Wasacz appears on shaky ground after KERM decision
While Treasury Minister Emil Wasacz's job appeared to be in jeopardy last week partly as a result of the way he handled the privatization of Poland's largest insurance firm, government employees and privatization observers disagreed whether the minister would be dismissed.
Last Tuesday, the Cabinet Economic Committee (KERM) scrapped Wasacz's decision to sell an additional 20-25% chunk of Powszechny Zaklad Ubezpieczen (PZU) to its strategic investor, pan-European insurance holding Eureko, without a public tender. After the first deal with Eureko, Wasacz said last month that his office would allow Eureko to increase its 20% holding in PZU to 40-45% without a public tender, essentially handing over control of the company to the insurer.
"The situation in the Treasury Ministry is quite complicated at the moment," said Robert Szaniawski, an employee in the prime minister's information office. "(With) journalists writing their articles there is a possibility that the treasury minister could be dismissed, and one of the reasons is connected with the PZU and Eureko contract."
The sell-off of PZU would continue through an initial public offering (IPO) on the Warsaw Stock Exchange (WSE), thereby reverting to the treasury's original plan after the partial sale to the strategic investor, the cabinet said last week. After the first sale, the treasury said it would sell another 25% of PZU on the Warsaw and London stock exchanges in late 2000 or early 2001. The Treasury Ministry has flip-flopped several times on the timing of the second stage of privatization since the first 30% stake was sold to the Eureko-BIG Bank Gdanski (BIG BG) consortium.
Last November, the Treasury Ministry sold 30% of PZU to a consortium of Eureko and BIG BG for zl. 3 billion ($769 million). Eureko got 20% of PZU, while BIG BG received 10%. The deal gave the consortium a minority holding in the company, four of nine seats on the supervisory board and an option to increase its stake by another 10% in the next public offering.
Ruling Solidarity Election Action (AWS) government officials last week blamed press speculation for reports about a possible no-confidence vote in Wasacz. Some opposition deputies in the Sejm have criticized Wasacz for corrupt practices in privatization deals and for selling Poland's state-owned companies for less than their value. They also opposed the PZU sale and called for its cancellation, especially after it became known that Eureko was to pay a low price for the additional shares.
The Polish Peasants Party (PSL) last week threatened to issue a no-confidence vote in Wasacz, claiming that he sold off state assets for less than their value and did not consult Parliament on the sale of stakes in major industries.
Others said that the government's decision not to sell the additional stake to Eureko would not lead to Wasacz's dismissal.
"Some politicians are angry because PZU has been sold," Szaniawski said. "Some politicians say PZU should remain in public custody and we should not privatize it." He added that he was not a specialist in the area and that it would be better for a reporter to wait for a response from the Treasury Ministry, to which he forwarded the Business Journal's questions.
Other observers concurred that Wasacz may not be on his way out.
"The decision (not to sell the additional stake to Eureko) makes the position of the treasury minister safer," said Artur Szeski, an analyst at CDM Pekao Securities. He added that although there was a deal to sell an additional stake to Eureko, the offer came from Eureko and not the ministry and that KERM had the final say about not selling additional shares to Eureko.
Szeski also pointed out that the terms of the original deal with the Eureko-BIG BG consortium were never disclosed, though some industry observers say the Treasury Ministry made an unofficial agreement to sell Eureko the additional shares prior to the IPO. PZU controls about 60-65% of Poland's insurance market, Szeski said.
The details of the government's deal with Eureko are unknown, but it is believed that unofficially the ministry agreed to sell the pan-European insurer an additional stake without a public offering. Lorrie Morgan, spokeswoman for Eureko, said that the decision to offer another tranche to Eureko was not part of the company's original deal with the treasury.
Last Friday, a PZU shareholders meeting was held to "make decisions about the new supervisory board and elect a new management board," according to Adam Taukert, PZU's spokesman. The company's president, Wladyslaw Jamrozy, and his deputy were suspended by PZU's supervisory board for supporting Deutsche Bank in its recent takeover attempt of BIG BG, of which Eureko owns 8.6%.
When asked about the influence of political pressure in the decision not to sell the second stake to Eureko, Taukert said: "It's a matter (for) our shareholders the government, Eureko and BIG BG. They may talk about politicians and political pressure and other strategic pressures (at the meeting)."
Morgan said no decision had been made yet as to whether Eureko will wait until the IPO to buy additional shares. Eureko has already purchased some of BIG BG's 10% stake in PZU, and intends to buy the rest.
In related news, at press time Friday, the state treasury and Eureko named Jerzy Zdrzalka president of PZU.
