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Poland's ruling party tightens grip on big state firms
October 10, 2017 / 6:37 AM / in a month

Poland's ruling party tightens grip on big state firms

WARSAW (Reuters) - When presidential aide Malgorzata Sadurska joined the board of Poland’s biggest and oldest insurance company this summer, her lack of business experience was no obstacle.

Her main qualification to help run state-owned Powszechny Zaklad Ubezpieczen (PZU) was something else -- loyalty to the ruling Law and Justice (PiS) party.

What PZU needs is “a person who knows the PiS program and is a guarantee that it will be implemented,” parliamentary deputy Marek Suski told radio RMF FM as the conservative PiS took to the airwaves to explain her appointment in June.

Her task, he said, was “to implement the program of the government, which is to repair Poland.”

Sadurska, 41, is one of hundreds of loyalists brought in to state companies by PiS to tighten its grip on big business and help it implement its conservative, nationalist-minded policies since it returned to power in 2015 after an eight-year absence.

The aim is not only to ensure loyalty in major companies and give PiS a say in their personnel, investment and policy decisions.

It has also enabled PiS to use such firms as vehicles to buy out foreign interests in the banking and energy sectors, with a U.S.-owned news channel, TVN24, seen by some business leaders as a likely next target because it is critical of the government.

Opponents fear public procurement and financing rules are being blurred, giving PiS access to large advertising budgets which can be used to fund publicity campaigns or events that promote the party’s agenda.

This, they fear, will deepen the concerns of Poland’s European Union partners about what they see as an assault on the rule of law and democracy since PiS set its sights on asserting its power over the economy, the judiciary and the media.

Aleksander Laszek, chief economist at the Civil Development Forum (FOR), a Warsaw-based economic policy think tank known for its liberal view on the economy, said the PiS moves to assert control of big business were “exceptionally strong and brazen.”

“A VERY GOOD PROFESSIONAL”

Sadurska’s responsibilities at PZU include real estate, strategic partnership programs and bancassurance, under which an insurance company can sell its products to a bank’s client base, PZU said.

PZU officials gave no further details of what she has done since joining the board.

Before her appointment, she had no experience in insurance, finance or business beyond an MBA in business management from her native Lublin region in eastern Poland.

But she had won a reputation for dedication to the PiS cause since first being elected to the lower house of parliament in 2005. She has served as secretary of state responsible for labor and social policy and was chief of President Andrzej Duda’s chancellery for almost two years from August 2015.

Contacted by phone, Sadurska directed Reuters to the PZU press office, which declined to answer emailed questions about her appointment or PZU business policy.

Suski also declined to give any details to Reuters. Asked whether Sadurska had been appointed to PZU to implement PiS policy, he said: “She is a very good professional”.

PZU has not said how much Sadurska is paid. Her predecessor, according to PZU financial records, received the equivalent of just over 22,000 euros ($25,850) a month.

After a series of personnel changes in the past two years that appear to reward political loyalty, the government now has greater control of the more than 200-year-old firm than at any time since four decades of communist rule ended in 1989.

PZU’s chief executive officer, Pawel Surowka, is among the recent appointees. An experienced manager who also worked at Bank of America Merrill Lynch, he was named CEO in April and had been brought in to head PZU’s life insurance arm in 2016.

Surowka has said it is normal that a company such as his would “try to fit in” with government economic policy.

Government influence has not had any discernible impact on the price of PZU insurance, but PZU’s share price has risen by 39 percent this year.

PIVOTAL ROLE

The PiS’ business policy has attracted less attention than its overhaul of the judiciary but the heads of most big state firms have been replaced in the last two years, sweeping away officials appointed under the previous, centrist government.

Politics and business rarely act in isolation in any country, and it is not unusual for politicians to cross from parliament to boardroom. But the extent of political control over big state business in Poland alarms government critics.

PZU, with 27,000 employees and a market value of about $10.9 billion, has a pivotal role to play in the PiS plans.

Late last year, PZU teamed up with the state-run Polish Development Fund to buy back state control over Poland’s second-biggest bank, Bank Pekao SA, from Italian UniCredit.

Other state firms have also been used as buyout vehicles. In March, state-controlled utility Enea closed a deal to buy a power plant from French Engie and in May Poland’s biggest power producer, PGE, announced it would buy French group EDF’s local power and heating plants.

Some business leaders expect PiS, in tandem with Poland’s biggest bank, state-run PKO Bank Polski, to move soon to buy out TVN24 -- and silence its criticism.

A PKO BP spokeswoman dismissed the speculation, saying: “There are no such plans ... We don’t have this (buying media) in our statute.”

But a manager at PKO BP, speaking on condition of anonymity, said such a move was likely.

“Most probably it will be PZU along with PKO that will buy TVN, though no decision has been made,” the manager said.

Discovery Communications Inc, which is acquiring TVN24-owner Scripps Networks Interactive Inc., said: “Our policy is to not comment on market speculation or rumors.”

PZU has also become a big sponsor of events and campaigns that dovetail with PiS policy.

When a publicity campaign began last month in support of the government’s planned judicial reform, it was launched by a foundation funded by state-controlled companies including PZU.

On Aug. 1, PZU’s Warsaw headquarters were illuminated with a symbol of Poland’s underground resistance to mark the anniversary of the failed 1944 Warsaw Uprising against occupation by Nazi Germany. PiS has put promotion of Polish wartime victimhood at the center of its appeal to nationalism.

Last month, PZU sponsored a picnic organized by an outspoken Catholic priest, Tadeusz Rydzyk, with whom PiS has built an increasingly close alliance.

Writing by Matt Robinson, Editing by Timothy Heritage

Our Standards:The Thomson Reuters Trust Principles.
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