Slovak prosecutors refuse to pull privatisation implicated in Gorilla files

By bne IntelliNews August 10, 2012

Tim Gosling in Prague -

The Bratislava General Prosecutor's Office confirmed on August 8 that it has officially declined to initiate a case seeking to cancel the 2004 privatisation of a heat and power plant to murky financial group Penta, despite the deal reportedly being mentioned in the files of the "Gorilla" corruption scandal.

Former Interior Minister Daniel Lipsic filed a complaint against the sale of Paroplynovy cyklus (PPC) with Slovakia's General Prosecutor in March, arguing that the deal was illegal and caused the state damage to the tune of at least SKK15bn (€15m). However, a spokesperson for the Bratislava prosecutor confirmed to that legal action will not be filed because the complaint came too late, the three-year window for objections having passed.

That sparked a war of words. Lipsic insisted in return that in the case of PPC, the 10-year window for natural monopolies should be applied because at the centre of the case is a contract with the country's dominant utility Slovenske elektrarne (SE). He also suggested the General Prosecutor is the only person in Slovakia to doubt that the deal was extremely disadvantageous for the country, and called for the introduction of direct elections for the post, reports the portal Energy in Slovakia.

On August 9, the General Prosecutor replied that the case had been moved to the appropriate regional prosecution, while accusing Lipsic of making a political campaign and misleading the public.

After the emergence of the Gorilla scandal - which centred on a secret service surveillance file codenamed Gorilla that comprises transcripts of a dozen incriminating chats apparently between politicians and Penta officials, and was leaked onto the internet before Christmas last year - the PPC case popped up. At the centre of Lipsic's complaint was an economy ministry report from 2004 that suggested the state stood to lose up to SKK1.5bn (€50m) due to a contract running to 2013 that committed SE - a state-owned enterprise at the time - to buy power from PPC.

According to the former interior minister, the contract meant that the state had guaranteed PPC a profit of up to €500m, based on what he called an overpriced agreement to make power purchases. Lipsic also told media in March that the sale price itself (SKK2bn) undervalued PPC, and that in fact Penta had not put in the highest bid for the 90% stake being sold by National Property Fund.

Penta refutes the claim, saying that the privatization programme on SE created uncertainty over the future of the sales contract, thereby significantly lowering the value of PPC. It points out that the conditions under which PPC currently sells power to SE were negotiated two years after the privatisation.

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