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DESPITE RECORD ACHIEVEMENTS, SARIO'S MANAGEMENT SHUFFLE CONTINUES

All change (again) at investment agency

INSTABILITY at the Slovak investment agency SARIO continues, as general director Artur Bobovnický is replaced by former vice governor of state-run Eximbank Ladislav Balko, who will be the agency's sixth head in its traumatic three-year history.
SARIO was launched in 2000 as a one-stop shop for investors, bringing together the resources of six ministries and the National Property Fund (FNM).
Among other services, SARIO offers potential investors a database of property available, investment opportunities, industrial parks, and detailed regional studies. The agency also cooperates with national, regional, and local institutions and helps investors find partners for joint ventures.


BOBOVNICKÝ bids farewell.
photo: TASR

INSTABILITY at the Slovak investment agency SARIO continues, as general director Artur Bobovnický is replaced by former vice governor of state-run Eximbank Ladislav Balko, who will be the agency's sixth head in its traumatic three-year history.

SARIO was launched in 2000 as a one-stop shop for investors, bringing together the resources of six ministries and the National Property Fund (FNM).

Among other services, SARIO offers potential investors a database of property available, investment opportunities, industrial parks, and detailed regional studies. The agency also cooperates with national, regional, and local institutions and helps investors find partners for joint ventures.

Between October 2001 and September 2002, SARIO managed to attract more than 30 investment projects worth 335 million euro and 6,500 new jobs. Under Bobovnický's management, from the beginning of 2002 to February 2003, the agency was instrumental in attracting PSA Peugeot Citroen's 700 million euro investment, announced in January.

The Peugeot project was originally introduced by the French Chamber of Commerce to the Slovak Economy Ministry, which handed the management of the deal over to SARIO.

French chamber of commerce director Igor Schmidt said he was pleased that the deal had been closed successfully under SARIO's management, although instability in SARIO's top positions has remained a question. A similar potential investment by BMW in 2000 fell apart after details of a meeting between BMW officials and SARIO were leaked to the press.

"There's been a new director [at SARIO] every little while - Bobovnický himself has only been there a year, I think," said Schmidt, adding that he was looking forward to meeting Balko.

Constant change at SARIO is nothing new. The agency was formed in June 2000 to replace the defunct Slovak National Agency for Foreign Investment and Development (SNAFIR), which was heavily criticised for poor service and lack of coordination.

SARIO's first boss and former SNAFIR head Roman Minarovič hoped that the new agency would function better than SNAFIR, through a larger share of the state budget and over 5.5 million euro from the EU Phare programme.

The agency planned to take a more proactive approach by promoting Slovakia abroad at trade shows and seminars. Then-chairman of the board Alan Sitár expressed hope that SARIO would grow, in order to allow Slovakia to compete for foreign investment with Poland, the Czech Republic, and Hungary.

However, SARIO was forced to the edge of bankruptcy in May 2001 when the government failed to transfer its budget on time, leaving it unable to pay the rent on its offices.

Two months later, Minarovič and Sitár were accused of having conflicts of interests when it appeared that they still held private-sector positions. The Economy Ministry called for resignations and the European Commission refused to release EU grants until it was assured of the "safe financing" of SARIO.

In August 2001 SARIO was transformed into a joint stock company, prompting Sitár's resignation. His position was temporarily taken up by SARIO manager Miroslav Malík, who was soon replaced by Miroslav Šipikal. Bobovnický was named to head the agency by former economy minister Ľubomír Harach in January 2002.

With the arrival of Bobovnický it looked as though SARIO was over its teething difficulties. Bobovnický had come from the business world, having worked in Slovakia's energy sector and as a top manager at the EuroTel mobile telecoms company. Before his appointment he had run a business consultancy for small and medium-sized enterprises.

Despite marked improvement in the agency's performance, the cracks in the relationship between Bobovnický and new economy minister Róbert Nemcsics were already showing by late last year.

Bobovnický had from the beginning of his term lobbied the government for more funding to increase the size and scope of the agency. With just 44 employees, SARIO is much smaller than similar agencies in surrounding countries. The Czechinvest agency has 162 employees, while Hungary's ITD employs 234.

In November, however, shortly after Slovakia made Peugeot's shortlist of potential sites, Nemcsics announced he would be carrying out stricter control over SARIO, stating that "we should be discussing the effectiveness of [the agency], not what resources are available to it."

"When the minister is working on large foreign investment projects he is interested in cooperation, not conflicts, with the agency that is responsible for them," said an Economy Ministry spokesperson in early November.

In an interview with the weekly Trend, Bobovnický said his departure was due to "radical disagreements on the way the agency should be managed, which I couldn't accept. I believe that a change of head may bring in better perception of and support for the agency."

Bobovnický also said that the agency will have a difficult time competing for investment with neighbouring countries unless it gets more government backing.

"[SARIO will be successful] if it gains the right support, and is able to carry out its mission - attracting new investors to Slovakia. That is the most important thing," he said.

It remains to be seen whether new director Balko will be able to secure that support or the finances that his predecessors lacked. Potential investors hope that Balko will be able to make the agency work, but caution that questions over SARIO's management and relationship with the ministries remain.

"It's still a state firm," said the French chamber's Schmidt. "But I am looking forward to hearing [Balko's] plans and I hope the plans include something that will bring [SARIO] closer to us."

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