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Page 1: Slovak Spectator1706

Vol. 17, No. 6 Monday, February 14, 2011 - Sunday, February 20, 2011

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NEWS

Trnka fights backThe government has pro-posed new rules for prosec-utors, but faces criticismfrom former general pro-secutor Dobroslav Trnka,who has now returned to asenior position.

pg 2

RTVS chief appointedInterim RTVS director Mi-loslava Zemková was ap-pointed permanently to themerged public broadcaster'stop job after winning thesupport of 80 MPs in a par-liamentary vote.

pg 3

OPINION

Cutting the stringsWhatever justificationsbusiness may come up withfor the golden parachutesgranted to executives, thereis no place for them in state-owned firms – or for politic-al nominees.

pg 5

BUSINESS FOCUS

Investment maturesIn the last decade privateequity groups in Slovakiahave started to becomemore sector-oriented andextend their activities in-to neighbouring coun-tries.

pg 6

Looking to EuropeInvestment analysts talk toThe Slovak Spectator aboutwhat makes private equityfirms in Slovakia unique.

pg 7

CULTURE

Dubček in RomeFormer Czechoslovakstatesman and leader of thePrague Spring, AlexanderDubček, was commemor-ated in Rome with a bustof him being unveiled inJanuary.

pg 11

Coalitionloses

another MP

THE ISSUE of dual citizenship is proving ascontroversial as ever, and led to a majordisagreement within the coalition on Feb-ruary 10. After parliament failed to pass thecoalition’s draft amendment of the citizen-ship law and two coalition MPs voted in fa-vour of an opposition draft, Most-Hídblocked parliamentary business, leadingFreedom and Solidarity (SaS) to sack reneg-ade MP Igor Matovič from its parliament-ary caucus.

Most-Híd leader Béla Bugár announcedthat his party would not vote for other co-alition draft laws until the situation hadbeen clarified, and called on fellow coali-tion parties SaS and the Christian Demo-cratic Movement (KDH) to deal with theirerrant MPs. Matovič, who leads the four-member Ordinary People faction withinSaS, and Radoslav Procházka, a KDHdeputy, supported a draft amendment pro-posed by the opposition Smer party. Bugáralso called on Prime Minister IvetaRadičová to act, and convene a session ofthe Coalition Council, saying “this is aproblem for the whole coalition”.

SaS leader Richard Sulík subsequentlyannounced Matovič was being expelledfrom the SaS parliamentary caucus, thusmaking him the second independent MP,following the recent departure of AndrejĎurkovský from the KDH caucus.

“If Igor Matovič doesn’t have a problemvoting with him [Fico], that’s his decision.We have a problem voting with him [Fico],and we also have a problem with a personwho doesn’t have such problem beingamong us,” Sulík said.

See OUT pg 3

Igor Matovič, an MP for the Freedom and Solidarity (SaS) party, voted for an opposition amendment to the Citizen-ship Act on February 10. SaS promptly expelled him and he will now sit as an independent. Photo: Sme

State plans to sellheating plants

GOLDEN parachutes for CEOs, fishysales of excess emission quotas at ahefty discount on the market priceand failed political nominations totop managerial posts have broughtthe subject of state-owned heatingcompanies under the political spot-light. Now the government has de-cided to put six heat producers upfor sale based on an analysis by thecountry’s privatisation agencywhich says that the state would, inthe long run, be better off selling atleast part of its stake in these com-panies rather than trying to man-age them.

The cabinet approved the sale onFebruary 9. Yet, as recently as Janu-ary 20, Prime Minister IvetaRadičová said that only companiesthat have been consistently loss-making would be considered for sale.Finance Minister Ivan Mikloš com-mented that even if some of thesecompanies, which produce hot wa-ter and steam to heat whole residen-

tial blocks and even city districts viapiped distribution networks, havereported profits these have largelybeen down to one-off sales of excessemissions quotas – and that some ofthe companies have remained loss-making even after taking such in-come into account.

Privatisation is in the public in-terest, Mikloš said, adding that theexperience of keeping heating com-panies in state hands has shown thatthey do not develop well and haveslipped further into debt.

See SALE pg 9

BY BEATA BALOGOVÁSpectator staff

Bank loan rates spotlighted

THE FINANCE Ministry hasannounced that it will con-duct a close examination ofbanking practices in Slovakia.The country’s central bankand antitrust authority willalso be taking a hard look atthe fees and interest rates thatbanks operating in the Slovakmarket charge to lend money,for example to finance homepurchases. Finance MinisterIvan Mikloš said in early Feb-ruary that it will be necessary

to check whether what hecalled “high” banking chargesare not the result of a cartelagreement across the bankingsector. The minister pointedout that mortgages providedby banks in Slovakia areamong the most expensive inthe whole eurozone. Observ-ers suggest that when, as isthe case in Slovakia, threelarge banks control a majorityof the banking market thenthey do not really need a cartelagreement.

“I consider the price ofloans and banking charges tobe inappropriately high inSlovakia,” Mikloš said, adding

that his ministry intends toexamine them together withthe National Bank of Slovakiaand the Antitrust Office. Thebanks deny that there is anycartel agreement and say thatthe issue should be subject toan independent audit.

“We are convinced thatthere is no cartel agreementthrough the banking sector;yet this could be either con-firmed or denied by an inde-pendent body,” Marcel Laznia,spokesman for the BankingAssociation of Slovakia (SBA),told The Slovak Spectator.

See RATE pg 9

BY BEATA BALOGOVÁSpectator staff

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COMING NEXT WEEK

CAREER & EMPLOYMENTGUIDE 2011

Trends in the Slovak labour market and human resources

Dual citizenship changesput on ice

BY MICHAELA TERENZANISpectator staff

Page 2: Slovak Spectator1706

Harabin seeks foreign observers

THE PRESIDENT of Slovakia’sJudicial Council, Štefan Ha-rabin, wants the EuropeanNetwork of Councils for theJudiciary (ENCJ) to send ob-servers to Slovakia to monitorthe election of new judicialcouncil members that are ex-pected to be held in May orJune 2012. Harabin made therequest during a February 9meeting with the newly-elec-ted president of the ENCJ,Miguel Carmona Ruano.

