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State will pay €17.6 million to lawyer but will immediately sue his firm

The management of state company HM Invest was sacked over this scandal but they can still receive a generous "golden handshake".

Branislav Bačík of MH Manažment(Source: SITA)

The scandal surrounding the remuneration worth millions of euros to lawyer Radomír Bžán for winning an international case for the state could still have an interesting ending. The government decided that they would pay the percentage share to the law firm as agreed in advance but they will also turn to the court to get it back, the Sme daily wrote on November 7.

Economy Minister Peter Žiga announced earlier that the cabinet is considering pronouncing the contract with Bžán and his firm void. The National Property Fund (FNM) which then administered state property concluded the contract with Bžán but failed to publish an addendum in the central register where the conditions and reward for the law agency should be stipulated. This is reason for the state to deem the contract void.

What the scandal is about

The scandal surfaced when it was leaked that the law firm would receive €77.6 million for representing Slovakia in arbitration concerning the Gabčíkovo hydro-power plant. Later, the successor of FNM, state company MH Manažment, agreed with the firm, after public and media pressure, on a reward of €17.6 million. Still, many consider this amount exaggerated. So far, Bžán has received €4.9 million from the state, for the successful arbitration proceeding.

Read also:Lawyer to get dream pay-out from state

Žiga announced on November 7 that, according to the stance taken by the Slovak Bar Association (SAK) and according to the expertise of other law agencies, a flaw occurred in the conclusion of the contract. Also, it could be considered void in the part where the original agreed sum is stipulated.

“The State should pay an additional €12.7 million to Bžán's company by November 10 – and it will do so,” Žiga said as cited by Sme. However, at the same time, the cabinet is intending to sue the law firm. “After the legal analysis, we decided to turn to the court immediately after the state has paid this sum and we will require from Mr. Bžán the difference between the sum paid and an adequate reward,” Žiga added, without specifying what would be an adequate reward and what would be deserved.

Legal opinion and further steps

This procedure seems to present the smallest legal and financial risk for the state, according to the legal analysis of the TaylorWessing law firm which was addressed by Žiga. By paying the invoice of Bžán's company, the state rids itself of the risk of paying an “immoral reward of €77 million” in the future, the minister told Sme. Another reason is that Slovakia, despite being the defendant in the arbitration concerning Gabčíkovo, is not entitled to have any of the costs of its legal representative covered. Žiga noted that he deemed this decision as incomprehensible.

End of poundage fees for lawyers

Žiga explained that the state deems contracts signed between FNM and the law agencies in 2015 – including the Dvorecký & Partneri agency worth €7 million – void, and will thus require the agencies involved to return the money.

Read also:MH Manažment has turned into a money-making factory, claims OĽaNO

Žiga also wants the remuneration and fees for lawyers to be agreed in a different way than by poundage fees, i.e. in sums depending on the amount of money won for the state. The rewards should be made according to a lawyers' reduced tariff which is more just and transparent, the minister summed up. In the future, lawyers should be paid according to hours worked.

Golden handshake for those responsible

At the beginning of October, Žiga recalled the whole Supervisory Board of the state company MH Manažment. It was to be replaced by Economy Ministry employees and they were then expected to make staff changes to the three members of the company Board.

The Board of Directors was chaired by former Smer MP, Branislav Bačík. Other members were the head of the Young Social Democrats (Smer's youth organisation) Juraj Gedra and Rudolf Šamaj.

Read also:Justice Ministry to prepare rules for state’s use of legal services

Now, all three of them are entitled to compensation amounting to 6-months' salary, the Biztweet website informed.

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Topic: Corruption & scandals


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