THE POLICE stopped their investigation of VÚB bank for tunnelling, an illegal form of private expropriation in which controlling shareholders siphon off funds from high cash flow clients to low cash flow clients for their own narrow interests. According to the daily SME, the case prosecutor called off the fraud investigation.
Two years ago, Finance Minister Ivan Mikloš and Interior Minister Vladimír Palko disagreed sharply over the restructuring of VÚB loans. Palko accused VÚB managers of tunnelling when the financial institution was in state hands, resulting in a Sk2 billion (€50 million) loss. Mikloš claims that Palko is mistaken and asserts that VÚB did not sustain such losses.
Palko’s accusations stem from loans granted by VÚB in the late 1990s to a company called Konsult Real, which eventually defaulted. The firm was a significant risk; according to law it should have gone into bankruptcy proceedings in 1998.
When the government decided to compensate the bank for bad loans as part of its privatization process, the loans to Real Konsult (together with other bad loans) were moved to Slovenská konsolidaèná, a state-owned bail-out agency. In 2000, a company called Strategia Invest signed an agreement with Konsult Real to take over part of its debt. VÚB agreed with the transaction.
Palko claims that the Sk759.7 million (€19.7 million) worth of assets moved from Strategia Invest to Konsult Real counts as tunnelling. According to the Finance Ministry, the transaction amounts to a bank restructuring process.
Compiled by Marta Durianová from press reports
The Slovak Spectator cannot vouch for the accuracy of the information presented in its Flash News postings.
15. Aug 2005 at 13:47