On Tuesday, Polish Treasury Officials, who control 56 percent of the shares in Poland’s largest insurer, Powszechny Zaklad Ubezpieczen, ousted directors from Eureko, the European consortium of insurance companies, and its Polish partner BIG Bank Gdanski, from the company’s board.
The move was the latest action in a bitter dispute between the Polish State and the private shareholders. Eureko and BBG acquired 30 percent of PZUs shares in November of 1999, and have maintained that part of the agreement gave them the right to equal representation on the company’s Board of Directors. A change in government brought the agreement in to question, and the newly appointed Treasurer, Andrzej Chronowski, initiated court proceedings last November to cancel the sale, or to at least declare parts of the agreement invalid. They are currently pending.
Eureko officials reacted strongly to the ouster, calling it a de facto attempt on the part of the government to nullify one of Eastern Europe’s biggest privatizations. Poland’s action will undoubtedly have a “chilling effect” on future plans to privatize government controlled companies.
Many state industries in Eastern Europe are desperate for private capital to update their outmoded and inefficient infrastructures. The PZU conflict evinces that there may be greater risks than anticipated in these investments.
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