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PZU CEO Claims to Have Nothing Against the Dutch, Yet Sees Little Chance for Reaching Amicable Settlement in Shareholder Clash
(Polish News Bulletin Via Thomson Dialog NewsEdge) Jaromir Netzel received approval of the Commission for Financial Supervision (KNF) to head Poland largest insurance company PZU, on Tuesday. Apart from the KNF top authority Stanislaw Kluza, the National Bank of Poland (NBP) Deputy President Jerzy Pruski and the PM's nominee at the KNF (and its deputy head) Marcin Gomola voted against this decision. Netzel has won acceptance thanks to the votes of support of another PM nominee and KNF deputy head Iwona Duda, the Labour Minister Anna Kalata, the President's representative Henryka Cioch and the Finance Ministry's man Arkadiusz Huzarek.
Jaromir Netzel has already worked as PZU CEO for half a year. PZU's two largest shareholders ? the Treasury with 55 percent of its shares and Eureko holding a 33 percent stake ? are in conflict. The, lasting five years, war between shareholders has intensified in the last few months, while emotions have started to appear during general shareholders' meetings. The issue of the insurer's privatization is the bone of contention. The Dutch want to buy the promised 21 percent shares in PZU and then float the insurer on the stock exchange. The Treasury opposes the idea of raising the investor's stake in PZU. The foreign investor is fighting for its rights before an international arbitration tribunal. If Poland loses, it may have to pay compensation of a few billion euro. Meanwhile, the Polish government did not reveal what it intended to do with PZU. For the first time in history, the Treasury-nominated PZU CEO Jaromir Netzel officially said that Eureko by no means could take over majority in PZU. Below you will find an interview with Netzel conducted by Aleksandra Bialy, featured in Rzeczpospolita. Note that fragments of Netzel's answers in brackets were attached by the PZU CEO himself during the interview's authorization, leaving Rzeczpospolita's editorial team unable to refer to them in questions.
Why don't you like Eureko?
Netzel: "It is not true that I do not like the company. I have nothing against the Dutch either. I have a lot of sympathy for them. Ajax Amsterdam is among my favourite football clubs, while Johan Cruyff is the footballer I admire."
Nonetheless during the last extraordinary meeting of PZU shareholders you presented information that could have been regarded as an attempt to disparage the Dutch company as investor in PZU.
"I showed the truth, not an attempt to disparage anyone."
Then why the information about alleged irregularities in PZU's foreign investments were not handed to shareholders in writing, but read and shown on slides instead? You may have got the impression it was done on purpose.
"This was the board's information on the company's condition. They were not a justification to any draft resolution that were to be voted during the GMS, therefore there was neither need nor obligation to show them to shareholders beforehand."
But this information was the basis for assessment of the previous PZU board headed by Cezary Stypulkowski and eventually led to withdrawing approval of their work. What losses did PZU incur as consequence of these foreign investments?
"It was an honest description of the previous board's actions. PZU's losses have not been calculated yet, but various inspections and audits are currently in progress."
When will they be calculated?
"I will announce it as soon as it is done. I can only tell you the losses are enormous. I have no doubts that full responsibility for them can be ascribed to Eureko, because the concepts of entering those markets came from the company or from people recommended by Eureko for PZU's management and supervisory board membership."
As I understand, this is the opinion of the current PZU board. Maybe you are wrong. Is there anyone else, an independent body, that expressed their opinion on the matter?
"We will call another auditor, should we find it necessary."
Another information you presented during the PZU GMS concerned the insurer's agreement with EuroCross, company from the Eureko group. It was to have provided PZU clients with aid services at place of accident. The agreement, however, has been revoked by our board after not even five months, explaining that EuroCross did not secure personal data of PZU clients appropriately. What losses did PZU incur as a result of these malpractices?
"This agreement was valid only a few months. In this case, not even financial matters, but issues connected with lack of sufficient data security were the reason for revoking it. In our opinion, EuroCross protected personal data received from PZU inappropriately."
What exactly did it do, did it throw documents to some generally accessible skips?
