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SLOVAK FINANCIER IS REMANDED IN CUSTODY ON FRAUD, ORGANISED CRIME CHARGES

From boardroom to prison cell: The career of Jozef Majský

HE GETS UP at 5:45, just like all the other prisoners, eats breakfast and then cleans his cell. Visits from his family are limited to one half-hour a month in the presence of a police investigator. His mail is read by prison staff before it is passed on. Jozef Majský, for years considered Slovakia's richest man, is awaiting trial in jail, his wealth and influence for once beyond reach.
It's an ignominious fate for the fast-talking Majský, who since emerging in the early 1990s as a shrewd trader has boasted of bribing state officials and bankrolling political parties, but who until this year has never been officially challenged.
Given the seriousness of the latest charges, however, Majský's many political friends may not want to be seen influencing the outcome of his trial, even if they could.


Jozef Majský
photo: TASR

HE GETS UP at 5:45, just like all the other prisoners, eats breakfast and then cleans his cell. Visits from his family are limited to one half-hour a month in the presence of a police investigator. His mail is read by prison staff before it is passed on. Jozef Majský, for years considered Slovakia's richest man, is awaiting trial in jail, his wealth and influence for once beyond reach.

It's an ignominious fate for the fast-talking Majský, who since emerging in the early 1990s as a shrewd trader has boasted of bribing state officials and bankrolling political parties, but who until this year has never been officially challenged.

Given the seriousness of the latest charges, however, Majský's many political friends may not want to be seen influencing the outcome of his trial, even if they could.

"This case shows that the law applies to everyone," said Interior Ministry spokesman Boris Ažaltovič.

Majský was arrested at a border crossing between Slovakia and Austria on October 21 and charged with fraud and forming an organised crime group. The charges stem from the spring 2002 crash of the Horizont and BMG Invest firms, which operated like pyramid schemes, and whose premature demise cost around 200,000 depositors an estimated Sk16 billion ($380 million).

The financier was stopped at the border in a car driven by his wife, Diana Dubovská, a member of parliament for Vladimír Mečiar's opposition Movement for a Democratic Slovakia (HZDS) party. Majský, who was appointed the honorary consul for Cyprus in 2000, was apparently on his way to Israel on his diplomatic passport, although his wife said he had no intention to flee.

"Come on, he has roots in Slovakia, he has a base, friends and work here. It cost him too much energy and strength to build up a firm and image for him to leave the country because of some discrepancies and problems. He wouldn't do that," said Dubovská, whose husband was nevertheless remanded in custody in a Košice jail.

Discrepancies

Police said the charges against Majský were related to a sales contract between Horizont and the "non-existent" Cavaliere Sales firm of Delaware late last year in which Horizont bought a Sk112 billion ($2.6 billion) debt owed by the Slovak Telecom firm. Slovak Telecom has never recognised the legitimacy of the debt.

In other contracts, Horizont and BMG were reportedly sold for a single Slovak crown each to Cavaliere and another nonexistent US firm, Commodore, meaning that the buyers acquired the assets in return for a debt that may prove impossible to collect.

The charges, which could cost Majský a jail term of up to 12 years if he is convicted, follow another indictment filed earlier this year against Majský and his two sons, Erik and Jozef Jr., who in 1998 allegedly transferred Sk426 million ($9.9 million) from their Sipox Holding firm to Istrokommerz rather than repay a debt to the FNM privatisation agency.

The suits come after years of bold admissions by Majský, who when asked on the STV state channel whether he ever offered bribes, once said: "I don't think just sometimes, but almost every day."


A HEAVY SMOKER, Majský must now be content with prison-issue tobacco.
photo:Ján Svrček

Majský has said he got his start in business during communism at the turn of the 1970s and 1980s, convincing the VSŽ steel maker to turn out thinner tin cans on the sly. "For the same money we got more cans. I did it for a year under the table; we broke the rules. The director was in a sweat and said we would all be thrown in jail," he said.

Two years ago, Majský was quoted in the Sme daily describing his 1989 beginnings as a capitalist, importing cheap computers from Taiwan and selling them for as much as Sk400,000 (then over $20,000) mainly to state firms. "I would come to a deal with the director, who would be earning Sk5,000 [a month], that I would give him Sk100,000 and he would pay me [for the computer] within a week," Majský said.