Harabin stated that hisrequest was based on the“absolutely non-standard

and enormous pressure ofpolitical power in overrulingthe judiciary,” as quoted bythe SITA newswire. He alsostated that the governmenthad recently removed threemembers of the JudicialCouncil in violation of theconstitution.

Carmona said Harabin’srequest will be passed on tothe governing body of theECNJ, SITA wrote.

Carmona also met JusticeMinister Lucia Žitňanskáduring his one-day visit toBratislava.

Court rejects complaint by Smer MPs

THE CONSTITUTIONALCourt has rejected a com-plaint brought by MPs fromthe opposition Smer partywho argued before the courtthat their constitutionalrights had been violated inparliament’s secret ballotvote on December 2 to selecta general prosecutor. A panelof the court dismissed thecomplaint by saying it waslodged by a person withoutproper standing and was alsogroundless.

The complaint was de-livered to the ConstitutionalCourt on December 3. A groupof 55 deputies from Smer, ledby former prime minister andcurrent deputy speaker ofparliament Robert Fico, said

their fundamental rights andfreedoms and their right toparticipate in administrationof public affairs through asecret ballot were violatedwhen some MPs took photosof their ballot papers alongwith an attached MP’s IDcard in order to have evidenceof how they had voted, whileother MPs came to cast theirballots in pairs, the SITAnewswire wrote.

Fico reacted that he hadexpected such a ruling fromthe Constitutional Court, say-ing he had already stated hisconcern about whether theinitiator of the complaint hadlegitimate standing to submitsuch a complaint, the Smedaily wrote.

Bratislava to see second pride parade

SLOVAKIA’s gay prideparade, Rainbow Pride Brat-islava, will again be held inthe capital city in 2011.

“The biggest lesbian, gay,bisexual, and transgender(LGBT) event in Slovakia willtake place on June 4,” Ro-mana Schlesinger, the Exec-utive Director of the event,told the SITA newswire. Shesaid preparations are ongo-ing and that the 2011 pro-gramme will have more in-teresting accompanying cul-tural events and a musicalprogramme. She added thatshe expects the parade acrossBratislava to be safer thanlast year, when the first everpride parade in Slovakia wasdisrupted in several ways.

“The organisation ofRainbow Pride Bratislava 2011is in full swing,” Schlesingersaid. “The success of the firstyear motivated us and wecannot just stop. We wouldlike to establish severalunique spots for open discus-sions about human rights.”

The organisers saidmembers of the public willhave an opportunity to seeseveral movies and theatreperformances, to take part indiscussions and to view ex-hibitions on lesbian, gay, bi-sexual, and transgenderrights during a week of ac-companying events.

Compiled by Spectator staff

from press reports

PM lays out changesin prosecutors' offices

SLOVAKIA’S state and districtoffices that are charged withprosecuting those who violatethe law are next on thegovernment’s agenda for whatthe prime minister and justiceminister call more public con-trol and transparency.

At the end of last year theruling coalition parties wereunable to select a new generalprosecutor despite a series ofvotes in parliament, a debaclethat rocked the Slovak politic-al scene. Now the post of gen-eral prosecutor, the top pro-secutorial position in thecountry, is vacant and theJustice Ministry is promisingthat the next person in thatposition will have to followsome new rules.

The amendment to the Lawon Prosecution prepared by theJustice Ministry has been un-dergoing interdepartmentalreview since February 4 andwill remain open for com-ments for another three weeks.The General Prosecutor’s Officehad the draft earlier, for its re-view and comment.

Prime Minister IvetaRadičová stated that the sub-stance of the amendment isbased on feedback from cit-izens, saying that 65 percent ofSlovaks believe that thecountry’s prosecutors havefailed in cases involving organ-ised crime or in prosecuting ‘bigfish’ and ‘white collar’ crimes.She added that in the futurethese kinds of cases should notbe swept under the rug as easilybecause of several changes in-cluded in the amendment, suchas banning so-called ‘negativeorders’ issued by higher-levelprosecutors.

Banning ‘negative orders’

Justice Minister LuciaŽitňanská proposed in theamendment to eliminate‘negative orders’, a process inwhich higher level prosecutorsare permitted to order subor-dinate prosecutors to notlaunch criminal prosecutionagainst a suspect, to not lodgecharges or have a suspect ar-rested, or to cease criminal pro-secution.

“We respect the hierarchicstructure of the organisation ofprosecution and therefore if thedirect superior of a prosecutorfeels that a prosecutor is nothandling a case right, he or shecan take over the case and de-cide on it alone,” Žitňanská said.

More transparency

The justice minister hasalso proposed the eliminationof the position of prosecutionclerk and instead seeks to in-

troduce the position ofprosecutor’s assistant. In thisway the minister said shewants to open the process forselecting new prosecutors toall candidates who fulfil therequirements of the position.Currently, prosecution clerksare favoured to become newprosecutors, the ministersaid, while noting that formerGeneral Prosecutor DobroslavTrnka had refused to makethis change.

“The institute of prosecu-tion clerks is meant for thesystematic preparation of theclerks for the post of a prosec-utor, both professionally andorganisationally,” Trnkawrote in an open letter to thejustice minister dated Febru-ary 2, his last day in office,while also criticising all otheraspects of the ministry’s pro-posed amendment.

To be transparent, the se-lection process for prosecutorsshould be similar to that forjudges, Žitňanská said, with allthe documentation submittedby a candidate and informationassembled by a selection com-mission being published. Sheadded that head prosecutors indistricts will be selected in thisway under the amendmentand will serve for a maximumof two five-year terms ratherthan for an indefinite period,as is currently the case.

There is controversy overthe composition of these selec-tion committees. The amend-ment, following the principlesthat are included in the re-cently enacted law on judges,states that the selection com-mittee will consist of fivemembers, one nominated byparliament’s constitutional af-fairs committee, one nomin-ated by Slovakia’s Council ofProsecutors at the state level,

two nominated by the JusticeMinistry, and one person selec-ted by the prosecutors’ councilin the district with a vacantprosecutor’s position.

Trnka wrote that givingthe justice minister the au-thority to pick two people whowould select prosecutors is “anunacceptable intervention in-to the independence ofprosecution”. Trnka’s letter la-belled a provision that wouldallow the justice minister tostart disciplinary proceedingsagainst a prosecutor in thesame way.

