Poland's squeaky clean image post-communism threatened by secret tape

Mennica Polska SA

18/06/2014 18:16

* Furore over leaked remarks by central banker, minister 
    * Businessman Zbigniew Jakubas mentioned in the tapes 
    * He says tape shows officials plotted against him 
 
    By Adrian Krajewski and Christian Lowe 
    WARSAW, June 18 (Reuters) - The furore over a secretly 
recorded conversation between two senior Polish officials has so 
far focussed on comments that call into question the 
independence of the central bank. 
    But businessman Zbigniew Jakubas says he is more upset about 
another part of the tape: a section in which, according to a 
transcript, Interior Minister Bartlomiej Sienkiewicz and central 
bank governor Marek Belka discuss how they can pressure 
Jakubas's company to charge less for the coins it was proposing 
to mint under a state contract. 
    According to the transcript published by the Wprost 
magazine, Belka talks about the possibility of wielding a state 
"truncheon" against Jakubas's mint, Mennica Polska  MNCP.WA , 
and Sienkiewicz then alludes to organising various branches of 
the government - such as the tax authorities and the central 
bureau of investigation - in the effort. The transcript does not 
contain details about what exactly the agencies would do. 
    Jakubas, 62, says that reading about the conversation made 
him recall Poland's days under communism, when the party imposed 
military rule and officials ordered his business destroyed. 
    "I'm not a vindictive person. But this hurts me," Jakubas, 
ranked 14th among the wealthiest Poles by Forbes magazine, told 
Reuters in an interview. 
    "I thought that after 25 years of freedom .... things had 
moved on from martial law. But it seems some people still have 
it in their heads that they can do anything," he said. 
    Asked to comment on Belka's remarks on the tape about the 
mint, a central bank spokesman referred Reuters to an earlier 
bank statement dealing with the tapes in general. That statement 
said Belka's remarks had been taken out of context, and that 
Belka has not stepped beyond the bounds of his authority. 
    Reuters contacted an interior ministry spokeswoman by phone 
and email requesting comment about Sienkiewicz's remarks about 
the mint. The spokeswoman did not provide a comment. 
    In a television interview, Sienkiewicz, when asked about the 
mint conversation, questioned the accuracy of the transcript - 
without saying which parts may be inaccurate - and said some of 
the phrases he used sounded worse than they were because they 
were a kind of shorthand used among friends.  
    Polish politics have been in an uproar since Saturday when 
Wprost published excerpts of the tape transcript and posted part 
of the audio on YouTube. In it, Belka is heard telling 
Sienkiewicz he would be willing to help the government out of 
its economic troubles if the finance minister were fired.  
    Prosecutors say they have no evidence Belka or Sienkiewicz 
broke the law in their conversation, which Wprost said took 
place in July last year. Prime Minister Donald Tusk says he sees 
no reason to fire Sienkiewicz, and Belka also remains in his 
position.  
    Neither Belka nor Sienkiewicz has denied the conversation 
took place but both have said their comments were misinterpreted 
and they did nothing illegal. 
    But many Poles - and foreign investors - are concerned about 
what the tape says about Poland's standards of governance, and 
wonder if the country is as upstanding as they believed it had 
become since Tusk's pro-market government came to power in 2007. 
    Poland has attracted huge investment since, partly because 
it is viewed as having better and cleaner governance than other 
emerging markets. 
    Peter Attard Montalto, emerging markets economist with 
Nomura, said the revelations have compelled Poland-watchers to 
think about political risks they had not considered for some 
time. 
    "The next steps will determine if we can settle back to such 
old ways or not," he wrote in a research note. 
    
    "TRUNCHEON" 
    At the time the conversation took place, the central bank 
was inviting bids from firms to manufacture Poland's lowest 
denomination coins, the 1, 2 and 5 groszy coins. 
    Mennica Polska, which was already minting those coins under 
a prior contract, was invited to bid along with mints from 
Britain, Finland and Canada. 
    According to Belka's remarks in the transcript, his 
preference was to award the contract to Mennica Polska. There 
was public pressure for the contract to go to a Polish firm.  
    The contract was awarded in October last year to Britain's 
Royal Mint. The central bank said at the time that Britain's bid 
was lower than Mennica Polska's. 
    In the transcript, Belka talks about the difficulties of 
getting the Polish mint to lower its bid and says it was 
negotiating with an unnamed person who "already believes that we 
have robbed him." Jakubas says the unnamed person was him, and 
Sienkiewicz later names him in the exchange. 
    According to the transcript, Sienkiewicz replies: "Perhaps 
we need to tell him how we can rob him more. Maybe he'll 
understand." 
    Belka is quoted as saying that the person in question is 
taking advantage of a weakness in the position of state 
institutions. 
    "Even though at the end of the day the state does have this 
truncheon ... Here, what's needed is close cooperation with that 
truncheon," Belka is quoted as saying in the transcript. 
    At this point, Sienkiewicz describes his experience bringing 
together the central bureau of investigation (CBS), the tax 
inspectorate (UKS) and the state treasury's intelligence arm to 
work on joint projects. 
    "It seems to me that at some point this will also be a very 
useful tool in our games with the kind of fat cats who believe 
they can act with impunity," the transcript quotes Sienkiewicz 
as saying, referring to the mint's tough negotiating position. 
    He said when those agencies tried to act alone against 
Jakubas, whom he identified by name, they got nowhere. But, he 
said: "All together, collected into a pile, that is completely 
different, a completely different story." 
    Asked specifically about his remarks on the mint by 
broadcaster TVN24, Sienkiewicz said: "I have never in any 
respect, either in my words or actions, stepped beyond the law 
and truthfully speaking I was acting to the benefit of the 
Polish state." 
    Jakubas told Reuters he found the transcripts chilling. 
    In the 1980s, after quitting a job as a teacher in a 
technical college, he ran a network of clothing boutiques in 
Warsaw and a business in eastern Poland making clothes. 
    At the time, the Communist authorities tolerated some modest 
private enterprise. But he said that, on "orders from the top of 
the party," tax inspectors tried to wreck his business in the 
eastern Polish town of Biala Podlaska.  
    They failed. His holding company, Multico, now includes the 
mint, train manufacturer Newag  NWGP.WA , a gas pipeline maker, 
a publisher and a film production company. Forbes magazine 
estimated his wealth at 1.3 billion zlotys ($425.20 million). 
    He said of the leaked tape: "It's not just a question of the 
personal damage, but it's the fact that in our country, which we 
believed already to be a country ruled by law, this situation 
can happen where a minister talks about taking a truncheon to 
someone." 
 ($1 = 3.0574 Polish Zlotys) 
 
 (Additional reporting by Marcin Goettig; Editing by Sonya 
Hepinstall) 
 ((christian.lowe@thomsonreuters.com)(+48 22 653 97 00)(Reuters 
Messaging: christian.lowe.thomsonreuters.com@reuters.net)) 
 
Keywords: POLAND TAPES/BUSINESSMAN