Lawyer Ernest Valko: "Why am I now the bad guy?"

Ernest Valko used to be a fast friend of the current government. A prominent Bratislava lawyer who specialises in constitutional cases, Valko represented the then-opposition SDK party in almost every important legal challenge it mounted under the former government of Vladimír Mečiar. It was Valko, for example, who defended the SDK against an attempt to have the party declared ineligible to contest last September's elections. It was Valko, too, who helped Prime Minister Mikuláš Dzurinda modify the controversial amnesties issued in March 1998 by acting President Mečiar.

Ernest Valko (left) has recently found himself in the dock with FNM President Ľudovít Kaník.
photo: TASR

Ernest Valko used to be a fast friend of the current government. A prominent Bratislava lawyer who specialises in constitutional cases, Valko represented the then-opposition SDK party in almost every important legal challenge it mounted under the former government of Vladimír Mečiar. It was Valko, for example, who defended the SDK against an attempt to have the party declared ineligible to contest last September's elections. It was Valko, too, who helped Prime Minister Mikuláš Dzurinda modify the controversial amnesties issued in March 1998 by acting President Mečiar.

But times have changed. Valko is now under a cloud for his role in the 'Nafta affair,' the latest privatisation scandal. Some members of cabinet, especially Dzurinda and Economy Minister Ľudovít Černák, feel that Valko helped American energy giant Cinergy buy a lucrative gas storage concern known as Arad from under the government's nose. As a lawyer representing the FNM privatisation agency, Valko says he did everything possible to secure Arad for the state, but Černák and Dzurinda remain deeply suspicious of Valko and his employer, FNM President Ľudovít Kaník.

Feelings are running so high in the cabinet against Valko that other ammunition is being sought to discredit him publicly. Defence Minister Pavol Kanis told a recent cabinet meeting that he had in his possession a taped conversation between Valko and Peter Steinhubel, a reputed Bratislava mobster known as 'Žalud.' Valko has also come under scrutiny for his role in a controversial decision by the Radio and TV Council to allow the Satel Média corporation to keep its broadcast licence for the VTV cable television station.

In response to the cabinet campaign against him, Valko says that the current government has lost its respect for the rule of law, and is under the influence of "powerful interests." He says he feels victimised in the cabinet witch-hunt over Nafta, and pledges to sue Černák for slander if a public apology is not forthcoming. The Slovak Spectator spoke with Ernest Valko in parliament on July 7.

The Slovak Spectator (TSS): Why did the government take so long to decide the Nafta Gbely case?

Ernest Valko (EV): After [my] law office came up with a legal position [in February 1999], which set out a minimum of seven reasons for which the original contract [allowing the sale of gas storage facility Nafta Gbely from the FNM to Trnava businessman Vladimír Poór in 1996 for one-sixth its market value] was invalid, I laid two charges in the courts. These two criminal charges attempted to get a preliminary court ruling [on the Nafta case] and the return of the shares. But because these court cases can take a long time, the FNM started in March, through the person of President Kaník, to negotiate an agreement with Poór which would get the shares back to the FNM. In other words, they started to negotiate what would be the result of the court case.

Valko, who once served as the Chief Justice of the Czechoslovak Constitutional Court, says the government has lost respect for the law.
photo: TASR

Our current legislation says that whenever a contract is ruled invalid, each party should return the property that he received from the other. In this concrete example [of Nafta Gbely], it was a question of 150 million Slovak crowns in cash and 350 million in the form of bonds [that Poór had paid to the FNM]. However, our legislation says nothing about how to get shares in a company back when a contract is ruled invalid. That's why the FNM looked at various methods of reaching this goal.

Later, in the middle of May, the government got involved in these negotiations, and passed a decision on May 19 that the FNM and the [state gas utility] SPP would form a joint stock company [known as SPP Slovakia].

TSS: Prime Minister Dzurinda and Economy Minister Černák have accused the FNM of not fulfilling its role, especially in its negotiations with Poór, after cabinet made the decision on May 19 to form the joint stock company. You represented the FNM - do you agree with these accusations?

EV: Look, the role of the FNM was basically to make sure that criminal charges were laid in the courts. But the FNM, on its own initiative, went further and engaged in negotiations with Poór. During the search for an agreement, Poór agreed to return the [Nafta Gbely] shares to the FNM, but on the condition that the situation at Nafta Trade [a Nafta Gbely daughter firm in financial trouble] was sorted out. If I want to get an agreement, and I don't want to go through the courts, I have to respect the wishes of the other party.