The ministry has proposedmaking disciplinary proceed-ings more open to the public byaltering the composition of adisciplinary committee so thatit would include a memberproposed by parliament andone proposed by the ministry.

Following up on theRadičová government’s previ-ous approach to making thework of public institutionsmore open to the general pub-lic, the amendment proposesthat certain decisions be pub-lished online: decisions by se-lection committees, decisionsof disciplinary committees,and decisions made by aprosecutor’s office which donot lead to further court pro-cesses. Additionally, prosec-utors’ declarations of assetsshould be published on thewebsite of the GeneralProsecutor’s Office, accordingto the amendment.

Critical comments

Trnka has expressed con-cerns that the amendment isan attempt to politicise thework of the country’s prosec-utors and give more control tothe government over their de-cision-making.

“The proposed legislationrestricts the autonomy of theprosecution and of the generalprosecutor in relation to polit-ical power and basically is dir-ected only towards one aim,the politicisation of theprosecution,” Trnka wrote,suggesting that if the law ispassed in its current form hewould seek review of it by theConstitutional Court.

“A closed system alwaysdefends itself from opening topublic control,” Žitňanská saidin reaction to Trnka’s criti-cism.

Trnka would be eligible

The proposed amend-ment states that a generalprosecutor (GP) will serveonly one seven-year term.The prime minister said thiswas designed “to strengthenthe independence of the GPfrom politicians so that theGP is not tempted to impresssome politicians or politicalparties based on the fact thatthey might vote for him orher for the next seven years”.But the proposed amendmentdoes not make this restrictionretroactive.

“I welcome that we havereached an agreement withthe minister,” Radičová saidabout the proposed law havingan initial, temporary clausewhich prevents it from beingapplied retroactively, thus al-lowing previous general pro-secutors to again seek the postunder the new law. Thus,Trnka would be eligible to seekthe post again and could servefor another seven years.

Even though Trnka’s termas general prosecutor endedon February 2, he soon re-turned to the GeneralProsecutor’s Office. LadislavTichý, who is currentlyserving as the temporary,caretaker general prosecutoruntil parliament makes a de-cision on a permanent suc-cessor, had previously servedas Trnka’s first deputy. With-in days of Trnka’s term as gen-eral prosecutor ending, Tichýappointed him to the positionof deputy general prosecutorresponsible for the office’spenal department.

Trnka is therefore still re-sponsible for criminal casesand in the event of Tichý’s ab-sence he may have the top de-cision-making power with theGeneral Prosecutor’s Office,even though Trnka had toldbroadcaster TV Markíza thathe was going to act as “a nor-mal, ordinary prosecutor”after his term elapsed. TheSme daily wrote that it suspec-ted that Trnka had created thedeputy’s position for himselfonly shortly before his depar-ture when he changed theoffice’s organisational struc-ture. Sme wrote that Trnka re-fused to comment on its story.

2 NEWSFebruary 14 – 20, 2011

Hungarian climber dies in High Tatras

A HUNGARIAN mountaineerwas killed in an avalanche inthe High Tatra mountains onthe afternoon of SaturdayFebruary 5, Prešov RegionalPolice spokesperson JanaKarnišová told the TASRnewswire.

Two other tourists, alsoHungarians, were severelyinjured in the incidentwhich took place in an areanear Lomnický Štít moun-tain while another Hungari-an mountaineer was slightly

injured but was able to walkto safety unaided. Mountainrescue teams of 12 profes-sionals and 4 volunteers at-tended the scene to assistwith the rescue.

According to the Moun-tain Rescue Service, the fourHungarian mountaineerstriggered an avalanche whilethey were climbing downLomnický Štít. The plungingsnow swept them down asteep and narrow mountainvalley.

Dobroslav Trnka may run for the GP post again. Photo: Sme

BY MICHAELATERENZANISpectator staff

Page 3: Slovak Spectator1706

English becomes a must at schools

FOREIGNERS looking for a bus stop or amuseum in Copenhagen or Stockholmdo not usually hesitate to ask a local res-ident for help since they are almost cer-tain to get a reply in fluent English.This, however, is not yet the case inBratislava according to English teachersin Slovak schools who have welcomedthe initiative of the Education Ministryto strengthen the English-languageskills of current and future generationsof Slovaks. But some teachers have alsoexpressed doubts whether the legisla-tion passed by the Slovak parliament,overriding a veto by President IvanGašparovič, that makes English instruc-tion compulsory at primary schools willbe enough to do the job.

Education Minister Eugen Jurzycabelieves that giving preference to Eng-lish, as the contemporary lingua franca,over other languages in the mandatorycurricula of primary schools will bringfruit in that every secondary schoolgraduate will be tasked with masteringEnglish at the B2 level of the CommonEuropean Framework of Reference forLanguages. With that aim in mind, theEducation Ministry was able to push anamendment to Slovakia’s Schools Actthrough parliament.

English becomes compulsory

Slovakia is the 14th country in theEuropean Union to make English lan-guage instruction compulsory, after theSlovak parliament overrode a presiden-tial veto of the amendment in earlyFebruary 2011 and gave the green lightto new rules that will become effectiveon March 1. English will become com-pulsory starting from the third grade atall primary schools in the upcomingschool year.

Currently, only about 66 percent ofstudents in Slovakia learn English while inthe EU overall the percentage is as high as90 percent. Slovak students are required tostudy two foreign languages: one begin-ning in their third year and a second onebeginning in the fifth grade. They will nolonger be able to choose the first of them –English will be mandatory for all.

“A positive impact from this decisionwill not be seen immediately but in myopinion it was necessary to come to thisconclusion,” Jana Berešová, the head ofthe Slovak Association of Teachers of Eng-lish, told The Slovak Spectator, addingthat the law in itself will not improveSlovak students’ English and that furthersteps need to be taken, such as replacingthe old-fashioned accreditation based ontheory and literature by practical lessonsfocused on skills.

Berešová compared Scandinaviancountries with Slovakia in that they arealso fairly small and their native lan-guages will never be used by otherEuropeans as target languages.

