Spectator on facebook

Spectator on facebook

COMMUNIST-ERA LOCKSMITH OPENING DOORS TO FORMER SPP MISMANAGEMENT

Watchdog Jozef Stahl taking on big-time corruption

Jozef Stahl, chairman of the Supreme Control Office, is courteous, straight-forward and impassive. At 56, he seems to have learned from a career of 'control' - checking the accounts and decisions of people who spend taxpayer money - not to lay all his cards on the table.
The Supreme Control Office (NKÚ) is a state-run financial watchdog whose main role is to conduct inspections of how taxes and other state budget income is raised and spent. That includes state-run companies such as gas utility SPP and electricity utility SE, various ministries, the government and the Office of the President. His Office cannot interfere with the decision-making powers of these bodies, but can investigate the effects their decisions have on public finances. Stahl's mantras are efficiency and economy in the use of state funds.
Since the Office won the right on January 1 this year to make its findings public, Slovak citizens have been treated to regular reports of corruption large and small. Stahl was behind the discovery that SPP had paid millions to reconstruct penthouse flats in an exclusive Bratislava area for its top managers, but then signed these flats over to the ownership of company bosses. He has faulted President Rudolf Schuster for gold-plating the gates of his official palace.


Jozef Stahl feels the injustices his family suffered under Communism increased his thirst for justice and order.
photo: TASR

Jozef Stahl, chairman of the Supreme Control Office, is courteous, straight-forward and impassive. At 56, he seems to have learned from a career of 'control' - checking the accounts and decisions of people who spend taxpayer money - not to lay all his cards on the table.

The Supreme Control Office (NKÚ) is a state-run financial watchdog whose main role is to conduct inspections of how taxes and other state budget income is raised and spent. That includes state-run companies such as gas utility SPP and electricity utility SE, various ministries, the government and the Office of the President. His Office cannot interfere with the decision-making powers of these bodies, but can investigate the effects their decisions have on public finances. Stahl's mantras are efficiency and economy in the use of state funds.

Since the Office won the right on January 1 this year to make its findings public, Slovak citizens have been treated to regular reports of corruption large and small. Stahl was behind the discovery that SPP had paid millions to reconstruct penthouse flats in an exclusive Bratislava area for its top managers, but then signed these flats over to the ownership of company bosses. He has faulted President Rudolf Schuster for gold-plating the gates of his official palace.

He also was empowered by a revision of the constitution this past spring to investigate deals made by the FNM privatisation agency. The FNM, it should be remembered, has been a closed book to the public since it was removed from the NKÚ's purview in 1994, and is suspected of having been the conduit for billions of crowns in privatisation fraud from 1994 to 1998.

Finding corruption in high places is his job and, if the slight smile that tugs at his lips says anything, his true calling. The Slovak Spectator spoke to him August 9 about his findings since taking the post in December 1999.


The Slovak Spectator (TSS): You were born in Martin in northern Slovakia in 1945. What kind of family did you grow up in?

Jozef Stahl (JS): My father was self-employed, he had a car repair shop, so I was born into that repair-shop environment - at least until political changes occurred [with the Communist Party coming to power in 1948 - ed. note] and my father's property was nationalised. Thereafter our living conditions declined, because my father's business became a barrier for us children; we weren't able to choose what school we wanted, but had to go where they [Communist Party] sent us.


TSS: Did the fact you were born before Communism appeared in this country make you any different from children born after 1948?

JS: It depends what stage of Communism we're talking about, because children were not as affected by the regime in its earlier years as they were to become later. It also depended a great deal on what kind of 'class profile' a person had - in other words, who your parents were. Children whose parents were labourers received preference, in attending schools and other areas, while the situation was the reverse for others like me whose class profile was poor because my father had been a businessman.


TSS: You yourself became a locksmith...

JS: Yes, because I wasn't permitted to choose which secondary school I would attend. So I became a locksmith, and thus also a member of the working class (laughs).


TSS: Is there any connection between your first trade and your current profession - in a way, 'unlocking' corruption cases in the current state sphere?