"Fortunately not. Personal data of our clients were kept in a way, which was not in line with the signed agreement, which was to guarantee their safety. Furthermore, their electronic processing ? contrary to the deal's clauses ? was conducted not in EuroCross's Polish headquarters, but in the Netherlands. Thus, PZU was unable to monitor and control the situation."
Another information presented at the GMS concerned irregularities in purchases and tenders conducted in PZU. How much do these losses tot up to?
"These are large sums."
How large are they? ZL100m? How important are they in relation to PZU's assets?
"Comparing these amounts with PZU assets would make them look small. But in relation to the motivation system preferred by Eureko, they are not that tiny. Furthermore, what PZU is selling its clients is based on trust to the company, its tradition, honesty. Whenever we must handle any kind of malpractices, it is a threat to PZU's most valuable capital ? trustworthiness."
All the mentioned information revealed during the PZU GMS from the board's initiative, were presented very late. One of the shareholders even fell asleep next to his voting appliance. It is very difficult to make a balanced decision in such conditions.
"It is not my fault that the GMS lasted 19 hours. None of the shareholders filed for suspending it. [The course of the GMS was the consequence of a stance adopted by Eureko, its plenipotentiaries and other people that cooperated with the firm. Please do not place accusations regarding the matter against the PZU board.]"
But later there was a vote on withdrawing approval of the previous board's work. It was initiated by the Deputy Treasury Minister Pawel Szalamacha, who referred to some "new information." Maybe he meant the information hastily presented by PZU management earlier during the GMS we are talking about. Or did he mean some other information?
"I disagree with the opinion that something was presented during the GMS ? as you put it ? hastily. Returning to your question, Szalamacha meant the information provided by the board during the GMS, of course. I think, however, that the fact Eureko received more data about PZU than other shareholders was pivotal. [We cannot forget that the data could have influenced decisions on buying or selling PZU shares and it was Eureko ? not the Treasury ? that was trading these shares.] It would be a good thing to ask the Treasury about it as the motion's initiator."
How do you become a PZU CEO? How is it possible for an unknown lawyer from Gdynia to get this post?
"You get an offer and you either accept it or turn it down. I accepted it, realizing it is a chance appearing once in a lifetime."
Who backed your candidacy?
"I think it was the Treasury minister."
Did you make any endeavours to get it?
"I did not run any campaign regarding the case. The fact that my name has not appeared in the media before is the best proof for my words."
I heard that you were recommended by Marek Gluchowski, lawyer from Gdansk, who has been nominated for chairman at PKO BP's supervisory board. Do the two of you know each other?
"Yes, I know him personally, but Marek Gluchowski has nothing to do with it."
And what do your contacts with Ryszard Krauze look like? A well-informed person told me that the solicitors' office you worked for before coming to PZU belonged to him.
"This is utter nonsense. My solicitors' office was a sole proprietorship and I owned it in 100 percent. I did not employ any politicians, children of politicians and was not financially dependent on anyone, including Ryszard Krauze."
But you are Krauze's friend. Do you visit each other?
"I have never been to Krauze's house and he has never been to mine."
In one of interviews, the President Lech Kaczynski called you a tank with double armour. Do you regard it as a pleasant definition?
"I treat it as a compliment."
How often do you see the President and the PM?
"I have seen PM Kazimierz Marcinkiewicz once, PM Jaroslaw Kaczynski once too, and the President, since he has become Poland's President once as well. I do not contact them in any way."
What task did you get from the Treasury Minister Wojciech Jasinski?
"To protect the Treasury's interest in PZU."
That is get rid of Eureko?
"Protect the Treasury's interest in PZU."
How do you assess, in a scale from 0 to 10, the chances of reaching an agreement with Eureko on Dutch conditions? I would only like to recall that they demand the Treasury fulfils the privatization agreement, that is give them control of PZU.
"The operations Lithuania and Ukraine are the best proof that Eureko will never, or at least in the near future, cannot take full control of PZU. There is no guarantee that what happened in Lithuania and Ukraine would not repeat in Poland. Protecting the Treasury's interests in PZU is an important element of the state's economic security."