From computers Majský moved on to oil. His Sipox firm, according to the Pravda newspaper, in the early 1990s offered the Slovnaft refinery 100,000 tonnes of Russian oil, then worth about Sk350 million, even though the oil still belonged to its Russian owner. The deal, in which Majský received an unspecified amount of money from Slovnaft, cost the then-head of the refinery's oil purchasing division his job, according to Pravda.

After that it was rubber, various metals, fertiliser, and weapons - "rockets, ammunition and so on".

In 1993, Majský moved into the machinery industry, privatising VAB Bánovce nad Bebravou, but according to the FNM never paying for it (hence the charges laid earlier this year). In 1996, however, on a public debate series organised by The Slovak Spectator, Majský was critical of what he regarded as privatisation fraud under the 1994-1998 Mečiar government.

"It's true that mistakes are made everywhere, but Sk103 billion worth of mistakes are pretty big mistakes. The FNM has privatised Sk103 billion. These aren't mistakes, it's just speculation. It isn't normal. Privatisation can't go on like it's going now."

Majský has also admitted to not paying social benefits dues for his employees, saying that "not paying dues to social funds was not a crime at that time".

But however controversial his methods, they seemed to work. Majský's Sipox Holding, the flagship in a corporate empire including 36 firms in 1996, was ranked the sixth-largest Slovak firm that year by Deloitte & Touche. Majský's companies at the time employed 11,000 people, had an annual turnover of $800 million, and were worth roughly $300 million. His holdings included women's clothing firms, hotel facilities and media.

"Last year, when I was on a business trip to the east of the country, I was surprised to find out that one of the facilities there belonged to us as well. So I said: 'My God, is this mine too?'" Majský was quoted as saying in the Plus 7 Dní weekly magazine.

Through Sipox as well as directly the Majský family owns extensive Slovak real estate, including two villas near Bratislava castle (one decorated with stuffed 'trophies' from hunting safaris to Tanzania), another in the High Tatras mountains, chateaux in Gelnica and Lučivná, and recreation grounds in Štrba, Trenčianské Teplice and Kremnica.

The firm also rents five hunting grounds, including a 2,700-hectare ranch near Topoľčany leased from the Catholic Church, on which Majský built several residential and commercial structures.

In later years, however, Majský's Midas touch seemed to falter, with Sipox's purchase of the Czech Liaz Liberec and Škoda Mníchovo Hradiště factories resulting in the closure of the plants.

Friends in high places

Majský is perhaps best known, however, for his open engagement in politics.

Declaring that he had known former PM Vladimír Mečiar "since our youth", Majský added he had supported the authoritarian three-time former Slovak PM because "he became Interior Minister [in 1990], and everyone likes friends with important posts."

Confronted in 1996 with the statement that he had been the main sponsor of Mečiar's HZDS party in 1992 during its campaign to get re-elected to government, Majský said: "It's true that I sponsored the movement when it was in its formative stages, but it wasn't because I wanted to be an adherent of any particular party... the main reason I helped the HZDS was that I have known [Mečiar] for more than 30 years, so I wanted to help him - as a friend.

"I don't regret it, but I do regret the fact that things turned sour a little, that things got a little out of control and slipped through his [Mečiar's] fingers."

On another occasion, however, Majský said he had been alienated by a tradition he said had been started by Mečiar - "the more stupid you are, the higher the position [you are given]". The financier added he had objected to Mečiar's apparent indifference to European Union and Nato criticism of his policies.

From the HZDS Majský moved his support to the left of the political spectrum, particularly to the Democratic Left (SDĽ) and the Civic Understanding Party (SOP), which he helped to found along with current President Rudolf Schuster.


THE HONOURABLE CONSUL for Cyprus attends a Christmas 2001 party with President Schuster.
photo: TASR

"My inclinations have always been towards the [former communist party] SDĽ," Majský said in a 1999 interview with The Slovak Spectator. "This was because of my social feelings. I have always tried to find some middle way, which would give a chance even to those people who know how to work but are not highly talented and would not survive in a free market economy. So I have always been inclined to favour the social-democratic programme rather than the right wing or nationalist platform."

