Public peek behind veil of secrecy

IN THE LIGHT of the recent disclosure of investment contracts between the Slovak government and car giants PSA Peugeot Citroen and Kia Motors, large privatisation contracts are no longer protected by a veil of secrecy.
The biggest privatisation deals in Slovakia were cooked up in the kitchens of the Ministries of Finance; Economics; and Transport, Posts, and Telecommunications.

IN THE LIGHT of the recent disclosure of investment contracts between the Slovak government and car giants PSA Peugeot Citroen and Kia Motors, large privatisation contracts are no longer protected by a veil of secrecy.

The biggest privatisation deals in Slovakia were cooked up in the kitchens of the Ministries of Finance; Economics; and Transport, Posts, and Telecommunications.

So far, only the Finance Ministry, which has sold stakes in the main banks and the biggest insurance house to foreign owners, has received replies from investors about whether or not to make their privatisation contracts public.

Austrian Erste bank, which owns the largest bank in Slovakia - Slovenská sporiteľňa, is the first to agree to publish its contract.

The second largest bank VÚB now belongs to Italian IntesaBCI, Investičná rozvojová banka is in hands of Hungarian OTP Bank and the biggest Slovak insurance company, Slovenská poisťovňa, is now owned by German Allianz.

"The Ministry of Finance addressed all three banks and the insurer Allianz about disclosing their privatisation agreements. The deadline for their replies was set for Friday [August 6]," Peter Papanek, the spokesman for the finance minister told The Slovak Spectator.

"Erste bank agreed to reveal its contract, apart, of course, from information subject to confidentiality provisions. Intesa asked for a postponement of the deadline, while OTP said that their reply was on the way," he continued.

According to the news agency TASR, Erste bank mainly considers information about old, ongoing court cases involving Slovenská sporiteľňa to be confidential. However, the ministry will look closely at the bank's request to conceal some parts of the contract.

"Experts at the ministry are investigating Erste bank's reply. We want to judge whether the request not to disclose some parts of the agreement is really justified," he told the news agency.

The contract with Erste bank on the sale of Slovenská sporiteľňa will not be published on the internet, but everyone interested can request a copy of the contract from the ministry.

As for Allianz, disclosure of the contract is out of the question for now, as when the insurance house bought Slovenská poisťovňa they asked for a provision to conceal the information on the privatisation agreement for three years.

The sale of Slovenské telekomunikácie was the biggest privatisation deal by the Ministry of Transport, Post and Telecommunications.

The ministry sold its stake in the Slovak telecommunication firm (now Slovak Telecom) to German Deutsche Telekom.

"We have addressed the board of directors of Slovak Telecom and currently we are waiting for a reply [about the disclosure of the privatisation contract]," said Tatjana Kelcová from the press department of the Transport Ministry, although the right partner for such negotiations is arguably Deutsche Telekom.

Apart from the investments by PSA Peugeot Citroen and Kia Motors, the Economy Ministry also concluded important privatisation deals in the energy sector. The biggest was the sale of 49 percent of the gas company SPP to a consortium of Gas de France and Ruhrgas.

A minority stake in the oil transportation company Trans-petrol is now in hands of the Russian giant Yukos.

Three energy distribution companies have also been privatised. German E.ON obtained Západoslovenská energetika, Electricité de France has Stredoslovenská energetika, and RWE Plus acquired Východoslovenská energetika.

"We had requests for the disclosure of some of these agreements in the past as well, in the context of the Act on Free Access to Information, and investors refused it," Dagmar Hlavatá, of the press department of the Economy Ministry, told The Slovak Spectator.

"However, Minister Rusko has said that he would make efforts to ensure that at least parts of those agreements would be revealed. He has also asked the Justice Ministry for consultation on which parts of the agreements could be disclosed as was the case for PSA Peugeot Citroen and Hyundai," she added.

The debate about disclosing investment contracts arose after the Slovak government signed investment contracts with PSA Peugeot Citroen and Kia Motors to build new production plants in Slovakia.

Some NGOs raised concerns about whether the investment incentives that the Slovak cabinet offered the investors exceeded the benefits expected from the investments, adding that the public had the right to know how taxpayers' money was spent.

The mood for disclosure was strengthened further when the contract between Slovakia and Kia was leaked and parts were published in the weekly Domino fórum.

According to the leaks, Kia would receive additional state assistance if it decided to invest more than the originally announced Sk30 billion (€746 million), the Slovak daily SME wrote. Kia, on the other hand, is not bound to invest any concrete sum of money.

In light of this the Slovak Justice Ministry declared that concealing information on incentives for foreign investors coming to Slovakia violates the Act on the Free Access to Information.

"I think that publishing the information on the incentives is not a matter of the cabinet deciding on the issue, but rather respecting the law," Justice Minister Daniel Lipšic told the press.

This analysis of the law, which raised tempers within the ruling coalition, maintains that even if an investor requests that the details of a contract be classified, the Economy Ministry should not automatically meet the request and must instead explore which parts can be classified based on the valid legislation.

"The Slovak cabinet is obliged to publish the text of materials (proposals, reports, and analyses) submitted at the meeting of parliament.

"Only classified information, personal data, data that pertains to an individual's privacy, data that is subject to commercial secrecy, and information pertaining to criminal prosecution may remain concealed," said Ján Hrubala, head of Slovakia's anti-corruption department, in an earlier interview with The Slovak Spectator.

"It is impossible to conceal information that pertains to the handling of tax money, including the property of the state and its municipalities," he added.

Finally, after parliament asked the cabinet to publish the PSA Peugeot Citroen and Kia Motors contracts, the government decided in July to make them public.

The cabinet agreed that Economy Minister Pavol Rusko and Justice Minister Daniel Lipšic would set up a team to examine sections of the contracts and define which sections were subject to confidentiality provisions and consult with the carmakers on these sections.

"The Commercial Code defines precisely what is considered a business secret. No business secrets will be revealed, but the public should be able to access information pertaining to public funds," spokesman for the Justice Ministry, Richard Fides, told The Slovak Spectator.

The authorities' decision concerns not only investment contracts but also past privatisation agreements concluded with the Slovak government. Slovak ministries are now preparing to publish the contracts of big privatisation deals.

Experience from around the world shows that revealing contracts can be normal and natural.

Anita Archie, deputy of the Alabama State Council for Development, the group responsible for negotiating the state's investment deal with Hyundai, told the daily SME that, "The text of the agreement between the state and the investor was made public."

She said that all citizens of Alabama have the right to read information regarding the obligations between the state and the carmaker.

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