Is it true that you sent Eureko's representative in the PZU board Joice Deriga to a psychiatrist or a therapist so that she checked whether her brain was functioning properly? Do you often banter like that?
"Such event never took place. Nobody from the board's members confirmed it did."
But I heard that Joice Deriga was crying when leaving the board's meeting. Do you like it when women are crying?
"Oh please, do not exaggerate. In a minute I will have all feminists against me. Is there anyone else you want to play against me?"
But you did make her cry?
"I did not see her cry. Women are most of my closest workers. I like and prefer to work with women."
Eureko, when announcing its decision on withdrawing representatives from PZU organs, apart from the shrink-case said that its reps were disposed of their company cars, while their company credit cards and mobiles were blocked. Why?
"They did not want to accept certain tasks. [While Joice Deriga left for holidays without informing the CEO and without receiving my consent, which she was obliged to have done]"
But taking away cars as if they were toys?
"Not like toys. They also lost their offices. PZU is not my own private company. If someone does not want to work, does not want to have duties, but wants to have rights, well, then there is something wrong about it."
What did the situation with dividing duties for Eureko representatives in the board look like?
"The problem was that the deputy CEO Piotr Kowalczewski refused to accept control of IT matters. Everyone knows that it is one of the main problems PZU needs to solve. Kowalczewski referred to instructions given to him by Ernst Jansen."
As he did not want to accept IT, you took away his company car?
"He refused to accept tasks."
What exactly did the brother of the KNF head Stanislaw Kluza do at PZU and why did he resign?
"He was the director of the office for strategy and projects. He motivated his resignation with the fact that his brother chairs the KNF. I have nothing more to say about it."
And what about Drobkartel?
"I will not talk to Rzeczpospolita about Drobkartel. The case is the subject of my legal dispute with the daily's editorial staff and is examined by the court and the prosecutors' office. I am not worried about the dispute's outcome."
Does the PZU board, apart from all these events, handle business issues? Two largest European insurers: Allianz and Axa have just announced the launch of a new method of selling insurance policies ? via phone and the Internet. PZU also had such an idea. What is going on with it?
"Business matters are our priority. Right now we have a dozen or so business projects launched bent on both raising revenue and reducing costs. Our actions are aimed at strengthening PZU's market position. Today I can confirm what I said in August at a press conference on PZU's financial results in the first half of the year. Our financial performance in 2006 will be record-high."
One of PZU shareholders sitting next to me during the GMS estimated that preparing such exhaustive materials on alleged irregularities at PZU must have taken your board at least a month. He also deduced that at that time the board had limited possibilities of taking care of business matters. He said that if anyone asked him what to do with PZU shares, he would recommend selling them.
"And that is a very good recommendation for Eureko."
Before the start of our talk you said that Eureko's deputy CEO Ernst Jansen should resign. Why?
"When filing for a break during the PZU GMS in November, I was led by the fact that I had received a letter from Ernst Jansen a day earlier. In the letter, Jansen suggested he saw possibilities of negotiating with the Treasury. An agreement has not been reached, however, and I believe that as long as Jansen is Eureko's negotiator it will never be reached. During the last seven years, he has played so many roles, often contradictory, and taking into account his strong emotional engagement in the case, the negotiating possibilities are more and more limited and heading towards zero."
I am sorry, but it is a little naive. Even if Ernst Jansen resigns, he would still be able to control negotiations "from the back seat". What would it change? Do you really think it would make reaching an agreement with the Treasury easier?
"I only want to tell you how I see things from my perspective. As Ernst Jansen is still negotiating with the eleventh Treasury minister in a row and cannot conclude talks, then there must be something wrong."
After leaving PZU, do you intend to continue your managerial career at a financial institution or rather return to the profession of solicitor?
"When I cease to hold the PZU CEO post I will most likely return to being a solicitor. Every ship has to return to his mother port sooner or later, unless it sinks."
Copyright 2006 Polish News Bulletin of the British and American Embassies. Source : Financial Times Information Limited.
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