“Their language policy supports Eng-lish as a language of communication, so inSweden children start learning Englishvery early and during their secondaryschool studies they can learn another tar-get language, but mostly languages theythink will be needed for real purposes,such as Spanish because a large part of theworld’s population uses Spanish as theirmother tongue or as a language ofcommunication,” Berešová explained.

After the amendment was first passedby Slovakia’s parliament, Education Minis-ter Eugen Jurzyca was showered withstrongly critical reactions from many quar-ters. President Ivan Gašparovič vetoed thelaw, stating that students should be able topick a language of their choice as their firstforeign language. Some ambassadors toSlovakia, according to President Gašparovič,also objected to their country’s language be-ing pushed aside in Slovak schools and someschools worried that there might not beenough qualified English teachers.

Berešová explained that studyingEnglish at Slovak universities is not veryattractive for young people as learningthe language is not easy, the social statusof teachers is low and the expected salaryis discouraging. She suggested that onetemporary solution for the lack of Eng-lish-language teachers would be to givestudents at universities in any field ofstudy an opportunity to continue incourses of English for Specific Purposes(ESP) for six to eight semesters.

“Most non-philological facultiesstopped teaching ESP to save money,”Berešová told The Slovak Spectator. “Noinstitution checked if this kind of savingis good or bad. It seems to be bad becausemany graduates are unemployed. If theyhad completed ESP courses, they couldhave tackled this lack of teachers for acertain time.”

The Education Ministry told TheSlovak Spectator that at the end ofNovember 2009 almost 13,000 teacherswere teaching English at basic and sec-ondary school levels and that someschools lacked English-language teach-ers. The ministry expects to fill anyshortage in teachers by using teacherswho are upgrading their qualifications sothey will be permitted to teach English.

Almost 4,000 teachers are now at-tending university courses for training inteaching foreign languages. The pro-gramme for retraining teachers, whichhad been suspended for almost sixmonths due to problems drawing moneyfrom European funds, was restarted inearly 2011 when the education ministerfound resources in the state budget tofund it.

The British Council also proposed tothe Education Ministry last Septemberthat it could offer a range of courses forteachers that might meet the ministry’srequirements. The British Council said itwas willing to offer these resources to theEducation Ministry for free and wouldalso take the responsibility for trainingan initial group of trainers.

BY MICHAELA TERENZANISpectator staff

OUT: Most-Híd blocksparliament, MP sacked

Continued from pg 1

Matovič said he voted inline with his faction’sagreement with the Coali-tion Council, since Smer’samendment was defeated (asone Ordinary People MPvoted against it, while theremaining two abstained),but insisted that his vote infavour of Smer’s amendmentwas covered by the agree-ment as he had made clearthat he wanted to vote in linewith his conscience. Matovičadded that he had been de-ceived by the rest of the co-alition, but did not specify inwhat way.

“I’ve always voted in linewith my conscience, and Iwill continue to do so,” washis response when asked ifhe would continue to sup-port the ruling coalition asan independent MP.

Split opinions

The Coalition Councilhad met earlier, on the even-ing of February 9, after a voteon the coalition amendmentwas postponed due to dis-agreements within the coali-tion, to discuss possible solu-tions to the situation.

Matovič said that if hisalteration to the coalitiondraft was not accepted, hewould vote for the draftamendment proposed by theopposition Smer party,which was closer to his pre-ferred version.

Matovič in particularwanted to retain the facilityto remove Slovak citizenshipfrom people who acquire thecitizenship of another coun-try if they have not lived,worked, studied or donebusiness there for at least ayear, or if their relatives donot hail from that state.

Smer’s amendmentwould have allowed Slovakcitizens to obtain the cit-izenship of a country wherethey have been registered asa resident for at least sixmonths. The coalition draftrevision of the CitizenshipAct, in contrast, wanted toremove the provision that al-lows those who acquire thecitizenship of another stateto be stripped of their Slovakcitizenship altogether, withthe exception of police,army, intelligence servicesand security officers.

Most-Híd is most exer-cised about the changes as itrepresents many Hungari-an-speaking Slovak citizenswho could be targeted ifthey seek Hungarian cit-

izenship, something madeeasier by a law passed byBudapest last year.

Matovič was not the onlyrebel. The KDH’s RadoslavProcházka announced in theparliamentary debate onFebruary 9 that he would alsorefuse to support the coali-tion draft, but for rather dif-ferent reasons. He was op-posed to a provision whichstated that Slovakia does notrecognise the citizenship of aperson if it was not gained inline with international law.

“It looks as if we don’t re-cognise the effects [of suchlaws] only in cases where wespecifically state so, but oth-erwise we do recognisethem,” Procházka said, asquoted by SITA.

Late night talks

“If anyone tries to forceme to vote against my con-science, I will quit thecoalition,” Matovič said onFebruary 9, as quoted by theSITA newswire in reaction tovoices from the coalitionsuggesting that he and hisfaction should support thecoalition draft.

Matovič’s determinationhas shaken the ruling coali-tion and prompted somestrong statements, particu-larly from Most-Híd leaderBéla Bugár, who said that ifMatovič voted with Smer, hewould consider him an op-position MP. Speaking on TVnews channel TA3, Bugárconceded that such an even-tuality might lead to aminority government. Fol-lowing the departure ofĎurkovský and now Matovičthe coalition commands thevotes of only 77 MPs out of150, although Ďurkovský haspledged to continue votingwith it.

In the end, in line withthe agreement reached in theCoalition Council, the fourOrdinary People voted in fa-vour of their own version ofthe coalition draft, afterwhich Gábor Gál of Most-Híd, one of the authors of thecoalition draft, withdrew theoriginal proposal. Parlia-ment then voted on Smer’sdraft, which was defeateddespite the fact that bothMatovič and Procházka sup-ported it.

Prior to the vote, whenMatovič announced the ar-rangement to journalists, hesaid he wanted “the result tobe a good law which will bethe result of an agreementacross the coalition and theopposition”.