TSS: Černák said recently that "stolen property will return to the hands of the state; private citizens will not profit from it, but the state will profit from it by holding a transparent tender for the highest price." Do you see any legal means that the state could now use to get its 46% stake in Nafta Gbely back?

EV: I'll tell you one thing. Druhá Obchodná [which directly controls the 46% Nafta Gbely stake] is a joint stock company. The owners of the Druhá Obchodná shares are two legal entities - Arad, a.s., which has 85% of shares, and Naftárska, a.s., an employees company with a 15% stake in Druhá Obchodná. That means that Arad is a completely different company. It is probably owned by Vladimír Poór, but I have always wanted to see proof of his ownership. If Arad is indeed owned by Poór, he can do whatever he wants with it. It's his property. Arad is a joint stock company with a basic capital of one million crowns. They are paper shares, they are not publicly tradeable, and they are owned by a concrete legal entity.

I want to add one thing - when this whole Nafta affair broke [on June 23], negotiations began the next day between the FNM and Poór, and the FNM and Cinergy [the American energy firm which apparently bought Arad]. I had one basic question for Cinergy - I want to see your proof of ownership. I said, "Cinergy, you say you are the owner of the shares, so show them to me." It was a question of 1,000 shares with a face value of 1,000 crowns. We were willing to negotiate with Cinergy as long as we were sure they were really the owners of these shares. They had five days [from June 25] to show us the shares, but until this day I have never seen them. I ask myself why.

Present at these negotiations [between the FNM and Cinergy on June 25] was also the bank which had done the transaction between Arad and Cinergy. The representatives of the bank refused to show me the contract which was the basis of the sale. That's normal enough, but they were required to show me the shares, and that they didn't do. That was the first time I met the Cinergy representatives, so the accusations that I lobbied for Cinergy throughout this process are absolute nonsense.

TSS: Černák has said he is willing to amend the constitution to get Nafta Gbely back. What is your opinion of this statement?

EV: I heard about that, but I really believe it won't happen. Those methods were used by the communists in the 1950's to nationalise property.

TSS: It has been said that the Nafta case is a mess of corruption and lobbying. How do you, as one of the people accused in it, feel about the case?

EV: There is nothing to be said. Listen, I have an absolutely clean conscience. As the FNM's legal representative I did everything legally possible to bring this case to a successful conclusion. We produced many opinions as to how to solve this case, but often we found, unfortunately, that our legal system did not support such solutions because it has so many holes.

TSS: This government began its term in office vowing to fight corruption and to guarantee the rule of law. But doubts have been growing about the influence of lobby groups on the government, and about the cabinet's handling of the Nafta case and telecom privatisation. Where is the cabinet's respect for law now?

EV: Unfortunately, I'm asking myself the same question. They are changing the law in ways that suit them. We already had that under the Mečiar government, and it was criticised enough then. In the eight months they have been in power, they have changed their views of laws and rights.

TSS: You have said publicly that Defence Minister Pavol Kanis brought to the coalition government council a taped conversation you had with your friend Peter Steinhubel. Was this conversation recorded legally?

EV: I have information that Kanis told the coalition council that a tape of my conversation with Steinhubel exists. This was confirmed for me by members of the coalition council who were present at the negotiations.

Were the tapes legally recorded or not? In order to bug somebody's phones, a court order has to be obtained on the basis of an investigator's suspicions that the person has committed a crime. And if a court order has been issued against someone who is being bugged, it has to exist on paper. If this person [Peter Steinhubel] was suspected of having committed a crime, he should have been put in jail a long time ago

I also ask myself how this tape got into the hands of the minister. The tape doesn't belong there. I ask myself if it was recorded legally, and what was illegal about the conversation. I have known Peter Steinhubel for 15 years - we used to go to the weight room together. I never represented him as a lawyer, although there is no reason why I shouldn't have. But he had his own lawyer.

TSS: In late May, The TV and Radio Council, of which you are a member, voted to uphold the transfer of a broadcast license from VTV cable station to a new group known as Satel Média. you said afterwards publicly that Dzurinda had been upset by the decision, and had paid you a visit in which he said "either you leave the Council voluntarily, or legal steps will be taken against you." Is the taped conversation part of these 'legal steps'?