JS: That's an interesting question. I ended up in this job through a long process, and I think that perhaps the injustice and illegal behaviour my family and I experienced later aroused in me a desire and inclination towards justice. I felt the way to best achieve and support justice lay in the area of controls and audits. I was drawn to the law, and wanted to study it, but I couldn't because it was forbidden to me. I finally managed to get a law degree by doing it part-time, as an 'external' student - that was permitted after I had become a labourer. I started work in a factory as a technical controller, and gradually became a professional controller in 1985, by which time my past was no longer such a deciding factor.

Between then and 1990, controllers - even though the term used then was different - were professional, and didn't publicise many things that were 'uncomfortable'. We nevertheless performed many audits, investigations, and corrected many practices just by doing these controls. Even then the object of our work was weeding out corruption. Under the former regime there were many forms of corruption such as abuse of power for bribery.

Nowadays we are a financial control organ, which means we no longer control the performance of the state bureaucracy as we once did. If the prime minister, a cabinet minister or a bureaucrat takes a decision within their sphere of power, we don't get involved. We just look at the way they use and spend public funds. But before we would also investigate decisions that open the door for corruption, such as the issuance of building permits or deciding on admissions to schools. Such corruption was also widespread with household goods - there was a general shortage of goods, which meant that people looked for ways to corrupt and bribe vendors to put aside goods for them that ordinary citizens didn't have access to.


TSS: Does that explain the constant line-ups during Communism even for such goods as toilet paper?

JS: Yes, and especially for things like refrigerators, cars, bicycles - people would either wait all night in line for them, or they would try to bribe the store manager to give them first crack at the limited goods for sale.


TSS: And what could the store managers do with their bribe money - go bribe other store managers for other scarce goods? What was the purpose of corruption under Communism?

JS: A lot of it was non-financial corruption, such as people selling fridges, cars and bicycles trading these goods among themselves.


TSS: Did you know a young lawyer named Vladimír Mečiar during Communism?

JS: No, I first met him after the Velvet Revolution in the 1990s.


TSS: Much has been written about Mečiar's nomination of Ivan Lexa in 1994 to serve as Privatisation Minister, the theory being that Lexa's father's involvement in the fulfilment of communist five-year economic plans before 1989 had given him insight into which firms were worth privatising and which weren't. As an anti-corruption expert, how did it make you feel to see top communists remaining in powerful economic and political posts?

JS: From my point of view, there were many very able people among the communists, whether in economy or law; and many times they had been brought into the Communist Party to serve an economic role. When change came, they used their leadership, legal and economic skills more or less for their own gain. The Communist Party, which had fettered them before, no longer existed, and nothing remained to prevent them from using their skills for their own personal success. The fact that such a huge change happened so suddenly also allowed many people to get very rich very quickly, and they succumbed to the temptation.

Whether or not these people got rich by breaking the law is a very difficult question to answer, because the laws had to be rewritten, and the body of law we had at the time was such that people were able to get rich legally. For all the feelings of social imbalance that this aroused.

On the other hand, it's also true that the actions of these people were not subject to control. Even though the Supreme Control Office was founded in 1993, within a year it lost the power to control the activities of the FNM privatisation agency, which became a non-state institution but remained the channel through which all state property was privatised. Apart from the Agency's own management, executive and supervisory organs, it was not subject to control, which created space for some people to gain control of large amounts of property.

In December 1999 I was elected by parliament to the head of the NKÚ. In between the law was changed to allow us to expand our activities to control EU funds and how they are used in Slovakia. As of the first of July this year, as a result of the amendment of the Constitution last spring, we have the power to do controls of the FNM, and to go as far back into the past as we see fit. Nevertheless, even if we find privatisation contracts that were disadvantageous to the state, as long as they contain no legal mistakes they remain valid


TSS: What have you learned so far about former FNM activities? It was said as the Dzurinda government came to power in 1998 that many FNM documents were destroyed...

JS: I also heard that, but only from the press because until now no one except FNM employees has had access to the Agency. We've only had a month so far to do controls at the FNM, and it's going to take a long time for us to investigate the most serious cases, to see if contract conditions are being kept, if the FNM demanded of privatisers all that it was required to. It's tough so far to say what was destroyed, but that doesn't have to be a decisive factor.

