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MINISTER EXAMINING ALLEGATIONS IN CONTROVERSIAL SALE

Airport tender hits further turbulence

TURBULENCE continues to rock the privatization of Slovakia's two largest airports. Only weeks after a tender advisor revealed that the winning bid, that of the TwoOne consortium including the Slovak Penta group, had presented the weakest business plan for the Bratislava and Košice airports, one of the unsuccessful bidders challenged the decision of the tender commission, saying it had offered more money.

TURBULENCE continues to rock the privatization of Slovakia's two largest airports. Only weeks after a tender advisor revealed that the winning bid, that of the TwoOne consortium including the Slovak Penta group, had presented the weakest business plan for the Bratislava and Košice airports, one of the unsuccessful bidders challenged the decision of the tender commission, saying it had offered more money.

Adding to the unsettled conditions, the head of the country's strongest opposition party, Smer, said on January 4 that if his party gained power following scheduled September 2006 general elections, it would do its utmost to annul the privatization sales.

While Transport Minister Pavol Prokopovič is now weighing all the complaints and suspicions that have emerged since the December 22 decision of the tender commission and during the bidding process, the tender is proving more controversial than any in the Dzurinda government's second term.

Prokopovič has the last word on whether to accept the tender commission's recommendation.

The bidders vying for the 66-percent stake in the Bratislava and Košice airports included a consortium between Abertis, TBI and the J&T financial group; the TwoOne consortium (Vienna International Airport, Raiffeisen Zentralbank and Penta); Tepe Akfen Ventures; and Independent Slovak Airport Partners (Flughafen Wien, SNC-Lavalin International, and Airport Consulting).

On January 4, Independent Slovak Airport Partners (ISAP) claimed that it offered a higher price for the airports than the TwoOne consortium favoured by the privatization commission.

Johann Frank of the company Airport Consulting Vienna, which is part of ISAP, told the daily SME that the consortium had offered the highest price, Sk9.06 billion (€240 million), for a 66 percent stake in the airports. TwoOne, according to the daily, offered Sk6.9 billion (€180 million).

The ISAP consortium, led by Germany's Köln/Bonn airport, sent its objection to the ministers of transport, finance and economy.

The consortium had already promised in mid-December 2005 to appeal to the European Commission if TwoOne were selected, arguing that the investment by TwoOne would not benefit the region.

Fears have been raised by many observers that if TwoOne were victorious, the presence of Vienna Airport in the consortium might lead the investor to shift noisy, polluting and less lucrative flights from Vienna to Bratislava.

Transport Ministry spokesman Tomáš Šarluška told The Slovak Spectator that the cabinet would likely discuss the tender by the end of January, by which time the winner would likely be picked. The TwoOne consortium told The Slovak Spectator they would not comment on the ISAP's claims.

The tender commission's second choice was the consortium of Abertis, TBI and Slovakia's J&T financial group.

The tender had been plagued by leaks of classified information from the outset. The Pravda daily was the first to report that three out of the four bidders were ready to pay between Sk13 and 14 billion (€344 to €371 million) for the Bratislava airport and around Sk1 billion (€25.5 million) for Košice airport.

Meanwhile, an online article in the business weekly Trend appearing December 14 said that the TwoOne consortium was offering Sk6 billion (€159 million) for the Bratislava airport, plus a deposit of Sk7.9 billion (€209 million).

Trend also claimed that Abertis and J&T were offering Sk3.3 billion (€87 million) plus a deposit of Sk9.7 billion (€257 million), and that the ISAP group was offering a total of Sk10.3 billion (€273 million).

The Transport Ministry has not commented on the figures or confirmed if any are authentic.

The uncertainty surrounding the tender was fuelled by the opposition Smer, which promised to immediately cancel the privatisation once in government "if it is carried out under the conditions set for investors by this right-wing government."

Smer boss Robert Fico pointed out that Smer had deliberately chosen to make this statement before the winners of the tenders are announced, and that any investor should be aware of the risk they were taking on in purchasing the airport stakes.

The Transport Ministry responded that Smer had had a chance to audit and influence the choice of strategic investor during the tender as it had a member on the tender commission.

However, Smer MP Maroš Kondrót gave up his seat in protest against the privatization.

The commission eventually consisted of three appointees from the Transport Ministry, two from the Economy Ministry and two from the National Property Fund. Two seats belonged to the parliamentary Privatization Committee.

The privatization even drew the eye of the European Commission, which said last year it would keep an eye on the process, as it was an uncommon one by EC standards.

Earlier complaints about the TwoOne consortium's bid had nearly resulted in its expulsion. However, the tender committee's advisor, the Austrian Meinl Bank, said that TwoOne met the criteria and should remain in the race.

Vinci Concessions withdrew from the running on November 13 after the media exposed a financial connection between one of the consortium's principle investors and Raiffeisen Zentralbank.

Austrian A-way, bidding with French company Vinci, had the same members on its advisory board as Raiffeisen Holding, which controls Raiffeisen Zentralbank, a major party in the TwoOne consortium. The submission of "double bids" violates privatization standards.

At the time, TwoOne representatives told The Slovak Spectator they saw no reason to quit the competition. TwoOne also questioned whether the European Commission had any jurisdiction over the privatization deal, even if it disapproved of the process.

"The law stipulates that the Slovak government will pick the winner by issuing a privatization decision," TwoOne representatives said.

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