Kamela-Sowinska holds talks with Eureko
Dutch-based insurance group Eureko and the Treasury Ministry met last week to untangle the privatization of the country's largest insurer, Powszechny Zaklad Ubezpieczen (PZU), while PZU suspended its Friday shareholders meeting saying it would not take any action for at least a week.
Treasury and Eureko officials confirmed that the sides met but would not comment on the specific issues discussed. "Both sides agreed not to comment on the meeting," said Lorrie Morgan, head of communications for Eureko. "But it appears we have moved on from the impasse in which we seem to have been mired." The talks are ongoing, she confirmed.
In a related development, a Warsaw district court on March 2 issued a temporary injunction removing two of the company's three management board members and reinstating Eureko's representatives on PZU's supervisory board, according to a source close to the case.
Eureko and BIG Bank Gdanski (BIG BG) acquired a 30% stake in PZU in November 1999. The sides have been locked in a dispute almost since the moment they inked the privatization tender agreement. The fight culminated in November 2000 when then-Treasury Minister Andrzej Chronowski replaced the consortium's representatives to PZU's supervisory and management boards with his own choices, and attempted to annul the privatization agreement in court.
Treasury Minister Aldona Kamela-Sowinska, who took over for Chronowski two weeks ago, immediately made it known that she wanted to meet with Eureko officials and settle the dispute, which centers on Eureko's influence over company management. Any talks would have to address terms of the original agreement, which gave equal voting rights in the state-controlled company to the consortium, even though it did not have equal ownership. Chronowski pointed to the disparity as a reason for annulling the privatization agreement.
Following Eureko's exclusion from management in November, the rump supervisory board in January appointed new managers. Eureko retaliated by petitioning the court to reinstate its representatives in PZU's management structure.
The recent temporary court injunction removes two of the company's three management board members leaving it with one and reinstates Eureko's representatives on PZU's supervisory board, a source said. The decision is subject to appeal. The court order is also retroactive, meaning that the decision to hold Friday's supervisory board meeting was issued by managers who were never actually in power. According to one meeting participant, however, neither Eureko nor BIG BG lodged an objection.
Kamela-Sowinska, a non-party technocrat who handled privatizations during Chronowski's reign, has not signaled how she will resolve the knotted relationship between the government, PZU and the two strategic investors, though press reports have speculated that she will attempt to clean house and get rid of some managers tied to her predecessor.
The privatization dispute cast a pall on government efforts to sell state-owned assets and could have a real impact on the state budget. Under the original terms of the agreement, the treasury was to make an initial public offering (IPO) of PZU's stock before the end of 2001. The IPO has already been delayed and failure to resolve the spat could push it into 2002, depriving the government of revenue.
