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LABOUR MINISTRY FORCED OUSTER OF SOCIÁLNA POISŤOVŇA HEAD OVER DODGY IT CONTRACT

Social security boss sacked

THE DIRECTOR of Slovakia's Sociálna poisťovňa (SP) social security agency, Miroslav Knitl, has been sacked on the urging of the Labour, Social, and Family Affairs Ministry over charges that he signed in April a disadvantageous contract without approval from the insurer's board of directors.
According to Labour Minister Ľudovít Kaník, Knitl violated SP regulations and may have broken the law when he signed a contract with computer company CSC for the supply of an IT system at the agency after ministry officials had boycotted a March board meeting in order to block the contract.
"Knitl was recalled because, by ignoring the findings of the board of directors, he violated the law on social insurance," said Kaník to the daily Národná obroda.

THE DIRECTOR of Slovakia's Sociálna poisťovňa (SP) social security agency, Miroslav Knitl, has been sacked on the urging of the Labour, Social, and Family Affairs Ministry over charges that he signed in April a disadvantageous contract without approval from the insurer's board of directors.

According to Labour Minister Ľudovít Kaník, Knitl violated SP regulations and may have broken the law when he signed a contract with computer company CSC for the supply of an IT system at the agency after ministry officials had boycotted a March board meeting in order to block the contract.

"Knitl was recalled because, by ignoring the findings of the board of directors, he violated the law on social insurance," said Kaník to the daily Národná obroda.

"Breaking the law was sufficient reason for his removal," Kaník added.

Although Kaník's first three attempts to remove Knitl from office were unsuccessful, the recall motion was passed by 16 of 19 members present at a July 3 SP board meeting.

The contract at the heart of the dispute is for the installation of a complex IT system to manage social security operations throughout the country. CSC's final offer of Sk167 million (€4 million) was Sk27 million (€650,000) higher than a bid by rival IBM, and was reduced by Sk70 million (€1.7 million) after the tender process had been closed.

According to Kaník, SP's board of directors in February ordered Knitl to submit any draft contracts worth more than Sk10 million (€240,000) for the board's approval. Furthermore, he says, by walking out of the March board meeting, the Labour Ministry had removed the quorum necessary for sealing the board's approval of the CSC deal.

Knitl, however, maintains his innocence and says that he selected CSC over IBM because only the former would be able to install the system by September.

"I did not break any law," Knitl told journalists after his ouster.

"The problem is that the board of directors in the last little while has passed certain measures that are in conflict with legal norms.

"I did not violate the decision [of the board of directors] because I proposed the contract at a board meeting, which the state boycotted. More importantly, the decision of the board is in conflict with the law on public procurement. And at the moment, state supervisors have refused to investigate the Labour Ministry," said Knitl.

Although Knitl has not ruled out further legal action, Kaník holds that the former SP director failed in his responsibility to the board of directors, and that further investigation into the management of the agency will likely turn up more evidence against Knitl.

"It is beyond the knowledge of the SP director to appraise what is and isn't in harmony with the law," said Kaník to Národná obroda.

"On the basis of the law, he must fulfil the decisions of the board of directors. By signing the stated contract, [Knitl] overstepped his authority and violated the law on social insurance.

"The Office of Public Procurement has started corrective procedures, the results of which could be very disagreeable for SP. Many things there are not in order, but right now we can't evaluate what the development of this situation will be," said Kaník.

Although previous attempts to remove Knitl from office were opposed by SP employees and union representatives, labour officials now say that the former director had to go.

"At a minimum, Knitl violated ethical norms. He contravened a decision by the board of directors. If the board decided something and enjoined him to do something, that is how he should direct [the agency]," said Peter Gajdoš, vice-president of the Confederation of Labour Unions.

While a new director of SP has not yet been named, the agency's current director of the pensions department, Rudolf Križan, will take over as interim head. On July 17, the board is scheduled to decide on a new director, who should take up his or her post by the end of the year.

The dispute that led to Knitl's sacking is not the first controversy surrounding a tender for a state IT system in Slovakia.

In October 2002, Slovakia signed a contract with Hewlett-Packard for the supply of an IT system for the state treasury, after four previous tenders had been cancelled due to objections from rival bidder Siemens Business Services. IBM had also complained of being excluded from the fourth tender for the treasury IT system.

In 2001, Slovakia's Defence Ministry cancelled a tender for a logistics IT system after it was declared nontransparent. In a later tender, the contract was awarded to Slovakodata, but objections from rivals IBM, Fujitsu, and Hewlett-Packard led to a Public Procurement Office decision ordering a revision of the ministry's list of IT suppliers.

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