A bailiff hired by the Globtrade company arrived on the premises of Slovak shipbuilder SLK in the southern city of Komárno on a sunny day in late August. Expecting to confiscate SLK's cars and computers to settle debts the company had racked up to Globtrade over the past several years, the bailiff instead came away empty-handed, because the SLK had pulled a stunt increasingly common in this country - company executives had transferred some SLK property to a daughter company, meaning that the bailiff couldn't lay his hands on it.
All things considered, the SLK episode was an average day for a Slovak bailiff. Known in this country as 'executors', bailiffs here have the responsibility of seizing the property of a debtor and selling it to settle creditors' claims. But the job is rarely that simple - on the one hand, some debtor firms do all they can to hide property and thwart the bailiff's legitimate economic role, while others try - and manage - to cut deals to get bailiffs to turn a blind eye to asset-stripping. It's not surpising that bailiffs enjoy a poor reputation in Slovakia.
"They are like hyenas in the animal world," said Jana Červenáková, an analyst with the MESA 10 economic think tank. "The need for them is well-founded, and they do a good a job of cleaning up the economy, but if anyone wants to challenge their actions in a particular case he has to go through the courts, which are ineffective and very slow."
"Executors and judges are among the most corrupted professions in the country. The number of the corruption cases is not as high as in the health care sector, but in terms of money, we're talking about millions of crowns here," Červenáková added.
But Ján Jonata, president of the Slovak Chamber of Executors and a Bratislava bailiff himself, said that he didn't know of any corruption among executors in Slovakia. "I don't think this expression is something that can be connected with us [executors]. The parts of the distraint process where there is space for corruption [for example, the value assigned to distrained property - Ed. Note] have to be approved by the courts," Jonata said.
He explained that there was actually little room for either creditors or debtors to bribe bailiffs to act in favour of either side. "For example, it's almost impossible to auction off distrained property at knock-down prices, and thus help creditors, because the sale price has to be approved by a court-appointed estimator. On the other hand, creditors know very well what assets a debtor company has because they often tell us the real value of the company that owes them money. So there is little chance for us to cut a deal with debtors [to hide assets]," Jonata said.
However, he admitted that in individual cases, executors could be lured into acting in concert with a creditor. "But here, we are usually talking about big deals, cases which are often triggered artificially and which lead to asset-stripping at a company," he said, explaining that companies which pile up large debts to the government have occasionally used a fictitious claim at a friendly creditor company to transfer assets to that company, thus leaving the state holding the bag. "In these deals, creditor and debtor are one and the same entity, or they act in accordance," Jonata said.
Roots of image
The poor image of executors began in 1994 under the government of former Prime Minister Vladimír Mečiar, when ignorance of the profession and the dearth of qualified applicants forced the government to hire people with only a secondary school education.
Five years later, the 1999 Law on Executurs set new conditions for the profession, requiring bailiffs to hold law degrees from recognised universities. Despite the new restrictions, interest in the job has grown in step with its popular image as a get-rich-quick sinecure.
The image has a solid root in reality. According to the law, executors get 20% of the debt they recover, a cut that never amounts to less than 500 crowns ($11) and is never more than one million crowns ($21,300) per case. Even if a debtor coughs up what he owes before the executor gets to work on him, he still gets 10% of the total collected.
Nor do corruption allegations appear entirely unfounded. Ján B., the former president of the Executors' Chamber under Mečiar, is under investigation by police for his role in helping to transfer the assets of the machinery company ZŤS TEES Martin to ZŤS creditors DMD Holding and DMD Fin.
Červenáková explained that the window to corruption for many executors lay in their power to advertise auctions of a company's seized assets. The current law, she said, required the court to set an initial auction price for the assets, and then required the executor to advertise the sale. But if an executor publishes the notice only in a regional paper far from where the auction is to be held, he can be fairly sure that no bidders will turn up - meaning he can then sell the property for "what it will fetch" from bidders in a second auction round.
"This is one of the most common routes to corruption among executors that the courts and lawyers know about," said Červenáková.
The only way executors can be controlled is through the Justice Ministry, which appoints them. According to Paula Pacherová, the head of the civil protection department at the Ministry, from time to time the institution carries out independent checks on executors. However, officials spend most of their time investigating complaints regarding individual distraints.
"These complaints mostly allege that the executor was ineffective or one-sided, or involve the manner in which property auctions are carried out," Pacherová said.
If an investigation proves that an executor broke the law, he can be fined between 10,000 and 100,000 Slovak crowns, lose his license or have charges brought against him.
While there are now just over 200 executors in the country, the Justice Ministry has taken 11 executors to court over the last 22 months. None of the cases have ended in an executor losing his license.
"We [the ministry] won five out of 11 cases, and four haven't been solved yet. In one case, we proposed the license be taken away, but we didn't succeed," Pacherová said.
So why, if the image is so bad and the job is so hard, would anyone want to become an executor in Slovakia?
"Most bailiffs are former police investigators, which is also my case," said Václav Kuna, a Bratislava executor. "The work reminds me a bit of the work I did with the police, and the legal terminology I learned there helps me now, as does my law degree. It's about job satisfaction, and it's better paid than police work. But it's certainly not a money spinner, like so many people believe."