3February 14 – 20, 2011NEWS

Chief appointed fornew public broadcaster

SLOVAKIA’S mega publicbroadcaster now has a per-manent chief: MiloslavaZemková, the interim direct-or of Radio and Television ofSlovakia (RTVS), which wascreated by the merger ofSlovak Radio (SRo) and SlovakTelevision (STV) at the be-ginning of 2011. She waschosen by parliament tocarry through what CultureMinister Daniel Krajcer hascalled a significant reform ofthe public media in Slovakia.

On February 10, Zemkováwas supported by 80 out of137 MPs present in a recor-ded vote in parliament. Ac-cording to unofficial in-formation, along with MPsfrom the ruling coalitionparties, two independentdeputies – Igor Matovič, whowas expelled from the Free-

dom and Solidarity deputycaucus earlier in the day,and Andrej Ďurkovský,formerly of the ChristianDemocratic Movement –voted for Zemková, the SITAnewswire reported.

After a first round earlieron February 10, Zemkovácompeted head-to-head with

Jaroslav Rezník, the director-general of the TASR news-wire. Both, Rezník andZemková had managed SRoin the past. Rezník receivedonly a single vote after theopposition parties abstained.Krajcer had earlier pointedout that Zemková has aproven record as a successful

manager without any polit-ical affiliation.

Among 18 candidates whohad submitted applications,only Peter Abrahám, a formermember of Slovakia’s licens-ing council and Fedor Flašík, apromotions expert, as well asZemková and Rezník, weredubbed as having muchchance of being elected.

In her presentation to par-liament Zemková pointed tothe potential risks of mergingthe ailing TV network withthe financially healthier radiobroadcaster, while stressingthat even if she were electedby MPs, she would not be apolitical nominee.

She stated that if the fu-ture director failed to properlyhandle the financial chal-lenges of consolidating theradio and television broad-casters, it could mean the endof public media in Slovakia,the SITA newswire reported.

See RTVS pg 5

Miloslava Zemková Photo: SITA

Bugár said the coalition agreement was broken. Photo: Sme

BY BEATA BALOGOVÁSpectator staff

Page 4: Slovak Spectator1706

GDP growth forecasts released

THE ECONOMY is growingfaster than expected accord-ing to an analysis preparedby the Finance Ministry’sFinancial Policy Institutewhich states that GDP inSlovakia will grow by 3.4 per-cent in 2011 and by 4.8 per-cent in 2012, the Sme dailyreported.

The Financial Policy In-stitute commented that thereason behind its better pro-gnosis is an expected im-provement in the externalenvironment and positivepreliminary data for thefourth quarter of 2010 in bothSlovakia and across the euro-zone. The institute wrotethat in the first two years ofits prognosis, economic

growth should be primarilytriggered by foreign demand,investments, and rebuildingof inventory but that begin-ning in 2012 an increase indomestic household con-sumption due to a better la-bour market will contributemore to GDP growth, theSITA newswire reported.

The labour market willcontinue to stagnate forsome time according to theanalysis. The Finance Min-istry lowered its estimate ofemployment growth for 2011to just 0.7 percent comparedto its previous estimate of 1.2percent growth. In 2012 em-ployment is forecast to growby 0.9 percent and in 2013 by1.2 percent, SITA reported.

ICT sector blows its own trumpet

THE AUTOMOTIVE or elec-tro-technical industriesusually jump to mind as themain engines of Slovakia’seconomy but representat-ives of the Slovak IT Associ-ation (ITAS) said on Febru-ary 8 that the informationand communications tech-nology (ICT) sector is notpart of this ‘ranking’ eventhough it outperforms theautomotive industry inmany important indicators.The association introduced astudy prepared by INESSConsult about the import-ance of the ICT sector to theSlovak economy that wascommissioned by ITAS.

“This study has confirmedour assumptions that the ICTindustry is an important pil-lar of Slovakia’s economy,”said Juraj Sabaka, the presid-ent of ITAS. “It has grownhere on a green field withminimal state support and itnow employs tens of thou-sands of people generatingproducts and services with ahigh added value.”

Sabaka added that thepurpose of the study was not

to initiate an inflow of statestimuli into the ICT sector butto show that with minimalinterventions from the state(positive or negative) a thriv-ing industrial branch canemerge that generates bene-fits for the whole of society.

The study reported thatSlovakia’s ICT sector em-ploys almost 40,000 people,with nearly 30,000 of theseemployees working in thebasic ICT sector, excludingpublishing, audiovisual, andradio activities. The reportnoted that the averagemonthly salary in the ICTsector is €1,500 and that em-ployees in the ICT sector paymore in payroll taxes than dothe workers in the automot-ive industry. Furthermore,the analysis stated that ICTcompanies paid incometaxes of more than €170 mil-lion in 2009 and that this wasmore than the entire manu-facturing industry and 50times more than the auto-motive industry.

Compiled by Spectator staff

from press reports

'The airport has alwaysbeen a subject of interest'

MAROŠ Jančula considers theoption of renting BratislavaAirport to a strategic partnerfor a long-term period a viableoption. The head of BratislavaAirport also suggests that air-ports elsewhere are being ren-ted for as long as 65 years, butpoints out that they remain inthe hands of the state, whichalso retains partial interimcontrol over them, and thatafter the rental period expiresthey are returned to the statein the same condition – oreven improved.

Jančula confirmed that in-terest from investors canalready be detected. In an in-terview with Sme daily andThe Slovak Spectator, Jančulaspoke about the developmentprospects of the airport, pos-sible new connections and thechallenges that the air ter-minal faces.

The Slovak Spectator: Are youcurrently in negotiationswith new air carriers?

Maroš Jančula (MJ): Weare negotiating with currentcarriers who operate here nowabout enhancement of theiroperations. We are negotiat-ing with airlines that would beutterly new to the airport andwho have already shown aninterest in operating flightsfrom Bratislava.

TSS: For some time therehave been rumours about in-terest from Turkish Airlines;the carrier itself has publiclydeclared an interest in flyingto Slovakia. Are you negoti-ating with it?

MJ: I would like to leave po-tential confirmation of negoti-ations to these carriers. It wouldbe possible to name a list of car-riers with whom we commu-nicate, but so far we have notchosen such a policy. The carri-er is the one who bears thebiggest commercial risk, so let itdecide whether it wishes to con-firm an interest.

TSS: Why is Bratislava so at-tractive for classical airlinesfrom the East?