EV: Kanis said only this: "It's interesting that Valko is involved in both cases that ended badly." I ask myself, how did they "end badly?" For one thing, the VTV case was decided by the nine-member TV and Radio Council. I didn't represent anyone there, I was a normal member of the Council. For another thing, in the Nafta Gbely affair, the court case hasn't even begun yet. So what bad things could I have done? Someone tell me what things I did that were legally wrong. Mr. Černák will have to show this in court - that what I did that was legally wrong - because he still hasn't issued me a public apology. I have already prepared charges.

TSS: Was any political pressure applied to you to decide the VTV issue one way or another?

EV: No comment.

TSS: Many Slovak papers reported that Dzurinda asked you to visit him before the crucial vote, and there told you to vote against VTV. Is this true?

EV: I told him my legal opinion, and he told me his opinion.

TSS: So he tried to influence your vote?

EV: No comment.

TSS: Why did the cabinet wait for more than two months after the VTV vote to make a fuss about it? Did it have anything to do with Dzurinda's displeasure with you over the Nafta affair?

EV: Well it certainly wasn't a coincidence. The VTV case ended over eight weeks ago, and since then there has been absolute silence until now. I am convinced that the Council's decision was just fine. It contained five legal opinions, from the three lawyers on the council. Are we all stupid? The VTV case contains another interesting element - this TV station was bought from Mr. Poór by Mr. Milko, who was a candidate for the SDĽ [coalition government member party] some time ago. Mr. Milko's property was distrained, along with his broadcast license, and he allowed it to happen - he did not use his legal right to oppose it. That means that the Council, as the legal body, had to take this into account. If he had launched a legal challenge to the distraint, the court might have decided the case and decided if the license could in fact be distrained along with the property. But the court didn't decide this, and since the Council has no legal powers, it simply had to go along with what happened. It had no other choice - the distraint had occured, and the license had ended up with someone else.

I, as a lawyer, could have said whether or not the distraint was legal, but as a member of the Council I could not. And this wasn't just my decision - it was the decision of the nine-member Council. The Council's decision produced a dilemma over who would explain the verdict. The chairman of the Council is responsible for doing this, but he didn't feel he had the legal background to be able to explain the case. That's why the chairman asked me to explain our decision at a press conference, whether I agreed with it or not. Even if I had voted against allowing the license transfer to stand, the Council decision would have stood.

TSS: Who was against allowing the license to be transferred? Who's interests were at stake?

EV: The answer lies in the public statement of the general director of one Slovak television station. The statement was about the creation of a media empire. TV Markíza's discreditation of my character is crazy.

TSS: Why do they do it?

EV: Ask Mr. Rusko [TV Markíza General Director]. He has already twice barred me from appearing on his TV station. It's because I represented his [former] business partner, Mrs. Volcová, in the Markíza affair [in August 1998, when the Gamatex firm took over the station briefly, saying Markíza had become forfeit to Gamatex for non-payment of a debt]. Mrs. Volcová signed an agreement with a public notary behind my back, allowing the distraint and seizure of Markíza to begin. I found out about it a month later, and we parted ways, because I can't represent anyone who doesn't confide in me as a lawyer. One week later the Gamatex affair began.

TSS: On July 7 Markíza nightly news carried a story about FNM President Kaník, in which he reportedly cheated the state out of some money four years ago. Do you see any connection between the campaign against Kaník and against yourself?

EV: They are both attempts to discredit the two of us.

TSS: Why?

EV: Because they don't want us to have anything more to do with the Nafta Gbely case. They don't want us to represent the FNM.

TSS: Is it because you know too much about the personal interests of the parties involved?

EV: I don't know. How much is "too much?"

TSS: Under the Mečiar government, you were a part of the democratic opposition. Why all of a sudden are your former colleagues trying to discredit you?

EV: I don't know, and it makes me sad.

TSS: You represented the parties of the current government in almost all of their big cases in the past, when they were in opposition.

EV: Yes, I participated in almost every political case. That's the reason I'm wondering why I'm now the bad guy. What did I do to deserve it? I even worked on Dzurinda's amnesty case. So what's it all about? I guess their other interests are now more powerful. These interests have to be exposed, but that's the job of you reporters.

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