A generous man. Outgoing Finance Minister Miroslav Maxon has been told to forgive the tax duties of the troubled IRB bank.
On October 13, the government authorised Finance Minister Miroslav Maxon to make the necessary budget arrangements to absorb the loss. The 1.4 billion Sk figure represents money owed to the state in tax backpayments and related fines.
But although the Finance Ministry has been charged with responsibility for implementing the decision, it has done nothing so far. "We have some preliminary figures [related to the amounts to be forgiven] but we have no idea about next year's national budget. We presume that this problem will be resolved there," said ministry spokesperson Jana Tökolyová.
The legality of the government decision was questioned by Viliam Vaškovič, the economic expert of the biggest party of the former opposition, the Slovak Democratic Coalition (SDK). "The outgoing Finance Minister does not have the right to do it," he stated. "It's against the law."
"The outgoing government is making decisions that will have to be implemented by the incoming government," agreed Brigita Schmögnerová, deputy chairperson of the Party of the Democratic Left (SDĽ). The new government could recoup some of this money, she said, by raising interest on loans to the bank, but otherwise would have difficulty reversing the Mečiar government's decision. "A new government can't apply the distraint law on the IRB [and seize the bank's assets in compensation for the lost state revenues]," she pointed out.
Vlado Zlacký, an equity analyst with investment bank ING Barings, agreed that the government's move was unorthodox. "Tax and penalty release is improper and will result in financial gain to the private shareholders," he said. "This step would only be appropriate if the bank was being bought out."
More than 98% of IRB stock is in hands of Slovak shareholders, the largest of whom is Slovenská Poisťovňa (SP), the country's largest insurer. SP, which holds 66% of shares, is still controlled by the state through the National Property Fund (FNM) privatisation agency. The agency held on to its 50.5% stake in SP after an extraordinary shareholders meeting voted to invalidate a recent basic capital increase on October 15. The capital increase had been suggested by steel maker VSŽ, the largest private SP shareholder, and had left the FNM with a 40.4% minority stake in SP.
Another 0.49% percent of IRB stock belongs to Czech shareholders and 1.12 % to owners from Liechtenstein.
Slovakiaşs third largest bank, IRB was placed under a caretaker administration in December 1997 by the central bank after lack of liquidity forced the bank to close its doors. On June 10 this year, Slovenská Poisťovňa underwrote a 2 billion Sk issue of new shares, but central bank governor Vladimír Masár said the increase was not enough to restore the confidence of foreign investors in the bank.