MJ: It is all about the satur-ation of the market. Airports inVienna and Budapest areswamped and this is what setsthe prices at different levels.Many airlines from the Easthave grown and now they wantto expand.

Bratislava has its advant-age and disadvantage as well:the disadvantage is the prox-imity of Vienna, and the ad-vantage is its free capacities.Armavia, with its flights toYerevan, has made a stra-tegic decision – this was notabout nobody wanting to flyto Bratislava.

TSS: In the past you said thatthere was interest in routesto Kiev and Moscow, buttheir launch is obstructed bybilateral agreements thatdefine authorised carrierswho can fly between the twocountries. Are any carriersexerting pressure to havethese agreementschanged?

MJ: The carriers know thearrangements. Any arrange-ment can be opened only bytwo partners; in this case it isthe transport ministries ofSlovakia, Ukraine or Russia.We can help but we are not theones to decide. Our task is moreor less a passive one.

TSS: Do you know if carriersare negotiating with theministry?

MJ: It has been going onfor some time already. Maybewe will soon get a positive re-action from Moscow throughour ministry.

TSS: Can you imagine a con-nection between Bratislavaand Moscow via a low-costairline?

MJ: Of course, why not?Russian companies are ex-panding strongly now and itwould be a very interesting al-ternative for passengers whocurrently fly with expensivetickets from Vienna.

TSS: How are you preparingfor the upcoming Ice HockeyWorld Championship?

MJ: The negotiations withrelevant organisations are un-derway. We are also makingtechnical adjustments to ex-tended boarding gates to widenthe space for passengers in theso-called non-Schengen zone.Maybe fans from Russia andother parts of the world willcome. At the same time, wewant to create a space for tem-porary expansion of servicesfor passengers during theWorld Championship.

TSS: What is the financialcondition of the airport?

MJ: We are operating at aprofit but depreciation createsan overall loss. We are able tofinance everything ourselves,except for larger investments.

TSS: The draft plan for theairport’s future says thereare serious problems withthe runway. Its reconstruc-tion will require €233 millionover the next ten years. Thedraft points to the fact thatreconstruction of the pointat which the runways inter-sect will mean the airport isput out of operation. Willthis mean there are noflights from Bratislava?

MJ: Yes, exactly. Flyingwould be limited entirely ac-cording to the length of theavailable part of the runway.The runway could be used onlyfor some types of aircraft.

TSS: Is it realistic to limitlocal flights?

MJ: It happens that air-ports are closed for sixmonths or a year. The ques-tion is whether we can affordthis, or whether we would bebetter advised to look for oth-er options.

TSS: What are those other op-tions? The ministerial draftmentions them too.

MJ: These would be relat-ively major interventions inthe total reconstruction of therunway, e.g. its extension to-wards the Malý Dunaj River,thus creating a total lengththat would be sufficient duringreconstruction for Boeing737-700 aircraft to land.

TSS: As an expert on aviation,could you try to explain whyoffering an operating licenceis better for Bratislava Air-port than its sale?

MJ: This is not a questionfor an aviation expert, butrather for an economic expert.

TSS: But the ministry’s draftlacks any economic analysis.

MJ: When taking into con-sideration all factors currentlyinfluencing the market, a li-cence is probably better. Thedraft presupposes that it willbe read by people who under-stand what they are reading,so there is no deeper analysis.This is how it is perceived,with all probability. It is not auniversity textbook thatwould also explain the founda-

tions of the economic opera-tion of an airport.

TSS: So could you give at leastthree reasons why a rentalwould be better than a sale?

MJ: The airport will stay inthe state’s hands: the state willretain partial control and,after the rental period expires,it be will returned to the state.If the whole process is well-run and the contract is good,the airport will be returned tothe state at least in the samestate as when it was taken overby the concessionaire, if not abetter state.

TSS: However, one cannotmake good forecasts over aterm of 20 or 30 years, to beable to predict what mighthappen. In the last ten years,the aviation sector has made ahuge leap.

MJ: At present, airports arerented for as many as 65 years.Do you know what will be in 30years? How will we travel? Willwe need to travel that often byplane at all?

TSS: These are exactly the is-sues that will be difficult totake into consideration withthe knowledge we have today.

MJ: Yes, but it happensnevertheless. It will have to betaken into consideration alsoin this contract. Today,projects are made for anequally long term – and notonly for airports. Nowadays,airports are not only rented inthis way, but also built.

TSS: The ministry draft saysthat by the end of next year alicence-holder, i.e. conces-sionaire, could be chosen. Arethere any specific dates set?

MJ: Up to the end of thisyear, the requirements for aconcessionaire will just be setout. The schedule depends onthe ministry. A concessionairewill be chosen in 2012 at theearliest. This is a project wedon’t have much experiencewith, so someone will have tocome and advise us: an adviserwho could even change some ofthe views embodied in thisconcept for aviation.

TSS: Have you noticed any in-terest so far from the morewell-known transport li-cence-holders?

MJ: So far, nothing specifichas taken place, but they neverask directly. As for now, theyare making a market outline, tosee what happens and how itwill happen. We know that theairport has always been a sub-ject of interest. And this is goodfor an airport – it means thatthere is something that makesit attractive.

The Sme daily first publisheda version of this interview

with Maroš Jančulaon February 7

BY ADAM VALČEKSpecial to the Spectator

Bratislava Airport may seek a strategic partner. Photo: Sme

4 BUSINESSFebruary 14 – 20, 2011

Investment tax relief could broaden

THE FINANCE Ministry hasconceded that the time peri-od for tax relief that isprovided to recipients ofgovernment investment in-centives might be increasedfrom five years to 10 years.The Economy Ministry isplanning to push for thislonger period of time in adraft revision to Slovakia’sinvestment assistance law,the SITA newswire reported.

The Finance Ministrysaid that in principle it canforesee this as a possible stepas it believes this form of taxrelief imposes the smallestload on public funds fromamong all kinds of fiscalstimuli, but added that its fi-nal position will be decidedonly after a set of proposalsto improve the business en-

vironment have been re-viewed.

The Finance Ministryalso suggested that the dutyto deduct tax losses duringthe period of tax reliefshould be preserved, addingthat the state will providesubsidies for purchase oflong-term tangible or intan-gible assets only in excep-tional cases, namely for stra-tegic projects.