Everywhere around the world, people look for ways to, shall we say, lobby in favour of something. Positive lobbying, which helps a company develop for the benefit of all, is desirable. But then we have people who gained access to the property of some state firm, sold its machines and assets, made a few million [crowns] to support their own good and peaceful lives, while at the same time causing hundreds of people to be thrown out onto the streets without jobs, and neglecting the physical plant. That's negative lobbying, and was allowed to happen by the legal state.


TSS: How would you characterise the kind of corruption that occurs under the current government?

JS: Through the controls we have carried out we have found that when legal standards are broken it's often a question of inadequate legal knowledge among top [state] managers, as well as of their moral characters. Top bureaucrats have to themselves not take the path of abusing their power wherever the law doesn't expressly forbid it. For example, the Law on State Companies was approved in 1990 and remains valid today in basically the same shape. We've often pointed out that it is a very benevolent law that allows directors of state companies to handle and dispose of state property practically without limits.


TSS: Thus the hundreds of millions of crowns which gas utility SPP owes in promissory notes signed by former SPP Director Jáń Ducký before he was murdered in 1999...

JS: Thus those promissory notes, as well as the recent scandal over the flats. Wherever top state managers lack moral qualities or reservations, they often look at things this way - "I'm only in this job for a few years and then I'm gone, I've got to make a big enough packet that my future is assured."


TSS: The amended Constitution has given you new powers as of July 1 this year. What are you now able to do that you weren't before?

JS: As of July 1 our powers have been expanded so that now no one can stop us from doing a check on any institution or body that we feel is necessary. Parliament as well cannot interfere with our business, they can only require us to perform a control by passing a resolution.


TSS: Which case of corruption investigated by the NKÚ do you think has most damaged public morale?

JS: I think public opinion has been greatly influenced by the fact that as of January 1, 2001, we have been able to publish the results of our investigations. Before, the law on the NKÚ had specifically forbidden this.

I've seen a big public effect from the health sector, where we keep finding waste, business and legal non-professionalism - although doctors are indeed experts in their fields, most medical establishments are led by doctors without legal or economic training.


TSS: What's the most interesting case you've investigated?

JS: Perhaps Slovenský plynárenský priemysel [gas utility - SPP]. I was interested to note when I started this job at the end of last year that SPP as a state company had never been controlled by the NKÚ, even though the opportunity had always been there. It quite astounded me. So this year I included as one of our goals a control of SPP. Our control to date has unfortunately shown serious shortcomings, mostly poor economy, inefficient use of finances - findings which resulted in a scandal concerning the flat [paid for by SPP but owned by] former SPP General Director [Pavol Kinčeš].

TSS: Why had no controls been done on SPP since 1993?

JS: You'd have to ask our predecessors in the NKÚ.


TSS: So why all of a sudden now?

JS: Because SPP is one of the largest state companies with an enormous impact on the state budget, and we thought the state had to take an interest in whether such massive state property was being administered effectively.


TSS: What have you found so far?

JS: The control is still going on, and we've really closed only the question of the flats. It's going to take us another few months to finish our deeper control of the whole company.


TSS: Could the findings, or the wait for them, affect the privatisation of SPP, which the government is trying to sell by the end of this year?

JS: I don't see how our control could have any negative effect on the sale, quite the opposite, because I believe every investor is interested in knowing what he is putting his money into. The fact that we are truly independent makes our control better than an audit which could be done by any other firm. Auditors are paid by whoever orders the audit, which makes them commercially dependent on the outcome. But we don't get paid, we have our budget assured as part of the state budget, and thus have no financial motive to find either positive or negative results.

What is more, every investor will have a chance to look at our results, and thus get a picture of the organisation. Macro-economic results, such as turnover and profit, are available and beyond doubt. What we do is to show if the profit could have been greater, if there were any wasted costs, if the firm could have been run for lower costs.

