 62% stake in Huta Pokój. The charges include nonpayment of zł. 1.6 million ($380,952) in taxes and “working against the interests of the company.” Chairman of the board, Mariusz Łazowski, was also charged with nine separate offenses.

   “We’re not ruling out that the owners of Colloseum will be forced to restructure the capital of the consortium,” said a statement issued by the board of directors last week. This would help cover any fines the consortium will have to pay in legal fees. “(But) these steps could have a serious effect on the operations of our company and undermine our modernization program,” the statement said.

   The Solidarity trade union picketed the Katowice district prosecutor’s office during Jędruch’s hearing in an attempt to speed up court proceedings saying the longer he is detained the more harm will come to the company and its workforce.

   Jędruch was tightlipped last week about the effect the court case would have on the steel mill’s future. “The legal proceedings are still under way, so it’s difficult to assess their impact on our operations,” he said. “(But) the significance of the proceedings has been to weaken our image.”

   He said that other steel mills owned by Colloseum, including Huta Ferrum in which it has a 5% stake, should remain unaffected by the accusations. “I would not like the court proceedings to affect these firms,” he said. “They have their own clients, suppliers and banks.”

   Józef Skudlik, head of the Solidarity trade union at Huta Pokój, is concerned that banks working with the steel mill will change their criteria for providing credit to Huta Pokój and the ailing Polish steel industry in general. “We are also concerned that the financial problems that could arise at Colloseum will lead them to sell their stock to buyers with no concern for the interests in the Polish steel industry,” Skudlik said.

   Huta Pokój posted a profit of zł. 2.5 million ($595,238) on revenue of zł. 404.8 million ($96 million) in the first three quarters of this year.