The Economy Ministrywants to extend this stimu-lus provision to small andmedium-sized businessesand has suggested that theminimum investment levelshould be cut in half and thatfor investment in technologycentres, the minimum levelof assets should be reduced to€500,000.

Page 5: Slovak Spectator1706

Pokakať sa

IT’S NOT usual to hear politi-cians talk about pooping. Butthen again, these are excep-tional times. Mainly thanks torenegade MP Igor Matovič.

First, he outraged coali-tion colleagues with an inter-view for the Sme.sk website inwhich he suggested that onaverage, each MP has at least10 nominees in state firmsand institutions, which buystheir loyalty and glues the co-alition together. He later cor-rected his statements. Butonly to say that the average ismore likely close to 20.

In the same interview, hesuggested that one of the co-alition leaders voted for gen-eral prosecutor candidateDobroslav Trnka, in breach ofcoalition agreements. He gaveno names, but his descriptionfit only Most-Híd chairmanBéla Bugár.

And then finally cameMatovič’s vote on dual cit-izenship, and his subsequentexpulsion from the Freedomand Solidarity (SaS) parlia-mentary caucus, for which hehad a simple explanation – SaSboss Richard Sulík wasfrightened and pooped(pokakal sa).

What really is frighteningis the fact that the fate of this

government depends onMatovič and the other three“Ordinary People” factionmembers, without whom thecoalition has no majority. Andthe countless unknowns therecent development creates:Will Matovič vote for coalitionlegislation? How about votesof confidence? How long willit take before one of the othercoalition parties gets fed upwith not being able to governand starts talking to Smer?Are there enough votes tosupport the public vote on thegeneral prosecutor? If thevote is secret, can DobroslavTrnka win? If Trnka wins, willPrime Minister Radičováreally step down? And whathappens then?

It does not seem thatMatovič has even a vagueidea of where all this is head-ing. What he does realise isthat blocking the coalitionwill do for him what poopingdoes for children – win atten-tion. And that seems to be histop priority.

Cutting the stringson the golden chute

THE SKY of the corporateworld is full of 24-carat goldenparachutes allowing CEOs tobail out from businesseswhen they get tired or whenfirms decide their time ispast. When Time magazinedug into the history of goldenparachutes it discovered pricetags exceeding $35 million,plus deals guaranteeing lav-ish consultancy fees for themanager being shoved out ofthe corporate jet. Doubtless,there have been some dia-mond parachutes worth mul-tiples of these sums.Slovakia’s sky has its para-chutes too and even if theprice tag is only a fraction ofthese famous ones, they arestill enough to outrage thepublic and even politicians.

A pair of one-time man-agers at the Košice-basedheating plant TEKO recentlyreceived severance paymentsof €100,000 and €90,000 re-spectively, despite holdingtheir posts at the company foronly a few weeks or months.What makes their situationmore piquant is that TEKO is astate-owned company andthe managers in questionwere nominated to their jobsby political parties.

Other heat-producingcompanies have been makingheadlines in Slovakia not onlybecause of outrageous goldenparachutes but also due to themess that some politicalnominees have left behind, aswell as some rather unfortu-nate picks by parties whichhave helped turned the prac-tice of political nominationsinto a complete farce.

In one example, theŽilinská Teplárenská heatingcompany, while led by a Slov-ak National Party (SNS) nom-inee during the governmentof Robert Fico, in 2008 sold60,000 tonnes of excess emis-sions quotas at half the mar-ket price. The Trnava heatingplant, under its previousmanagement did even betterbetween 2008 and 2009,

selling emissions at €0.01 pertonne. The market price at thetime was around €20 pertonne.

This is the extent of themanagerial skills of somepolitical nominees. Yet, inthis Slovak fairytale, theywere even paid when asked toleave. Businesses have in thepast produced their own eth-ical justifications for goldenparachutes, but in the casesof the Slovak heating com-panies none of these apply.

For example, advocates ofgolden parachutes claim thatoffering them makes it easierto head-hunt someone for aposition, and then providesmore security and the pro-spect of keeping the samemanagers from yielding to of-fers from other companies.

Yet if the Slovak version ofthe golden parachute opensafter just a couple of weeks onthe job, it almost invites polit-ical nominees – who in factknow that their job prospectslast only as long as their polit-ical sponsors remain in power– not so much to strive forsuccess as to use the limited

time they have to improvetheir personal prospects andfill their pockets. If a managerof a state-run enterprise issacked for incompetence theyshould be liable for the dam-age they cause rather than be-ing given a parachute.

In the light of all thesedevelopments Prime Minis-ter Iveta Radičová has saidthat the era of political nom-inations will end and thatmanagers will in future bepicked via a competitive pro-cess – and that those chosenwill not get offered a goldenparachute. But it remains tobe seen if this will becomereality, and if so if it will beapplied to the present gov-ernment.

Those who have beenrunning Slovakia for the pasttwo decades have not con-ceded some important defin-itions: that party interestdoes not equal the public in-terest or the interest of thestate. Or, indeed, that the in-terests of the state do not al-ways coincide with the in-terests of the public.

The recent statement byMP Igor Matovič that eachSlovak deputy had installedas many as 10 people to vari-ous positions was probablyintended to impress the me-dia and get attention, butnevertheless he has a point.

It is disappointing thatpoliticians after each elec-tion cling to political nom-inations to state-ownedbusinesses. They still some-how pretend to believe thatbeing someone’s cousin, orgetting a job simply becauseof loyalty, or from beingclose to a party means that anominee will be just as gooda manager as a professionalwith years of experience.Why do party headquartersthink they are better suitedto pick managers than inde-pendent bodies? And why do‘independent bodies’ so of-ten pick nominees alongparty lines?

5OPINION / NEWS

QUOTE OF THE WEEK:“I have always wanted there only to be independent MPs inparliament, who would decide freely according to their consciences.”

