TCS Daily


Orlengate

By Kamila Pajer - October 4, 2004 12:00 AM

Late on the night of 21 September Igor Chalupiec, the deputy finance minister of Poland, became the new president of PKN Orlen, a big Polish petrol company. Although PKN Orlen is a company in which the treasury of Poland possesses no more than 30 percent of the shares and therefore should not be the only decider of who is the president of the company, the board followed the government's instructions about whom to elect. The previous president, who was not accepted by the prime minister, held his position for just three weeks. And one of the former presidents, Andrzej Modrzejewskim whom the government also did not accept, was arrested by anti-terrorist authorities and accused of wanting to leave the country and acting against the interest of the country. He was released a few hours later as the detention was unjustified, but the company's management understood that they had to dismiss him.

Now, the case of the spectacular arrest of Modrzejewski, with public TV cameras and dozens of soldiers, has become a scandal and the subject of a special parliamentary commission investigation. That's because the former treasury minister revealed the true reason for the police action. Modrzejewski was arrested because he was about to sign a big contract with a provider and it seems he was not willing to "share the splendor" of the transaction with the government. In other words, he would collect all the money from the bribe and would not share it with the governing politicians. That there was a bribe we can be sure as the provider offered the product for a higher price than the competitors, and yet the competitors were never invited to negotiations.

The special parliamentary investigation is becoming a common thing in Poland. One panel investigating the case of alleged bribe enforcement by governing left-wing party on a private media group had hardly finished its work when this new one was established. Thanks to the first commission we know that when the parliament works on a law it consults new propositions with interested parties and that by consulting it means asking for money. The present commission has so far revealed the way the Ministry of Justice is able to make anyone guilty of anything. It also revealed the true reason for the existence of public industries, which is to make politicians rich. And it disclosed the fact that PKN Orlen was one of the most generous donors to the president's wife's foundation.

The yearly profit of PKN Orlen of around $9 billion - according to the list prepared by the Polish daily Rzeczpospolita - makes it seventh biggest company in Eastern Europe. The money is therefore something to fight for. The socialist propaganda says that public companies are the best solution for the country, because they generate profit for all and because they are ruled by the state, they work better and more efficiently. However, the facts prove this wrong. Rather, if public companies generate profit it is always only for some - usually a selected group of politicians who rule them. And if money is stolen from the firm, the firm does not work efficiently.

Moreover, it has no incentive to be efficient, as it does not operate under free market conditions. It does not have to cut costs and worry about clients, because its source of profits is ensured by the state budget. Most importantly, however, the existence of public companies corrupts the market. Their great protector, the state, always guards their interests even when it has to break the law. And to justify the presence of a public firm, the state fights the competition - if it allows any.

Due to the present parliamentary investigation on how the public company is managed, a planned 'golden share' rule has been set aside for a moment. The golden share allows the state to have the casting vote on strategic issues for the company, even when the state possesses only a few shares. The proposition has many advocates who argue that there are companies of strategic importance for the country and only the state alone can ensure that the interests of the country are protected. Thus, the state has to protect us from the bloodthirsty capitalists who think only of their own interest and do not care about the people the way the politicians do.

And the politicians here have such a long tradition of caring about people. When the state considered shops to be a strategic issue for the country and they were all public - as it was during communism - we suffered constant food deficits and long queues. Today, with private stores people enjoy shopping. When the state considered housing strategic, people waited ten years or even more to get their small and ugly flats. Today, when it is private issue, they buy a flat whenever they want. The fact that the state still considers petrol to be strategic makes petrol so expensive that most of the cars now go on diesel. It is estimated that last year every car owner could have saved about €100 on petrol had not the state care made it so expensive.


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