Q&A: Robert Bogdański
State-owned Polish Press Agency (PAP), set up under communism to spread goverment propaganda, has slowly become a stable, profitable company since undergoing restructuring five years ago. PAP's chief executive officer, Robert Bogdański, gets much of the credit for PAP's turnaround. Last year PAP recorded a profit for the first time in its history, a considerable achievement given that the agency had depended on state subsidies throughout its history. And he is one of only a handful of managers of treasury-owned companies who have not been sacked by the Democratic Left Alliance (SLD) since the left-of-center political group took office last October. Still to be tackled is privatization - PAP is on the Treasury Ministry's list of companies to be privatized but there has been little progress since its privatization adviser, BRE Corporate Finance, was selected last year. The WBJ's Anna Kocińska spoke to Bogdański about various privatization models for PAP and its current operations. The following is a translated, edited version of their conversation.
Q: In April the Supreme Chamber of Control (NIK) praised PAP's financial plans for 2001. While NIK applauded PAP's management, the agency wasn't even mentioned in the government's report on treasury-owned companies. Why? A: You know why and I understand why.
Q: But weren't you surprised that the government's report didn't cover well-managed treasury companies such as PAP? A: No, I wasn't. The report's authors had their own concept and they collected information accordingly. The idea wasn't about presenting some selected companies that were well managed.
Q: So, you must be an inconvenient kind of CEO because your company doesn't fit the image created by the current government of corruption-plagued state-appointed managers that paralyzed the previous administration. A: Well, let me put it in a simple way. I am a very convenient CEO (for the government) because regardless of the kind of image it's trying to create, it's far better to cooperate with someone who runs a company in a professional way than to clean up after a bad manager.
Q: Does the current law allow the treasury minister to replace you before the end of your term as CEO? A: Under the law on PAP, the company's management cannot be removed from office until its privatization. It's not stipulated directly in the law but it's clear enough. My term ends next year in May or June, when the 2002 financial report is accepted by the supervisory board.
Q: I understand that the ministry hasn't made any attempts to replace you so far? A: Since last year's parliamentary elections I've read many speculations about people who would replace me. I can understand that for some people it was a way to promote themselves.
Q: But according to the WBJ's sources, the ministry has tried to accuse you of fraud. They said that PAP contributed land for half price to the Mysia 5 office project (the site of PAP's new office at the intersection of ulica Mysia and Bracka, expected to open in 2003). A: I wouldn't like to go into details as the whole thing is over and the attempt turned out to be a complete failure. On the other hand, this project that started almost three years ago and has been described by the supervisory board and NIK as extremely favorable for PAP, at some point fell under close scrutiny. Obviously, the intention was to find out things, you know. They failed. In my opinion it was a complete waste of time, on both sides.
Q: PAP won't receive subsidies from the state budget this year. Did that take you by surprise? A: There are no subsidies in the state budget for us this year and I hope that will never change. It's true that PAP used to live on state subsidies but that was in the past and our goal was to change that.
Q: Has this been a good moment to become independent? A: There is no such thing as a good moment when someone stops subsidizing you. It's painful when you learn that the sum of money that used to be in your account isn't there anymore. But please get me right: I think that subsidies are a bad thing.
Q: How will the lack of subsidies impact your finances this year? A: Last year, when planning our budget for 2002, we assumed there wouldn't be any subsidies coming. On the other hand, the fact that we didn't get zł. 1.7 million ($414,000) allocated to us in 2001 wasn't a nice surprise. That's a lot of money compared to our zł. 40 million ($9.75 million) in revenue. We will do our best to get this money back because it's part of our 2001 revenue.
Q: How is PAP doing now? A: All I can say is that we generated a profit last year. It's modest, though, on a level similar to 2000. I will be able to present details after the June 4 supervisory board meeting.
Q: When will PAP be privatized? The ministry, which is still said to be working on the privatization strategy for PAP, has been sending out mixed signals on this. A: It's the Treasury Ministry that is dealing the cards. But there are two aspects to the privatization of PAP. The government's privatization policy, whether to privatize PAP at all, is one; timing is the other. Considering the current economic conditions it might not be the perfect time to privatize the company. So I assume that PAP won't be sold soon.
Q: Last year Treasury Minister Wiesław Kaczmarek said he couldn't see why PAP should be privatized. Recently, the government has decided to renationalize the Szczecin Shipyard. Don't you find these signals alarming? A: All I do is present various, feasible scenarios to the ministry. At this stage one can implement scenarios that would provide the company with financing for its development. It would have to be done within the limits dictated by law, though. The ministry is informed about possible scenarios but I can't tell you what their decision will be. From what I can gather of my conversation with (treasury Vice Minister) Małgorzata Ostrowska, she is not against PAP's privatization. That doesn't mean, however, that privatization will take place soon.
Q: Is it possible to find a good buyer for PAP if the ministry is only ready to sell 49%? A: To sell more than the 49% we would have to amend the current law on PAP. The question is if the political environment is favorable to these changes.
Q: Politicians argued that the ministry must keep 51% of PAP to be able to control how the agency is implementing its public mission. A: The treasury, through its majority shareholding, wants to make sure the mission is implemented but I'm promoting a different kind of theory. In my opinion it's the market that guarantees the mission is carried out: PAP offers a very rich parliamentary news service, which is a must under the law but it also sells extremely well. I can't imagine that I would give this service up and would cut the company from its public obligations even if 100% of PAP is sold because it would simply undermine its position on the market. So because it's really the market that makes us carry out the mission, the law in this respect, is actually unnecessary. It would all work this way without all these stipulations in the law, assuming, though, that there are no state subsidies coming. Otherwise, the government, by subsidizing PAP, would expect certain responses from the agency.
Q: Critics of the current government argue that it simply wants to keep control over public television and PAP to be able to affect outgoing information. A: Let's not forget that the law on PAP was written and approved in 1997 by the SLD (Democratic Left Alliance) and the Freedom Union (UW) and during AWS (Solidarity Election Action government) the law wasn't amended. Whether it will be amended now I can't say but I'm not so eager to criticize politicians in this case because Poland, with the concept of privatizing its national press agency, is very far ahead of any other Central European country.
Q: What kind of an investor would be ideal for PAP? A: I don't think I would say anything new. An ideal investor should have appropriate financial resources and know-how. I don't think that a private equity fund could be interested in PAP because the company can't provide the kind of return rate over a short period of time that (private equity) funds are usually after. For the time being our profit rate is definitely lower than such expectations and I would be happy if it grew above inflation. That's why I think that an investor from the media sector of the market would be the best. The know-how aspect shouldn't be underestimated either.
Q: How much is PAP worth? A: I can't and I don't know the estimates made by the privatization adviser but PAP is worth more than one can expect. It's a good, profitable company, with a very good, well-known brand with good potential.
Q: And what are PAP's profit generators? A: We make money on two kinds of services: traditional news services, which was quite a discovery for us, and on our business service.
Q: Is PAP financially prepared to wait for privatization much longer or can it live without it? A: This is a problem because as soon as next year we have to invest in the modernization of our satellite systems, which would cost us a couple of million (złotys). It's the kind of money we can't afford from our revenue. We'll think about where to get this money; it can either be privatization or credit but obviously, privatization is a much better way to arrange that money.
Q: What kind of important changes have you made as CEO? A: We finally learned how much things cost in this company and how much we can charge for our services. That's the most important knowledge we've gained.
