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EDITORIAL

Corruption 2000: Red in tooth and claw

"The stability of the government...depends on whether or not the parties of the government become hostages to organized interests."
Those are strong words, coming as they did last week from Finance Minister Brigita Schmögnerová. But barely two weeks into the new year, with the cabinet pinned and wriggling under a fresh scandal, it seems that Schmögnerová may have even underestimated the threat posed by Slovakia's economic lobbies.

"The stability of the government...depends on whether or not the parties of the government become hostages to organized interests."

Those are strong words, coming as they did last week from Finance Minister Brigita Schmögnerová. But barely two weeks into the new year, with the cabinet pinned and wriggling under a fresh scandal, it seems that Schmögnerová may have even underestimated the threat posed by Slovakia's economic lobbies.

It's an open secret that government parties in this country use state-owned companies (principally energy utilities) to finance their operations. The gas utility SPP is 'owned' by the SDK, the main ruling coalition party, while the powerful SDĽ party controls energy producer Slovenské Elektrárne; the minor coalition partner SOP uses Slovak Telecom in a less obvious manner. Political parties are forced to seek extra money by the country's party financing laws, which do not give them enough funding from the state budget to live on.

Here is how the system works: the state utilities, under the leadership of a party-appointed puppet, may pay higher-than-market prices for goods and services. The vendor of these goods and services is often a firm which in some way helped the government win elections in 1998; the proceeds from the scam go partly into the coffers of the firm and partly into the pockets of politicians. In Schmögnerová's words, "for a small gift [help in winning elections] they [lobby groups] want to exact a heavy tax [kickbacks from government parties]."

In the latest of these apparent kickback schemes to be revealed, Slovenské Elektrárne boss Štefan Košovan (nominated to the post by the SDĽ) was found to have been planning to export spent nuclear fuel to Russia in defiance of government policy, which prefers the much cheaper option of storing spent waste in Slovakia. Although Košovan denied the charges, documents obtained by the media showed that Elektrárne had signed a contract for nuclear waste exports on September 24, 1999 with the Russian firm Tenex Moskva. On October 19, Elektrárne's Board of Directors approved the shipment of 2 boxcars of spent fuel to Russia at a cost of 1.6 billion crowns ($40.3 million).

The problem was that the export contract did not specify that the cost of the fuel exports would be deducted from the Russian debt to Slovakia, as the government had ordered. Instead, Elektrárne had the option of paying eight billion Slovak crowns ($190 million) in public cash for the service, which would have driven the utility deep into red figures. After the internal documents were made public, Elektrárne's Supervisory Board on January 4 revised the contract to forbid cash payments for the fuel exports.

As with so many of these scandals, it's difficult to know who stood to gain. Most commentators pointed the finger at Devín Banka, a Slovak-Russian financial house. Under its contract with Elektrárne, Devín gets a 20% commission on the value of any Russian goods and services given in settlement of the Russian debt, and on the nuclear fuel deal would have acted as a mediator.

The influence of the opposition HZDS party and Slovakia's strong nuclear lobby were also suspected, as Košovan's 'advisor' on debt settlement and nuclear waste exports turned out to be none other than Tibor Mikuš, director of Elektrárne under the Mečiar government and currently the party's shadow Economy Minister. Noses were also wrinkled at the SDĽ government party, whose chairman Jozef Migaš is a close personal friend of Devín Banka's Director Ľubomír Kanis. Migaš did nothing to dispel the suspicions when he said that government criticism of Košovan's actions was just "blah-blah-blah."

In fact, government criticism was for once acute. "Mr. Košovan has again lied to the face of the Prime Minister and the Coalition Council," said Hungarian party leader Béla Bugár. The activities of the utility "are in conflict with the official position of the government, and this is a problem which has to be dealt with," responded Deputy PM for Economy Ivan Mikloš. Deputy PM for Integration Pavol Hamžík, as well as Deputy Economy Minister Ján Sabol, called for Košovan's dismissal.

But in the end, even this rather gross scandal did not trigger decisive cabinet action against lobby groups. Economy Minister Ľubomír Harach defended Košovan and called for an investigation, while Prime Minister Dzurinda showed all the leadership of a "dead beetle," in the phrase of one Slovak journalist.

This is a pity, because Slovakia desperately needs to rein in its bold interest groups. People like Košovan are increasingly being allowed to call the tune, and many politicians themselves seem to have no idea of how much corruption the public and markets will accept. The result? In the cabinet's 15 months in power, it has not managed to guide a single major state company through a transparent tender process; scandals, on the other hand, have become almost commonplace.

Schmögnerová was right - certain politicians are being held hostage by the companies that helped them get elected, and are the source of much tension and frustration within the government. But until the 'dead beetle' emerges from his shell and kicks a few rumps, the Košovans of this country will continue to dirty Slovakia's reputation.

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