Eureko, Polish Government Reach Accord on PZU

April 4, 2001

The dispute between Poland’s Treasury Minister and Eureko, the European insurance consortium over the management of Poland’s largest insurance company, Powszechny Zaklad Ubezpieczen, appears to have been settled. Under new Treasury Minister Aldona Kamela-Sowinska the government will retain three of the company’s five management board seats, but the nine-member supervisory board will be split evenly, with Jerzy Sablik, who was appointed jointly, as its chairman.

Eureko, which took a 30 percent stake in PZU in 1999 in partnership with Poland’s BIG Bank Gdanski, had originally been guaranteed equal management rights, but the former Treasury Minister Andrze Chronowski refused, setting off a fire storm of mutual recrimination. The dispute threatened to curtail badly needed foreign investment in Poland, as it raised questions about how willing the government was to honor its commitments, and imperiled Poland’s efforts to join the European Union.

Under the compromise worked out with Kamela-Sowinska, Eureko has an option to purchase up to an additional 21 percent stake at the offering price when PZU is eventually privatized. If plans work out, the initial public offering could occur before the end of the year. All pending litigation between the two sides will be withdrawn.

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