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Economy Minister Černák: "We have had some shocks"

When Trnava entrepreneur Vladimír Poór sold a 45.9% stake in Slovak gas storage company Nafta Gbely to American energy giant Cinergy on June 22, he may have known that the government would be furious.
He could hardly have anticipated, however, the whirlwind of scandal and rumour which the sale unleashed. Poór has now been charged with fraud, while the top brass of the FNM state privatisation agency have been fired by the cabinet (pending parliamentary approval), and Economy Minister Ľudovít Černák has come under intense criticism for his handling of the case.


Economy Minister Ľudovít Černák defends his ministry.
photo: Vladimír Hák-Profit

When Trnava entrepreneur Vladimír Poór sold a 45.9% stake in Slovak gas storage company Nafta Gbely to American energy giant Cinergy on June 22, he may have known that the government would be furious.

He could hardly have anticipated, however, the whirlwind of scandal and rumour which the sale unleashed. Poór has now been charged with fraud, while the top brass of the FNM state privatisation agency have been fired by the cabinet (pending parliamentary approval), and Economy Minister Ľudovít Černák has come under intense criticism for his handling of the case.

Several coalition government party members, while stopping short of demanding Černák's resignation, have recommended that he take full political responsibility for the Nafta debacle, in which the state's plans to reacquire a valuable gas company privatised in 1995 were foiled by Poór and Cinergy.

The Slovak Spectator spoke with Černák after a cabinet meeting on July 14 to get his side of the story.


The Slovak Spectator (TSS): Ján Lángoš, a member of a rival group within your own SDK party, has called for your resignation over the Nafta Gbely affair. SDĽ leader Jozef Migaš has complained that we have no clear concept of medium-term development of the national economy, and that the ministers responsible for these things should take political responsibility. Are you going to resign? Will you take political responsibility for either issue?

Ľudovít Černák (ĽČ): Let me react to the first part of your question. Ján Lángoš' criticisms have never damaged anyone in Slovakia. The attitude that the SDĽ presented in the newspapers today [an interview with Migaš appeared in the July 14 issue of the daily paper Pravda - ed. note] is different than it was yesterday during coalition talks, where we clearly set out who should be responsible for what.

A concept for medium-term development of the national economy exists. When they [the SDĽ] criticised the absence of this concept, it had already been discussed by the government. I think that it is not necessary that very clear concepts for development of individual sectors exist. Our main economic and political aim is to create conditions compatible with the conditions that exist in the European Union.

The Ministry of Economy has played a very active role in the creation of strategies for such conditions. The ministry has prepared a strategy for the support of foreign investments in Slovakia, and for the approximation of our legal norms [to those valid in the EU]. We have also produced material dealing with the barriers to investment in Slovakia, as well as on the development of industrial policy.



Černák says he is a passionate defender of the SDK party against "destructive" internal influences.
photo: Vladimír Hák-Profit

TSS: Your handling of the Nafta case, as well as of the selection of power producer SE to administer the Russian debt, and brokerage house Slávia Capital to advise on the tender for the sale of telecom monopoly ST, has raised allegations of corruption in the government and in your ministry. What can you do to clear your name and reassure investors of the government's transparency?

ĽČ: I am really sorry that my name and the name of my ministry will have to be cleared, because we haven't done anything that hasn't been transparent or against the law. It is a mystery why some journalists are out to get me and my ministry. From the point of view of the Ministry of Economy, Slávia Capital isn't an actor in any of our projects. I have never broken the rules of the game because of Slávia. As far as the Russian debt is concerned, I didn't get into any arguments with Finance Minister Brigita Schmögnerová - instead, I consistently defended the transparency of the whole transaction.

As far as the ST tender is concerned, [Telecom] Minister [Gabriel] Palacka is responsible for it. This was the first transaction carried out in co-operation with Transparency International, which was there to confirm the steps taken by the ministry. And in this tender, which was more transparent than any other, Slávia Capital worked as an official advisor of Deutsche Bank. And yet this tender is the one which has excited the most disapproval. For crying out loud, if Slávia wanted to do some dirty business they would do it through several invoices abroad and nobody would ever know about it.

So, yes, I am prepared to bear political responsibility. I have political responsibility towards those who voted for me, but I will never step down just because of gossip.


TSS: Prime Minister Dzurinda has asked parliament to recall two official over the Nafta affair - Ľudovít Kaník, president of the FNM state privatisation agency, and Ladislav Sklenár, his deputy. Why should Kaník and Sklenár take political responsibility for Nafta when you were the politician closest to the transaction?

ĽČ: You know, I was quite close to the whole transaction because I wanted to be. The strategy for building a central European gas hub cannot be realised without storage capacities. This strategy was seriously violated when Nafta Gbely was sold. I wanted [state gas distributor] SPP to control these storage capacities, and not to be bypassed in this transaction. This is why I took the initiative in cabinet sessions.

