Polish oligarchs strike back

By bne IntelliNews October 2, 2007

Patricia Koza in Warsaw -

Poland's current election campaign is increasingly focusing on attacks by the conservative Kaczynski twins, who are president and prime minister respectively, on the "oligarchs" who, they claim, run the Polish economy and interfere in Polish politics. But some of the businessmen under attack are beginning to strike back.

President Lech Kacyznski set the tone for the campaign shortly before parliament voted on September 7 to dissolve itself halfway through its four-year term after the coalition government collapsed, by promising to fight against a "Poland for the rich." New elections are scheduled October 21.

His brother, Prime Minister Jaroslaw Kaczynski, joined the fray a few days later, targeting the Polish media for being "essentially under the control of oligarchs" who, he alleges, amassed their fortunes through backroom deals and are hostile to the Kaczynskis and their ruling Law and Justice Party.

The debate over who is running Poland - the politicians or the oligarchs - became a campaign issue after one of Poland's richest businessmen, Ryszard Krauze, was linked in July with two former ministers in the Kaczynski government who were dismissed on corruption charges over a scheme to reclassify farmland into lucrative construction investment area. Prosecutors announced in August that they would detain Krauze in connection with their investigation.

Krauze, who has been out of the country since the scandal broke, finally responded through his lawyer on September 20, saying that he planned to return to Poland to face the charges against him as soon as he completed his business abroad. "I declare that I do not feel guilty of the crimes I am accused of," his statement said.

Krauze's image in the public's eye hasn't been helped by recent negative headlines after he sold his controlling stake in Prokom to rival Asseco for what analysts described as a "scandalously" high price. The resulting furore - and the 15% fall in Asseco shares - forced both sides back to the negotiating table and on September 19 a 17% cut in the price was agreed.

Krauze, 51, a former college basketball star who is well liked in the business community, got his big break when his company Prokom Software landed the contract to computerize the Social Insurance Board, or ZUS, in the early 1990s. That led to a string of other government contracts, through which he developed a wide range of contacts with politicians. He has since moved into the fuel, pharmaceutical and housing construction sectors, and is worth an estimated $3bn.

Henryka Bochniarz, head of the Polish Confederation of Private Employers, warns that attacks on business leaders like Krauze could damage the Polish economy. "The little capitalist may be tolerated by the authorities, but as soon as his company grows a bit, he becomes suspect," she says. "We are cutting our own throats."

She also says the government's targeting of "corruption" as a chief goal is misplaced. "In meeting entrepreneurs I always ask what interferes with their making business," she says. "The top problem is labour shortages and high labour costs; corruption hasn't been signalled as a serious problem by them."

Jan Wejchert, founder and president of media and entertainment group ITI Holdings, also warned in an interview with the Polish edition of the Wall Street Journal that the Kaczynskis' policy could backfire. "I continue to do my own thing and so do my business partners," he said. "We will not be intimidated."

At the same time, he said he's aware that some entrepreneurs are seriously thinking about leaving Poland for a while, or of channelling investments abroad. "It is enough to see that these 'terrible' rich people have created millions of jobs and thousands of companies by investing their own capital," he said. "Like it or not, it is them, and not the state, who are the force behind Poland's economic development."

Paper wars

Prime Minister Kaczynski's bitterest attack was levelled at Gazeta Wyborcza, Poland's most profitable daily, which was set up by the Solidarity union prior to the 1989 elections that ended communist rule. He compared the newspaper to Trybuna Ludu, the leading communist daily during the oppressive Stalin years. Gazeta's owners took less than six hours to respond to the attack: they announced they will sue for slander.

"The prime minister's assault on Gazeta Wyborcza fits a scenario that bears a striking resemblance to what happened in [President Vladimir] Putin's Russia where the free press was gagged," wrote the paper's Deputy Executive Editor Jaroslaw Kurski. "It won't work with us."

So far, only one leading businessman seems to have backed away from confrontation with the government. Tomasz Lis, a veteran television journalist who has been a sharp critic of the current government, was sacked from his job at the private broadcaster Polsat, owned by Zygmunt Solorz-Zak, another target of the government campaign. Lis was replaced by a presenter who is considered more sympathetic to the Kaczynski's Law and Justice Party.

"If the owner of an independent TV station allows himself to be scared like that, this bodes ill for the freedom of the press in Poland - and brings disgrace on Mr. Solorz," Gazeta wrote in an editorial.

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Polish oligarchs strike back

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