Editor's note
The issue is rather complicated-there has always been a lot of controversy around privatization in Poland. On the one hand, the budget needs funds to decrease the deficit, and privatized companies need capital and know-how. On the other hand, the public reacts with disapproval and suspicion when Polish companies are handed over to foreign investors.
The situation surrounding PZU is a perfect example of such a controversial privatization. Initially, the Polish government signed an agreement requiring it to pass control of the company to the Dutch consortium, Eureko. However, in the face of strong public pressure, it backed down from the deal. Quite frankly, from the beginning the idea to privatize PZU was a huge gaffe. PZU is a gold mine-very profitable and strong, it doesn't need resuscitation. Nevertheless, a signed agreement must be honored.
Poland failed to do so (the government promised to introduce PZU on the stock market, and after the floatation, to sell 21 percent of the shares to the Dutch, giving them control) and Eureko-after numerous unsuccessful negotiations-took their complaint to a court of arbitration in London. The case is pending and a verdict should be announced shortly. The ruling, most likely unfavorable for the Polish party, will force the government to make high compensation payments to the foreign investor. The worst thing one could do in such a case is nothing, and that-up till now-is exactly what Polish government has done.
With his accord, Treasury Minister Jacek Socha has conquered the trend of passivity. The new agreement assumes that Eureko will retreat from the promised majority interest, and in return the Polish government will swiftly float PZU on the stock market. Eureko also promises not to sell off PZU's stocks for the next few years, to avoid a contested takeover.
In this situation, an old Polish proverb comes to mind: "the wolf is sated and the sheep untouched." One just wonders: Who's playing the sheep?
Eliza Durka
Editor-in-Chief
The situation surrounding PZU is a perfect example of such a controversial privatization. Initially, the Polish government signed an agreement requiring it to pass control of the company to the Dutch consortium, Eureko. However, in the face of strong public pressure, it backed down from the deal. Quite frankly, from the beginning the idea to privatize PZU was a huge gaffe. PZU is a gold mine-very profitable and strong, it doesn't need resuscitation. Nevertheless, a signed agreement must be honored.
Poland failed to do so (the government promised to introduce PZU on the stock market, and after the floatation, to sell 21 percent of the shares to the Dutch, giving them control) and Eureko-after numerous unsuccessful negotiations-took their complaint to a court of arbitration in London. The case is pending and a verdict should be announced shortly. The ruling, most likely unfavorable for the Polish party, will force the government to make high compensation payments to the foreign investor. The worst thing one could do in such a case is nothing, and that-up till now-is exactly what Polish government has done.
With his accord, Treasury Minister Jacek Socha has conquered the trend of passivity. The new agreement assumes that Eureko will retreat from the promised majority interest, and in return the Polish government will swiftly float PZU on the stock market. Eureko also promises not to sell off PZU's stocks for the next few years, to avoid a contested takeover.
In this situation, an old Polish proverb comes to mind: "the wolf is sated and the sheep untouched." One just wonders: Who's playing the sheep?
Eliza Durka
Editor-in-Chief
