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Kiska returned anti-shell law

PRESIDENT Andrej Kiska refused to sign the revision to the public procurement law, which is meant to ban shell companies from the public procurement process on December 18. He returned it to the parliament for another discussion.

PRESIDENT Andrej Kiska refused to sign the revision to the public procurement law, which is meant to ban shell companies from the public procurement process on December 18. He returned it to the parliament for another discussion.

“Even those who propose it admitted that the law will be ineffective,” Kiska said, as quoted by the TASR newswire. “It will not prevent firms with hidden owners from winning tenders since it requests just revealing of formal owners.”

The new legislation was adopted in the wake of a series of public protests emanating from the scandal concerning an overpriced computer tomography (CT) scanner purchased by the Alexander Winter Hospital in Piešťany from the Medical Group. The fallout led to the resignation of Speaker of Parliament Pavol Paška, Health Minister Zuzana Zvolenská and Deputy Speaker Renáta Zmajkovičová, who also served on the hospital board.

According to the government’s draft law, any company wishing to take part in a public tender must disclose all its shareholders owning 10 percent or more of the firm. Companies registered in a country where legislation does not require they disclose all such owners are also unable to participate. Slovak or foreign firms which are not registered in such countries, but which have shareholders that own 10 percent or more of the firm who do hold residence in such countries are also excluded. Moreover, firms where public officials have more than a 10-percent share cannot bid on public procurements either, according to the draft.

Critics point out that the new legislation, effective as of January 1, 2015, could be easily avoided if a shell company hides behind a co-owner that is a Slovak firm and represents the company in a public procurement process. Another possibility is to win the procurement with a known owner and then sell the company to a shell firm, the Sme daily reported.

“I don’t say that the draft submitted by the government in an accelerated legislative process solves all problems,” Borec said, as quoted by the Sme daily. “It solves some problems and it is definitely a step in the right direction.”

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