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ČSOB claim will cost Slovakia Sk24.7 billion

Neither the Slovak Finance Ministry nor the ČSOB bank know whether they will appeal the verdict of the International Centre for Settlement of Investment Disputes (ICSID, international arbitration tribunal) in Washington, which decided that Slovakia owes the Czech bank Sk24.7 billion and the country
must pay the bill within 30 days if it does not appeal the verdict, according to the daily SME.

The ministry could pay two thirds of the sum at once - the rest can be
settled from privatization revenues or by agreement. Finance Minister Ivan
Mikloš said that this is the explosion of a time bomb left behind by the former governments of Vladimír Mečiar.

The Slovak public finance deficit would this year rise by 1.9 percent of GDP
if the country does not appeal the court decision.

Mikloš would not reveal Slovakia's next steps, which are being discussed by
the ministry's lawyers. A decision is expected by mid-January.

The entire dispute originates from the ČSOB revitalisation scheme in 1993
for Slovenská inkasná (SI) and Česká inkasná (CI) banks - state banks formed by the Czech and Slovak finance ministries as part of the wind-down of
mutual affairs between the former federation partners. SI and CI assumed
ESOB receivables and took a loan from ČSOB.

According to Mikloš, SI has accepted more problematic claims than CI due to a lapse by the finance ministry at that time, wrote the TASR news wire.

"CI, having recovered its claims, was able to repay its loan to CSOB while
SI failed to do so. With the Slovak ministry failing to carry out its
duties, SI had become unable to pay back its debt to ČSOB in 1996," stressed Mikloš.

That year the bank called in the entire claim. "SI was unable to settle and
the ministry of finance (than led by Sergej Kozlík) refused to repay that
claim even though Kozlík himself has confirmed the validity of the claim at
many discussions," he added.

In April 1997, ČSOB petitioned to the ICSID for repayment of Sk13.7 billion.
After seven years on December 29, the arbitration court ordered Slovakia pay
off to the bank Sk24.7 billion including its original demand Sk13.7 billion and interest of Sk11.618 billion. In addition, Slovakia has to pay $10
million in court costs.

Compiled by Beata Balogová from press reports

The Slovak Spectator cannot vouch for the accuracy of the information presented in its Flash News postings.

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