Majský's social feelings also led him to support the SOP, whose then-leader, Košice Mayor Rudolf Schuster, had "given all his time to the welfare of Košice, and I would be happy if he gave it to the benefit of Slovakia."

Majský's girlfriend at the time, Diana Dubovská, was that year elected to parliament as an MP for the SOP, although the financier admitted his political support before the crucial September 1998 elections - in which a coalition including the SDĽ and SOP defeated Mečiar's HZDS - had been widely spread around among the victorious parties.

In an interview with this paper that was unusually candid - even for him - Majský said his support could have been decisive for the victorious parties.

"I think that if somebody employs almost 11,000 people and has more than 40 companies, he cannot survive without a certain level of political support and certain ties with government people with whom he could share opinions," said Majský.

"As for the SOP, I wanted to support these people. The same applies to the whole [1998-2002 ruling] coalition. I supported them and I think I did enough for this coalition to make them win in parliamentary elections.

"I don't want to go into details, but the support I gave them was extraordinary, was of fundamental importance. I used mass media, since as you might know, I have my fingers in different media [such as the daily Sme paper and the private station Rádio Twist]. It was just a question of replacing certain people and telling them how to write. Other possibilities included television and radio broadcasting. I think the media were in this way influenced sufficiently."

As the first Dzurinda cabinet neared the end of its term in office, however, government politicians began to be more circumspect about their contacts with Majský, with SOP member Marián Mesiarik saying after Majský's arrest that questions over the businessman's activities had been raised before.

"I'm not surprised, because even earlier there were signs that something was going to be unearthed," he said.

At the same time, Majský's ties to the HZDS and chairman Mečiar apparently increased, with Dubovská running for, and winning, another seat in parliament on the party's ticket in September elections. Slovak media speculated that Majský had forged some kind of deal with Mečiar on a possible state pay-out on the Slovak Telecom receivable, and thus a bail-out of the several hundred thousand voters who had been affected by the pyramid fund collapses.

The speculation arose from a damaging interview, recorded on video, allegedly between Majský and the former head of the BMG fund, Vladimír Fruni, who was arrested earlier this year in connection with the crashes.

In the interview, a voice which police analysts have identified as Majský's, tells Fruni that an unknown politician will step forward and declare state aid for depositors.

"When the guy I was telling you about announces that [the lost money] is to be repaid, the [public and police] view [of the fund crashes] will be different," says Majský.

While no evidence exists connecting the "person" Majský spoke of to Mečiar, the HZDS leader said while campaigning in the north Slovakia town of Žilina September 9 that the next government might have to compensate pyramid fund depositors.

"The first [choice] is that people sue the state, and I know they'll win their cases. The second option is a compromise between the government and the representatives of depositors. A certain level of compensation will be approved."

"I think it's now clear to everyone how Diana Dubovská got on the [HZDS] candidates list," said Monika Beňová, vice chair of the Smer party, after Mečiar's comments were reported in the media.

No more speeches

Following Majský's jailing in late October, however, a mantle of silence has fallen over the businessman's noisy lifestyle.

Diana Dubovská refuses to comment on media reports she has separated from Majský and is living on her own.

Majský's lawyer, Milan Ružbarský, refuses to talk about the case, or about the fact he himself used to work in a law office with the current director of the SIS secret service, Vladimír Mitro.

Many public officials and analysts refuse to discuss Majský's fate, saying they need more evidence before doing so. Police are refusing to release any evidence, so important is the case to repairing the tattered credibility of Slovakia's judicial system.

Majský himself, while behind bars, is unable to freely explain his predicament even if he wanted to.

Only his many interviews over the years offer a glimpse of how Majský found himself where he is today - unable to live comfortably under restrictions, his very captivity a sign that Slovak society is starting to take its most powerful members to task.

"Under communism, I always had the feeling that I could do more than [the regime] would allow me to do," he declared in 1996. "I suffered from the limitations imposed by the communist rules. So I was doubly happy that after the 1989 revolution I could travel abroad freely and sign contracts all around the world. I could basically wake up in the middle of the night and travel abroad for business. I took it as a development of my personality and as a kind of self-realisation.

"I think that things will eventually calm down. Every revolution brings all sorts of things to the surface of a previously calm pond. Some things then have to be removed, for the water to be clear again, so the fish can return.

"We just have to be patient."

The First Decade
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