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Court bans further direct sales by FNM

Slovakia's highest court ruled on November 16 that the government's direct sales method in privatization over the past two years has been illegal and barred the state privatization agency - the National Property Fund (FNM) - from carrying out any further direct sales. The Košice-based Constitutional Court's decision, however, is not retroactive, meaning that all direct sales that have taken place since the coalition headed by Prime Minister Vladimír Mečiar in late 1994 transferred the government's decisionmaking in direct sales onto the FNM cannot be overturned.
According to Ján Cúper, a legal expert in Mečiar's Movement for a Democratic Slovakia (HZDS) party, the Court's decision went against the "public interest." Another HZDS member, Dušan Macuška, was angrier.
"This was a politically irresponsible decision, although I expected it, since I am not used to the Constitutional Court deciding in favor of the government coalition."


"When I saw this ruling, I knew it would be a perfect argument for the complaint. The Court could not go against its own decision."

Ivan Šimko, KDH legal expert


Slovakia's highest court ruled on November 16 that the government's direct sales method in privatization over the past two years has been illegal and barred the state privatization agency - the National Property Fund (FNM) - from carrying out any further direct sales. The Košice-based Constitutional Court's decision, however, is not retroactive, meaning that all direct sales that have taken place since the coalition headed by Prime Minister Vladimír Mečiar in late 1994 transferred the government's decisionmaking in direct sales onto the FNM cannot be overturned.

According to Ján Cúper, a legal expert in Mečiar's Movement for a Democratic Slovakia (HZDS) party, the Court's decision went against the "public interest." Another HZDS member, Dušan Macuška, was angrier.

"This was a politically irresponsible decision, although I expected it, since I am not used to the Constitutional Court deciding in favor of the government coalition."

As soon as the Court's ruling is published, the FNM must stop approving direct sales, with the government now likely to take over that responsibility. In the past two years, the FNM has approved over 730 direct sales, worth approximately 100 billion Sk ($3.3 billion), according to information it provided.

It remains to be seen, though, whether the FNM will halt direct sales in the interim period between the Court's ruling and its publication. FNM president Ján Gavorník did say that he believed the FNM executive board should shy away from making any more direct sale decisions.

Makings of a complaint

At least one party not affiliated with the governing coalition doesn't believe that. "Until the Large-Scale Privatization Act [the law's formal name] is changed to comply with the Constitution," said members from the Party of the Democratic Left (SDĽ), "the governing coalition will continue with completing the privatization process."

The opposition had protested against the law since coalition deputies pushed it through Parliament in 1994, but was hesitant to file an immediate complaint with the Constitutional Court. The complaint was put together only in early 1996, by legal experts from two parties not in the governing coalition, Ivan Šimko of the Christian Democratic Movement (KDH) and Robert Fico of the Party of the Democratic Left (SDĽ).

Something unconstitutional

"We had suspected from the very beginning that this law was unconstitutional,'' Šimko said. şşBut we do not file complaints if we cannot base them on something certain.''

The "something certain'' came in the summer of 1995. Under a different appeal the opposition filed in early 1995, the Constitutional Court ruled that direct sales are a fundamental aspect of the Slovak Republic's economic and social policy. Decisions over such measures are to be made by the government, the Court wrote. Since the FNM is legally independent from the government, opposition deputies saw their chance.

"When I saw this ruling, I knew it would be a perfect argument for the complaint," Šimko said. "The Constitutional Court could not go against its own decision.''

Though past decisions cannot be annulled, the opposition is looking for ways to at least modify them. şşOf course, these decisions cannot be reversed anymore. But I believe that now they can be revised," Šimko said. "For example, if the Court finds out a company was sold too cheaply, it could increase the original sale price.''

Why the FNM was chosen

After Mečiar's HZDS won the 1994 elections, his party joined with the ZRS and the SNS to form a majority in Parliament. But direct sale privatization decisions still were the responsibility of then-Prime Minister Jozef Moravčík's government. That interim government announced on --- that it would continue ahead with direct sales. Reacting to that proclamation, the new coalition parties pushed through a measure in an all-night sitting in Parliament that transferred direct sale responsibility from Moravčík's government to the FNM.

"They did not want to govern, but they wanted to privatize," Šimko said.

The move, while effective because it stopped the Moravčík government from making direct sales during its lame duck period, also turned out to be brilliant later, Šimko said, because it allowed the government to say it was not directly involved in privatization decisions, since the FNM is legally independent of the government. It also freed the FNM from being regulated by the supreme control office, which monitors all other state administrative units.

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However, unlike all other state institutions, it does not report to the supreme control office. Simko's estimate was correct. The constitutional court ruled in favor of the opposition: all the xxxx direct sales worth xxxx Sk carried out since December 1994 were un-constitutional. "Most of the legislation is adapted purposefully, that's the problem,'' Simko said. "And, you can't forget that Slovakia is still very young. The law has been in action only since 1993. Legal system is only being created and interpretation of the constitution has only began.''

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