There are many spheres in which we will have to accept the rules of the game that the European Union plays. But there are two spheres where we are strong. We don't need to see the billboards of [American energy giant] Cinergy, Trans Canada International [the world's second largest pipeline company behind the Russian Gazprom, which had been interested in purchasing Nafta Gbely - ed. note] and [the German] Ruhrgas lighting up all Europe. Maybe in this region we will do such good business that our neighbours will come to know what SPP is.

I asserted this opinion, and that's why I became the target of criticism. But while I am still the Minister of Economy I will defend the interests of the state companies that I lead, because I am a state official and that is what I am paid for. You know, I would never in my life have guessed that I would come under political pressure for asserting the interests of the Slovak Republic. But on the other hand, I like it. It's like a drug. The more they dig into this question, the more tenaciously I will defend [the interests of state companies]. In a normal society, nobody would say a word if a person named Poór decided to sell shares in his company to an American or to any other firm. He has a right to do it according to the constitution of this country because it is his property. The question is whether he did it voluntarily or at the behest of some state officials.

When the Prime Minister proposed the steps he proposed [sacking Kaník and Sklenár], he was acting on the basis of undeniable proof that Poór had sold Nafta in accordance with FNM officials.

If someone had bought the shares from Poór alone, they would have been buying a pig in a poke, because the courts might very well have ruled that the sale was invalid. The whole transaction, then, made sense for them [Cinergy] only because the FNM promised them an out-of-court settlement. I am really sorry about that, because both Kaník and Sklenár are my friends. But I had to react as I reacted. This country isn't about to lose billions of crowns just for the sake of private interests. Obviously, the courts are going to investigate why the owner decided as he decided. Was it money, or a desire to knock this government to its knees? I think that Poór is clever enough to know that he cannot act against the government, so he must have consulted his steps with the FNM.


TSS: What proof does the government have that Kaník and Sklenár acted improperly ?

ĽČ: What would you think if during those 30 days, from May 19 to June 17, there were 16 meetings organised by the Ministry of Economy and the SPP, and not one by the FNM, which didn't approve of the decision to create a joint venture and was looking for another solution [cabinet on May 19 had approved the creation of a joint venture between the FNM and the SPP, known as SPP Slovakia, which would concentrate the Nafta properties under it - ed. note]. I don't think it is just an accident that Poór changed his mind on what to do with Nafta only several hours before the government was to have approved the decision on Nafta. Political as well as professional responsibility for this lies on the shoulders of FNM officials.

There are some important facts in this story. We heard many claims that Nafta was about to cross-default on its debts, while all the time there was no danger of cross-default. All debts were paid by the Nafta group from their own sources, while the money offered by the SPP was refused.

There is one more interesting fact. The person that Mr. Sklenár generally introduces as his friend and advisor visited me in the capacity of an agent for Cinergy, and was also seen sitting at an FNM desk on June 1. That same person negotiated for both the FNM and Cinergy. That's really strong coffee.


TSS: A major energy sector investor said that the Nafta scandal made him feel like "packing his bags" and leaving Slovakia because of the prevalence of special interests in the cabinet. Are other investors responding the same way to this government's steps?

ĽČ: I think that the opposite is true. On the basis of the steps the Slovak government has taken, new investors are entering the market. Volkswagen has increased its activities, while we have attracted new investors like the firm INA in Kysucké Nové Mesto and Molex in Košice district. With pleasure I welcomed the visit of officials from the French company Seribo, who announced that they are entering Bukóza Vranov nad Topľou - they promised to turn the company into the biggest producer of chairs in Europe within two years.

But let me come back to the Nafta case again. I had discussions with officials from Enron, Trans Canada International, Ruhrgas and Gaz de France. All of them asked me the same question - "Should we discuss this purchase with Mr. Poór? We can strike a bargain with him very quickly." I said to all of them: "No, wait until the case is legally clear and finished, and then we will organise an international tender." How can I look in the eyes of these foreign investors now, when one of them [Cinergy] broke faith and went behind the backs of the rest? Those who started to spread rumours about lobbying belong to that group of people who, when they don't get what they want, start to spread malicious rumours about others.

Look, your newspaper is read by many foreign investors. We have had several shocks here, and we have accepted responsibility for some cases [inherited from the former government] where there was a lot of dirt, making the affairs difficult to clear up. Very often, clearing up these kinds of cases calls into question the human character and the quality of the legal system. Unfortunately, some of our laws which deal with re-privatisation are still not good enough.


TSS: Do you raise money for the SDK?

ĽČ: No. As far as SDK financing is concerned, the party doesn't have regional structures, and thus does not have as great a need for money. The SDK is now like the Republican Party in the United States, which is able to survive with relatively low expenses and small structures. I am a fan of the SDK. I will do everything to push this party forward. I will do everything to prevent the party from destroying itself through infighting.

Whatever they say in Bratislava and in the parliament, we have reactions from all around the country confirming that we are following the right direction. There was a pilgrimage [on July 4] to Levočská Hora, where Prime Minister Mikuláš Dzurinda was welcomed by the ovation of several hundred thousand pilgrims. I don't want to mention what the reactions of those people were to [Justice Minister] Mr. Čarnogurský and Lángoš, who are constantly undermining everything. We have had enough of destructiveness.

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