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Ministry's Transpetrol shares disappear

Less than a month after a national referendum to forbid the privatisation of strategic state energy sector companies, a third of shares in one of Slovakia's largest public energy sector firms mysteriously disappeared from the books of the Economy Ministry. After several days, the Finance Ministry confessed that the shares had been seized by bailiffs to pay off a debt that the Ministry owed to a private company.
"It's a crazy situation, but Transpetrol wasn't privatised," said Martin Kabát, a securities analyst with Slavia Capital brokers. "The Ministry of Finance paid its obligation to a private company with shares instead of money, because they simply don't have any money."
Senior executives of Transpetrol, a.s., Bratislava, which operates a network of crude oil pipelines, found out in late October that a 34.05% stake of their company had been transferred, without the knowledge of the management, to unknown private corporate entities and individuals.

Less than a month after a national referendum to forbid the privatisation of strategic state energy sector companies, a third of shares in one of Slovakia's largest public energy sector firms mysteriously disappeared from the books of the Economy Ministry. After several days, the Finance Ministry confessed that the shares had been seized by bailiffs to pay off a debt that the Ministry owed to a private company.

"It's a crazy situation, but Transpetrol wasn't privatised," said Martin Kabát, a securities analyst with Slavia Capital brokers. "The Ministry of Finance paid its obligation to a private company with shares instead of money, because they simply don't have any money."

Senior executives of Transpetrol, a.s., Bratislava, which operates a network of crude oil pipelines, found out in late October that a 34.05% stake of their company had been transferred, without the knowledge of the management, to unknown private corporate entities and individuals. The company realized this when it asked for the record from the Central Securities Registrar (SCP).

After this discovery, company representatives notified the SCP of the situation and demanded an immediate inquiry into the affair along with a freeze on any other moves with Transpetrol shares. They also askedthe Ministries of Economy and Finance to start a legal process to secure the return of the shares.

Transpetrol, a crude oil pipeline operator, was established by the Economy Ministry, which was also the only shareholder before the above transfer. This company falls under the law on strategic state companies excluded from privatization.

Economy Ministry spokesman Jozef Sucha reported on October 27 that the Ministry had filed a complaint with the Office of the Attorney General, and had asked prosecutors to review the procedure of the court that led to the share transfer.

On the same day, the Economy Ministry asked the SCP to block all unlawful transfers of shares in possession of the Economy Ministry, and demanded that Transpetrol shares be returned to the Ministry's account at the Central Securities Register. The Ministry simultaneously filed a lawsuit to exclude its Transpetrol shares from court-ordered confiscation.

But as the daily newspaper Nový Čas reported on October 27, the mysterious disappearance of the shares was an inside job. A district court in eastern Slovakia's Vranov nad Toplou and a higher court in Prešov had both issued verdicts that obliged the Finance Ministry to settle a claim of 43 million Sk ($1.2 million) owed to a company named ILaS Vranov, which is registered in Hummenne (eastern Slovakia). The courts ruled the Finance Ministry also owed ILaS 17% interest from January 1, 1997 and court costs.

ILaS Vranov sold its claim on the Finance Ministry to a company named C.S.I.-CD, a.s. which then asked a bailiff to enforce the claim. The court then ruled on the confiscation of shares of several strategic state companies, and commissioned the bailiff to carry out the confiscation. According to the confiscation verdict, the bailiff was supposed to enforce a claim amounting to 65.5 million Sk ($1.82 million).

The bailiff issued an order to enforce the claim by the sale of shares in several companies, and informed the Finance Ministry of this decision on October 6. On that day, 34.05 percent of Transpetrol shares were transferred from the account of the Ministry of the Economy.

The SCP confirmed that the above transfer of the Transpetrol stake was carried out in a non-standard way and without the knowledge of the board of directors and other bodies of Transpetrol. The transfer also did not meet the conditions for a valid contract on the registration of a share issue.

Transpetrol's board of directors declares that the transfer of the 34.05% stake was carried out without its knowledge and considers this step to be a violation of the legal norms.

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