Warnings lights that are Amber

By bne IntelliNews August 15, 2012

bne -

When asked by a journalist what is most likely to blow governments off course, the former British prime minister Harold Macmillan replied, "Events, dear boy, events." Poland's premier, Donald Tusk, can only agree.

Since winning power for an unprecedented second term last October with 39% of the vote, Tusk and his Civic Platform party have steadily lost public support, first with a raft of austerity measures to right the listing economy and then a series of scandals culminating in August with the revelation that the PM's son was involved in the debacle surrounding the collapse of the OLT Express budget air carrier and the murky investment company behind it, Amber Gold.

In a July poll, Civic Platform's support had fallen to only 27% of respondents versus 32% at the start of July. One of the causes seen behind the fall was the resignation of the agriculture minister, Marek Sawicki, following the release of transcripts of private conversations by daily newspaper Puls Biznesu that showed a former head of the Agricultural Market Agency, controlled by the agricultural ministry, talking about cronyism and misuse of public money by members of Sawicki's agrarian Peasants Party.

Another July opinion poll found that President Bronislaw Komorowski is Poland's most trusted politician, with 70% of respondents. Tusk was a distant fourth with 40%, behind Foreign Minister Radoslaw Sikorski and Deputy PM Waldemar Pawlak.

Tusk's alredady sinking popularity is expected to take another hit from the latest revelations that his son Michal Tusk worked simultaneously for the state-run Lech Walesa airport in Gdansk and for OLT, which was declared bankrupt in July, followed a month later by owner Amber Gold - a gold-derivatives business that Polish regulators accuse of being little more than a Ponzi scheme

Flyover Poland

OLT Express burst onto the scene in April, providing long-suffering Poles sick of the awful roads and rail services the opportunity to fly around the country without having to rely on Lot Polish Airlines' regional subsidiary Eurolot.

OLT came about after mysterious investment company called Amber Gold, which made its money dabbling in gold and not airlines, bought OLT, then a failing German regional airline. Although Amber Gold was on the blacklist of Poland's financial markets regulator (KNF) for acting without a banking license, the company had outlets around Poland promising annual returns of 10% no matter what the gold price and, OLT CEO Jaroslaw Frankowski claimed, after several years of successful activity had gathered enough funds for it to plunge into the airline business.

But after investing about PLN60m (€15m), Amber Gold pulled the plug at the end of July, forcing OLT to suspend flights. OLT's sudden collapse inevitably put the spotlight on Amber Gold, which was already in trouble following a warning issued by the KNF that banks dealing with unregulated lenders faced a "reputational risk" prompting them to shut down Amber Gold's bank accounts. Amber Gold officially went under on August 13.

Amber Gold's 28-year-old founder, Marcin Plichta, called a news conference, saying that his companies had been brought down in a government conspiracy. While Amber Gold has promised it will pay investors back to the tune of €80m, few expect to see their cash again, according to internet forums. KNF now has the company under investigation, and questions are being asked about the role of PM Tusk's son in the whole affair.

The opposition are questioning whether Tusk's son was involved in a conflict of interest in working for both a state-owned airport and a now-bankrupt low-cost airline. The fact that Amber Gold received permission from administrators to buy and operate an airline despite having been designated an illegal bank by the regulator KNF is another concern the opposition is raising.

Tusk the younger - presumably in a misguided bid to reduce the impact on the PM - said in a magazine interview published on August 13 that his father had warned him not to get involved with OLT Express and its owner, Plichta, who was convicted in 2005 of embezzlement.

The opposition is now asking PM Tusk why he warned his son about OLT Express, but not the savers who were paying money into Amber Gold and may not have been aware of Plichta's conviction. They are also urging the PM to explain how both companies were cleared for operation by state regulators and justice authorities.

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