Treasury sacks PZU management board
By : Alexander Stocks
Treasury Minister Andrzej Chronowski was back at the center of a legal and political minefield last week after sacking the supervisory board of insurer Powszechny Zaklad Ubezpieczen (PZU) at an overnight shareholders meeting.
The treasury's ousting of the management, which had comprised representatives from strategic investors of pan-European insurer Eureko and BIG Bank Gdanski (BIG BG), has once again highlighted the controversy over the insurer's privatization agreement. Insiders at Eureko now hold out little hope that the ministry will come willingly to the negotiating table. The consortium said it would turn to European Union (EU) legal channels for help.
"We have to draw a line now. Enough is enough," said Eureko's Executive Director Ernst Jansen in a declaration explaining why the consortium, which holds 30% of PZU against the treasury's 56%, had walked out of the 13-hour meeting.
"We will now leave this shareholders meeting to make perfectly and publicly clear that only the state treasury is responsible for this," he said. "You are treating the other shareholders like cattle. We have a strong moral and legal case and remain committed to execute the privatization agreement."
The consortium plans to pursue its claims through legal channels unless the treasury declares in writing that it will adhere to the privatization agreement, said Jansen.
Meanwhile, the treasury stood by its actions in a subsequent statement and said it expected Eureko to honor the terms of the privatization agreement. The ministry has accused Eureko of buying its PZU stake only to strengthen its stake in BIG BG.
The privatization agreement sets forth procedures for appointing and removing management board members and gives four out of nine supervisory board appointments to Eureko. The Netherlands-based company maintains that the treasury breached the agreement.
In addition to several lawsuits pending in Polish courts on behalf of both parties, Eureko intends to file a claim with an EU court in "a matter of days," Jansen said. This differs from Eureko's earlier statement that a claim had been filed two weeks ago.
The insurance group is seeking compensation for losses incurred during the course of the showdown that began almost a year ago, when Eureko bought 20% of the insurer and BIG BG 10% for a combined zl. 3 billion ($732 million).
Eureko has also complained to both the Polish and Dutch governments and hopes to see action taken on both governmental and EU levels.
"We will now formally ask the EU to protect our interests," Jansen said, adding that any country on the brink of EU membership should be trustworthy in its adherence to a standing agreement. "We are determined to remain the strategic shareholders for PZU and we are determined to remain important investors for Poland."
Although the treasury's moves over PZU have worried many investors eyeing other forthcoming privatizations in Poland, some analysts said the battle has unique origins that separate it from the norm.
It goes back to an ill-fated attempt by Deutsche Bank in January 2000 to take over BIG BG, whose shares PZU executives secretly agreed to sell to the German bank.
But analysts said allegations are plausible that Chronowski is trying to take back the company to appoint his own cronies to management positions.
Andrzej Powierza, an analyst with brokerage Wood & Co., said Chronowski may have decided the consortium didn't pay enough for the equal voting rights it obtained and is looking for a way to bring the consortium's influence more in line with its 30% stake. That could increase the value of shares sold in the future. "I don't see any hope for a quick end to this story," he added.
PZU accounts for about 60% of Poland's insurance business.
