February 12, 2018 / 7:04 AM / 2 months ago

Poland detains ex-minister, investment bankers in privatization probe

WARSAW (Reuters) - Polish authorities on Monday detained six people, including a former deputy treasury minister, on charges of negligence in their handling of the sale of a stake in chemical firm Ciech in 2014, a move the opposition said was politically motivated.

The ruling Law and Justice (PiS) party, at odds with the European Union over its reform of Poland’s judiciary and other issues, has criticized privatizations by the previous centrist government, questioning the rationale and pricing of some deals.

PiS, which is socially conservative but favors a bigger state role in the economy, has been particularly critical of the 2014 sale of the Polish state’s 38 percent stake in Ciech.

Prosecutors said on Monday that an investigation showed four detained ex-treasury ministry officials had committed negligence and had exceeded their authority with the cooperation of two detained investment bankers working back then for a now-closed local unit of ING.

The government sold its stake in Ciech in June 2014 to KI Chemistry - then controlled by Poland’s richest man, Jan Kulczyk, who died in 2015 - for about 620 million zlotys ($182 million) - or 31 zlotys per share - close to the market price at that time.

The price was near the top of the 10-36 zlotys range from the previous five years. But in the 18 months following the privatization, Ciech shares rose 180 percent to 87 zlotys.

KI Investment said the sales process - via a public tender offer - was transparent and that apart from the 38 percent sold by the state, private investors sold a combined 12 percent stake at the tender. It attributed the subsequent price rise to the confidence investors put in the new owner and a rise in the price of Ciech’s products, among other factors.

All of the detained will have charges pressed against them, said a spokesman for the regional prosecutor’s office in the southern city of Katowice. If they are found guilty by courts, they could face prison terms of up to 10 years.

Reuters tried unsuccessfully to contact two of the detained people. The local unit of ING declined to comment on the case.

The leader of Poland’s main opposition party Civic Platform (PO), which was in power at the time of the privatization, said he suspected a political vendetta on the part of PiS.

“I believe that all issues need to be cleared up ... but it looks like a politically motivated case,” state news agency PAP quoted Grzegorz Schetyna as saying.

PiS ousted PO in Poland’s 2015 national election.

Reporting by Marcin Goettig, additional reporting by Marcin Goclowski; Editing by Gareth Jones

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