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AMID FEARS OF CORRUPTION, BUS COMPANIES HEAD TOWARD FULL PRIVATISATION

A SAD story

THE PRIVATISATION of Slovakia's bus transporter SAD will be wrapped up soon, as the majority of SAD's 17 companies have found new owners.
However, the road that the companies have had to travel to enter private hands over the past three and half years has not been smooth.
The media often reported suspicions of non-transparent conduct and people or firms involved in the privatisation process having ties to the underworld.

THE PRIVATISATION of Slovakia's bus transporter SAD will be wrapped up soon, as the majority of SAD's 17 companies have found new owners.

However, the road that the companies have had to travel to enter private hands over the past three and half years has not been smooth.

The media often reported suspicions of non-transparent conduct and people or firms involved in the privatisation process having ties to the underworld.

Some of the tenders will have to be revised, which will further delay the whole process.

The Slovak Intelligence Service (SIS) highlighted these serious concerns in its annual report for 2003.

"In the area of privatisation, the SIS reported the non-transparent and disadvantageous privatisation of several SAD companies sold under market prices.

"Some SAD companies were privatised by mutually interconnected persons and in some cases the buyers obtained the money for the privatisation by tunnelling those companies before their sale. Two SAD companies were probably privatised by firms connected to the underworld," reads the report.

SIS agents will continue to keep an eye on the SAD privatisation this year as they assume that people with corrupt pasts might be among those interested in the strategic Slovak companies, the daily SME wrote.

"It cannot be ruled out that subjective criteria will be used for judging the price bids along with objective evaluation methods," stated the SIS.

The General Prosecutor's Office has been investigating the sale of bus transporters, Svetlana Husárová, the office spokeswoman told the press. However, she refused to give further details.

"With regard to the suspicious privatisation of SAD, the ministry is preparing a special report for a cabinet meeting," Dagmar Hlavatá from the press department of the Economy Ministry, which is supervising the privatisation, told The Slovak Spectator.

The general director of privatisation section of the Economy Ministry, Mária Valovičová, told the daily SME that she did not know about any disadvantageous sales and that she rejected the allegations that the privatisation was not transparent.

She added that the Economy Ministry could not comment on the tunnelling of the companies because, prior to the privatisation process, the SAD companies were under the administration of the Transport Ministry.

"We have no information about that [tunnelling]. If the SIS publishes an annual report, they ought to comment on it too," Tatjana Kelcová from the press department of the Transport Ministry told The Slovak Spectator.

The initial impulse to transform and privatise the state bus transport company appeared in 1994 when the state separated cargo from passenger transport.

In 1999 the state created 17 firms out of the original 53 bus companies located in various Slovak towns and cities. The privatisation of the individual 17 companies began in 2000 after these were transformed into stock companies and put under the administration of the Economy Ministry, local state governments, and the National Property Fund.

The main reason to sell the bus transport firms was that the business had been greatly underfed and lacked serious investment.

The main goal was to obtain money to modernise equipment and the bus fleet.

In 2000 the property of SAD companies represented about Sk4 billion (€100 million). The loan burden reached Sk300 million (€7.5 million) and about Sk600 million (€15 million) of the property was under the pledge rights of lenders

"We [the Transport Ministry] wanted the companies to be transformed into stock companies so that they could run their own business, independent of the state budget," said Kelcová.

According to the privatisation scheme, investors could purchase a 49 percent share in a bus company with managerial rights and a preferential option to buy another 17 percent share.

So far, almost all of the 17 SAD companies have found investors. The government is supposed to approve new shareholders in SAD in the cities of Lučenec and Trenčín by the end of this year.

The tenders for these two companies had to be repeated as the Economy Ministry raised doubts about the investors chosen previously. SAD Banská Bystrica faces the same delay.

The new owner of the biggest SAD company in Bratislava, with attractive land in the city centre, was not chosen in the first round of the tender either.

The investor originally selected refused to sign the privatisation contract at the final stage of the process. The government approved its new investor only in July.

The National Property Fund has so far acquired more than half a billion crowns from the privatisation sales of SAD companies as of June 2004.

Bus transport accounts for 64 percent of passenger transport in Slovakia when counting the number of people in relation to kilometres travelled.

SAD companies have 5,100 buses in operation. On average they are 11 years old and almost 80 percent of them are beyond their economic life, the Národná Obroda daily wrote.

Privatisation was supposed to ensure better service quality and safety. Non-transparent sales, however, have raised concerns that this principal aim of the privatisation process will not be fulfilled.

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