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Low-price state auction raises doubts

AN ELECTRONIC auction of state-owned platinum mesh has now been added to the list of murky government deals. Even though the state agency responsible for the sale claims that it acted in line with all the rules, the opposition Smer party believes there was political deal and a cover-up, and a transparency watchdog group says the government needs to take further action.

AN ELECTRONIC auction of state-owned platinum mesh has now been added to the list of murky government deals. Even though the state agency responsible for the sale claims that it acted in line with all the rules, the opposition Smer party believes there was political deal and a cover-up, and a transparency watchdog group says the government needs to take further action.

The State Material Reserves Administration (SŠHR) sold mesh containing 63,000 grams of platinum for €668,000 in an electronic auction in July. But TV Markíza, which broke the story, reported that the market price for that amount of platinum was around €2.425 million.

The head of the SŠHR, Eva Hrinková, who was apparently nominated by the governing Slovak Democratic and Christian Union (SDKÚ) party, resigned on November 2 and the government of Iveta Radičová ordered the temporary suspension of further electronic auctions by the SŠHR.

Prime Minister Radičová, who recently announced her planned departure from the SDKÚ, said at the end of October that there needs to be additional government regulations covering electronic auctions, stating that it seemed that someone had been able to “immediately find a crack in how to turn even an electronic auction into a pre-agreed deal”, as quoted by the SITA newswire.

Smer leader Robert Fico swiftly latched onto the controversy, which was first reported by TV Markíza on October 16, using it to criticise Radičová by suggesting that she had covered up what he called a party-based transaction ever since the auction was held on July 4.

“Immediately after I learned about the problem from the media, an investigation by the Government Office was initiated,” Radičová repsonded during a political talk show broadcast on Markíza on October 30.

Hrinková said after her resignation that the row surrounding the platinum sale was just pre-election manoeuvring and that the SŠHR had complied with all the regulations set by the law on electronic auctions.

The platinum mesh

SŠHR, which administers the country’s material reserves, offered the sale of the mesh, consisting of 92 percent platinum and 8 percent rhodium, in early July. The price of one gram of platinum at the time was estimated by TV Markíza to be €38, while the price for one gram of rhodium was estimated to be €43.

The broadcaster reported that the platinum-rhodium alloy could have been sold by the government at €38.50 per gram. However, the highest bid that the state received in the auction was for €10.60 per gram – one quarter of its true market value, according to TV Markíza.

The platinum filters were purchased by a company called Heneken, which submitted its winning bid only one second before the closing of the auction. The owner of the company is reported to be Michal Hudoba, 27, who was a candidate for parliament in 2006 on the SDKÚ slate. Heneken later sent an explanatory statement to SITA about its purchase claiming that the filters were not of the best quality, were oxidised and needed to be chemically cleaned.

Hrinková, the head of the SŠHR since 2010, previously served as head of the Government Office when Mikuláš Dzurinda was prime minister. Dzurinda has denied that his party was involved in the sale in any way. The Sme daily wrote in its October 28 edition that both the head of the selling agency and the purchaser are close to the SDKÚ.

Who nominated Hrinková?

The chairman of Freedom and Solidarity (SaS) party, Richard Sulík, publicly called the sale a “theft”. Dzurinda responded that Hrinková had been appointed to her post at the SŠHR by Economy Minister Juraj Miškov, a member of SaS.

“It is true that political parties offer their experts to this or that minister but it is always the minister who is responsible since he can either accept or reject such a proposal,” stated Dzurinda in an interview with Markíza.

On October 27 Miškov reacted to Dzurinda's comments that the SŠHR came under the authority of the Economy Ministry by stating that according to the country’s Competencies Act, the SŠHR is under the remit of the government rather than the Economy Ministry and that the chair and deputy chair of the SŠHR serve in political functions and not in the role of experts.

Miškov added that according to the coalition agreement signed by the four parties after the general election in 2010, the SDKÚ had the authority to nominate the SŠHR director, SITA reported.

Fico stated on November 2 that the auction had been manipulated because the winning bid was submitted by a company owned by a person who ran on the SDKÚ slate in 2006 and added that Radičová should have taken action much sooner.

Fico said that the actual auction ran for 20 minutes from 9:00 to 9:20 on July 4 and the first bid submitted at 9:03 was for €440,000, that another bid for €600,000 came 4 seconds before the close of the auction and this is why he believes that the sale was manipulated in some way. The former prime minister added that he sees no legal way for the state to seek the return of the platinum.

The Supreme Audit Office, the Office for the Fight against Corruption and inspectors from the Government Office are continuing to investigate the sale. The SŠHR cancelled an electronic auction to sell grains of silver that had been scheduled for November 2 following the government’s order to halt further auctions.

The Justice Ministry reported that it is considering ways that the law on electronic auctions could be revised.

“I do care about eliminating doubts around electronic auctions, which I consider a correct tool for public procurement and the sale of state property,” Justice Minister Lucia Žitňanská (SDKÚ) stated, as quoted by SITA.

Zuzana Wienk, the head of Fair-Play Alliance, a political watchdog group, said that the Radičová government took the appropriate steps when it suspended further sales by the State Material Reserves Administration, sought to cancel the platinum sale and accepted Hrinková’s resignation. But Wienk thinks further measures need to be taken.

“Publishing the results of the investigation and drawing legal-criminal or other consequences should follow,” Wienk told SITA.

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