We have closed our investigations of some SPP outlets, although not the company as a whole. Some branches, for example, had old vehicles which they wanted to get rid of, but instead of doing so invested tens and hundreds of thousands of crowns in fixing them, and then within six months sold them for a far lower price, which was a waste. This is a signal for any future administrator of SPP property that if they see such deficiencies in any part of the company they get rid of the managers at fault and hire people willing to work responsibly and honourably.


TSS: Your office has recently seemed to be focusing on the Office of the President, which you've found broke the law by gold-plating the gates of the Presidential Palace and commissioning repairs to the statue of Mária Terézia. Is this a conscious decision you've taken, to go after Rudolf Schuster?

JS: No, we've been auditing the Office of the President just like we do any body funded from the state budget, there's nothing special or unusual behind our orientation. We basically look at their closing accounts for last year and check to see how efficiently and economically the money was spent. It's not always the case that the law gets broken, and in the case of the gold-plated fence or the number of extremely high mobile phone bills, the law wasn't broken, we evaluated it as lack of economy - that they didn't need to make so many phone calls, gold plate their gates, when money is needed elsewhere.


TSS: But doesn't the Law on Budget Rules state that all public money must be spent with maximum economy and efficiency?

JS: You're right, the fact that economy and efficiency weren't displayed did involve a violation of the law, but for such violations there are no penalties. The audited subject simply has to take steps to ensure that such lack of economy does not occur in future.


TSS: What have you so far discovered about the case of Roland Tóth [a Government Office employee fired in May after his estranged wife allegedly wrote a letter to senior politicians outlining Tóth's abuse of European Union taxpayer funding for Slovakia]?

JS: The basic thing we've discovered is that what appeared in the media about these European funds has so far not been confirmed. For example, that letter that Mrs. Tóth is supposed to have written - when investigators interrogated her, she did not confirm having written it. So the author was someone else. And the information the letter contained was neither objective nor verifiable, but untested information which was later taken [by the press] as true.

The way these EU funds worked was as follows. First, some programme would be declared and information about it published; then, individual parties could submit their projects, and finally, a commission would pick the winning project through a tender and that winner would have EU funds released to it.

We have so far investigated only the first two stages of this process, and we've found that there was no exact chronological list kept of projects reaching the Government Office; we don't know if the projects now in evidence there were all that they received, or if some were destroyed. Nor do we know how many were sent on to the next stage of the tender process, and how many were weeded out. There's simply no precise and reliable information.

The second thing we found was that Mr. Tóth didn't submit reports from his business trips. That might seem trivial, but it's serious, given that he travelled to Brussels at least four times a year, but left no record of whom he talked to, what he talked about, and we therefore can't judge whether he could have influenced anything or not in favour of certain projects. There are simply no records beyond the fact he went to Brussels. That clearly leaves space for corruption. However, whether or not corruption actually occurred is now up to other bodies to investigate.


TSS: Are you sometimes a thorn in the side of politicians?

JS: You'd have to ask them (laughs). I don't get that feeling, but then we have to remember that controls are uncomfortable for everyone who gets controlled.


TSS: Do you ever feel threatened?

JS: Do you mean personally or institutionally, as an office?


TSS: Personally.

JS: I've had some threatening phone calls and letters, but I sought advice with the Office for the Protection of Constitutional Officials, and they taught me how to react. But I really believe I had to count on it happening when I agreed to take this job.


TSS: Do you have a bodyguard?

JS: No. I just behave in a way that neither provokes nor leaves me open to possible attacks.

Top stories

Wooden toothbrushes prompt small-scale industrial revival in Bratislava Photo

To begin with, young enthusiast Roman Kovács just wanted to change his local environment for the better, and to help people.

Roman Kovács wants to renew production of wooden toothbrushes in Bratislava.

Blog: HR Marketing: Not everybody can be Google!

It is important to know who your target audience is and the position you aspire to achieve as an employer on the market.

Illustrative stock photo

The idea of Slovakia

What does this country stand for? Slovaks could – and should – shout a little louder about what they have achieved, and where they want to go.

D1 highway, illutsrative stock photo

Amazon chose Slovakia for its top returns centre Photo

The online retainer lures its future workers by wages and benefits.