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AGENCY CHIEF STEPS DOWN AS ROW WITH MINISTRY COMES TO HEAD

SARIO summer of discontent waxes full

Head of state investment agency SARIO Alan Sitár resigned August 8, citing an "inability to fully undertake the organisation's planned activities". He said that financing problems, and a difference of opinion with the Economy Ministry, a key SARIO shareholder, over the agency's direction, had been behind the step-down.
The resignation brought to a head a deepening conflict between the ministry and SARIO management, headed by Sitár, which had two weeks earlier seen Economy Minister Ľubomír Harach call for the removal of the agency's top executives.
"During the last year I tried to create an agency that was of the standard of those in other countries, such as the Czech Republic. The obstacles to the work of the agency, such as financing, our mandate, the creation of foreign delegations, were too great, and much of the agency's time was spent trying to solve external problems and little time on the important work of SARIO. I could not find a modus vivendi with the Economy Ministry in that time, and so I took this decision," Sitár told The Slovak Spectator August 8.


Groups surrounding Economy Minister Ľubomír Harach, above, are suggested to have been at the centre of disputes with Sitár.
photo: TASR

Head of state investment agency SARIO Alan Sitár resigned August 8, citing an "inability to fully undertake the organisation's planned activities". He said that financing problems, and a difference of opinion with the Economy Ministry, a key SARIO shareholder, over the agency's direction, had been behind the step-down.

The resignation brought to a head a deepening conflict between the ministry and SARIO management, headed by Sitár, which had two weeks earlier seen Economy Minister Ľubomír Harach call for the removal of the agency's top executives.

"During the last year I tried to create an agency that was of the standard of those in other countries, such as the Czech Republic. The obstacles to the work of the agency, such as financing, our mandate, the creation of foreign delegations, were too great, and much of the agency's time was spent trying to solve external problems and little time on the important work of SARIO. I could not find a modus vivendi with the Economy Ministry in that time, and so I took this decision," Sitár told The Slovak Spectator August 8.

He added that a resolution from a meeting between Minister Harach, Deputy PM for Economy Ivan Mikloš, Deputy PM for Integration Mária Kadlečíkova and Finance Minister Brigita Schmögnerová the day before, had prompted his step-down.

It was agreed at the meeting that SARIO would be transformed into a state joint stock company, with the Government Office, Finance and Economy Ministries being the company shareholders. The agency's activities for the support of exports will be taken over by the foreign trade department at the Economy Ministry.

"I realised as soon as that decision was taken, although I accept it, that my role was no longer necessary," said Sitár .

Months of problems

The resignation comes only weeks after SARIO managers were accused of having conflicts of interest and follows a near-bankruptcy in May. Sitár had rejected as "without professional basis", calls for management to be dismissed.

"SARIO has made substantial progress in supporting investment, and also with working with investors here [since it was founded in summer 2000]. We have the feeling that the Economy Ministry wants to change the management without giving any professional reasons for doing so," Sitár said just days before his resignation.

Harach made the call for the management clearout at a general assembly of SARIO shareholders July 27, his representative, Marius Hričovský, shocking managers by asking for a proposal for the recalls to be added to the agenda at the start of the meeting. However, the number of shareholders present was not sufficient to add the point to the assembly agenda.

Without the agreement of the Economy Ministry, and to its apparent disgust, a business plan and a 51 million crown ($1 million) budget for the agency was approved, with funds earmarked for the creation of six new branch offices in the UK, Japan, USA, Italy, France and Germany.

Hričovský left the meeting before it finished in protest at the approval of the plan, and SARIO managers afterwards publicly questioned the reasons for the ministry's proposed recalls, releasing the results of the meeting and their opinion of the ministry representative's walk-out in a press release.

"We were quite surprised when the Economy Ministry showed its opposition to our business plans. The regional offices are crucial. We have seen this from, for example, the results of [Czech state investment agency] CzechInvest in Ireland," explained Sitár.

Investor reaction

With Slovakia last year attracting more foreign investment than it had from 1993 to 1999 combined, and SARIO being touted as the 'one-stop shopping' vanguard of Slovak investment strategy, foreign investors had expressed perplexity over the agency's recent woes.

Reaction to news of the resignation from some investors was one of uncertainty.

"I'm very sorry. I think that Mr Sitár was a good man for SARIO. We worked with them, and I don't know what will happen now, what the consequences will be. I hope this will not have any negative effects for us or other investors," said Errico Biondi, general director of Whirlpool Slovakia.

A replacement for Sitár is yet to be named, but the outgoing agency chief did say that he had reassurances that the "basic principles" of the institution would be kept to by his replacement.

"No one is irreplaceable and I believe the strategies we adopted were the right ones. I wish whoever comes after me well, and hope that they can do a better job than I managed. But I know that sometimes it takes some time for someone new to come into a job and get used to it, and this may cause a slowing down of the work of SARIO. But this, of course, all depends on the management," he said.

Tales of woe

The investment agency has been at the centre of much unwanted media attention in recent months. In May it was discovered that the firm was close to bankruptcy after the government failed to transfer 50 million ($1 million) crowns onto its account to pay office rents.

In mid-July news also broke that Sitár and other managers, including the agency's general director Roman Minarovič, had possible conflicts of interest, holding seats on the boards of various private sector companies. Under the statutes of the agency, they are not allowed to hold such functions simultaneously with their SARIO jobs.

The men denied the conflicts of interest, claiming they had severed ties to the companies and informed the Economy Ministry of their actions in December last year.

But the matter refused to go away, with the European Commission (EC) delegation in Bratislava saying that 5.5 million euros in EU funds for grants and technical assistance would not be released until the EC was assured of the "safe financing of SARIO", that the agency was a 100% state-owned company, and that no one at the company had any conflicts of interest.

"We don't want to be involved in anything to do with changes in management of SARIO, that is an internal, purely Slovak governmental affair. But before we release this money, we want to be sure that SARIO is fully functional, i.e that its funds are fully secured, that it has enough staff, and that it is fully state-owned. We want to make sure this money is going to be used properly and that the best value is got for it," said Jochen Schult, counsellor at the EC delegation in Bratislava.

Following the Economy Ministry's proposed recall of senior SARIO executives local press portrayed the affair as a personal conflict between two separate political groups: one surrounding Harach, and the other linked to Deputy PM Mikloš, who was a public supporter of Sitár for the post of SARIO boss when the agency was created one year ago.

The Economy Ministry has rejected the claims.

"We are calling for the changes in management because we feel management made an incorrect attack on shareholders in the media. We also had some opposing views on finances and the business plan of SARIO," explained Peter Benčúrik, Economy Ministry spokesman, August 1.

"SARIO does not need offices in other countries. We have economic and trade consuls [at Slovak embassies] in other countries, and we feel that SARIO can use their knowledge and activities. We agreed with the Finance Ministry that this would save money.

"There was also information in the media about a possible conflict of interest; after that, the Economy Ministry asked for clarification from SARIO managers about this. As far as I am aware, we have not received that information."

However, Sitár maintained, even when announcing his resignation that he had never had any conflicts of interest, and played down speculation that this may have been behind his resignation.

"There have not been any conflicts of interest and the question of them was already fully answered in December last year," he said.

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