Igor Matovič, speaking after becoming an independent MP himselffollowing his sacking from the SaS parliamentary caucus

SLOVAK WORDOF THE WEEK EDITORIAL

BY BEATA BALOGOVÁSpectator staff

BY LUKÁŠ FILASpecial to the Spectator

February 14 – 20, 2011

What's that smell? Igor Matovič says he does not like political parties. Photo: Sme - Vladimír Šimíček

The Slovak Spectator is an independent newspaper published every Monday by The Rock, s.r.o.SSubscriptions: Inquiries should be made to The Slovak Spectator’s business office at (+421-2) 59 233 300. Printing: Petit Press a.s. Distribution: Interpress Slovakia s.r.o., Mediaprint-kapa s.r.o., Slovenská po‰ta a.s. Mail Distribution: ABOPRESS. EV 544/08. © 2010 The Rock, s.r.o. All rights reserved. Any reproduction in whole or in part without permission is prohibited by law. The authors of articles published in this issue, represented by the publisher, reserve the right to give their approval for reproducing and public transmission of articles marked ©The Slovak Spectator, as well as for the public circulation of reproductions of these articles,in compliance with the 33rd article and 1st paragraph of the Copyright Law. Media monitoring is provided by Newton, IT, SMA and Slovakia Online with the approval of the publisher. Advertising material contained herein is the responsibility of the advertiser and is not a written or implied sponsorship, endorsement or investigation of suchcommercial enterprises or ventures by The Slovak Spectator or The Rock s.r.o. ISSN 1335-9843.Address: The Rock, s.r.o., Lazaretská 12, 811 08 Bratislava. IâO: 313 86 237.

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RTVS: Financial stability now the focusContinued from pg 3

Rezník called hispresentation “Building astrong brand” and said thatprogramming is the mostimportant thing since view-ers are not interested in thefinancial problems of STV,which he called “a factoryproducing debts”. Rezníksaid that the dire financialsituation cannot be remediedwithout additional statesupport.

Flašík advocated mergingthe state-owned TASRnewswire into RTVS whilealso building a greenfieldmedia centre, a concept sim-ilar to one favoured byformer culture ministerMarek Maďarič, who is nowan MP for opposition party

Smer. Flašík’s wife, MonikaFlašíková Beňová, is a prom-inent member of Smer.

The mega broadcaster

The legislation establish-ing RTVS came into force onJanuary 1, 2011. PresidentIvan Gašparovič vetoed thelaw twice but parliamentoverrode his vetoes. Shortlythereafter Zemková wasnamed interim director ofRTVS, joined by deputiesĽuboš Machaj, formerly SRoprogramme director, andDaniela Vašinová, formerlyfinancial director of SRo.

Krajcer said that mergingthe two broadcasters intoRTVS should save the state€1.65 million in just the firstyear. But the overall debt of

STV for 2011 is expected toreach €36 million.

Krajcer called the mergerthe first step in a broader re-form of public-service mediain Slovakia which he saidwould take about three yearsand involve a fundamentalchange in its method of finan-cing. Beginning in 2012, thepublic-service broadcasterwill no longer receive revenuefrom the so-called concession-ary fee paid by all electricityconsumers in Slovakia.

The consolidation is alsoexpected to include movingthe two broadcasters into asingle building at some pointin the future.

When the interim man-agement took over they saidno major reshuffling wouldoccur within the television

arm of RTVS but some per-sonnel changes were made.The career of former STV dir-ector general ŠtefanNižňanský, who had signedsome large contracts inDecember just before leavingoffice, was brought to an end.Some of Nižňanský’s de-cisions as director had evokedstrong concern among somemedia professionals and eventhough Krajcer stressed lastyear that the merger was notdesigned to removeNižňanský from his position,the parties of the governingcoalition never hid their cri-ticism of his work.

Officials of other Slovakmedia outlets speculatedthroughout 2010 that STVwas on the verge of financialcollapse.

Page 6: Slovak Spectator1706

Investment groupsactive in Slovakia

Arca Capital

Arca Capital is a private equity group active primarily insupplying venture capital in central and eastern Europe.It is active in the construction, machine engineering,information and communication technology, energy,food and geodesy industries. It has current investmentsin Slovakia, the Czech Republic and Ukraine. Arca Capitalhas offices in Bratislava, Prague, London and Kiev.Arca Capital was established in 2003 through trans-formation of a group of companies belonging to AllFinance Services which had been active in the Slovakcapital market since 1994.www.arcacapital.com

ISTROKAPITAL SLOVENSKO

ISTROKAPITAL SE is a Cyprus-based investment groupdating back to 1996 which owns 100 percent ofISTROKAPITAL SLOVENSKO. The companies in the groupare primarily involved in banking (Poštová Banka) andother areas of finance.www.istrokapital.eu

J&T Group

J&T Group dates back to 1995 and provides services inprivate banking, asset management for private clientsand institutions, investment banking and projectfinancing. It has investments in the food processing,energy, finance, retail and wholesale, tourism,entertainment and real estate industries. Its projectsinclude construction of the River Park development,reconstruction of Grand Hotel Kempinski High Tatrasand Tower 115, among others. The group is primarilyactive in the Czech Republic, Slovakia and the RussianFederation.www.jtfg.com

Penta Investments

Penta Investments is a central European investmentgroup specialising in private equity and real estateinvestments. Penta was established in 1993, first asa securities trader. In 2000, Penta began investing inprivate equity projects and in 2005 added real estate as anew business line. Penta is active in the energy, retail,health-care, aerospace, machine engineering, privatebanking, telecommunications, facility management andentertainment industries. Its investments in thebanking sector include Privatbanka and in thehealth-care sector it owns health insurer Dôvera, thenetwork of Dr. Max pharmacies and ProCare medicalcentres. Penta is active in more than 10 Europeancountries, with offices in Prague, Bratislava, Warsaw,Limassol (Cyprus) and Amsterdam.www.pentainvestments.com

Slavia Capital

Slavia Capital dates back to 1995 and its priority areas ofinvestment are the energy, food, primary agriculture,machine engineering, and chemical industries andreceivables and debt-collection. It has investmentsin 11 European countries but has a focus on central andeastern Europe.www.slaviacapital.com

Slovintegra Group

Slovintegra Group was established in 1995 and hasinvestments in the health-care, energy andmanufacturing industries.www.slovintegra.sk

Source: Investment groups, Book of Lists 2011

Compiled by Spectator staff

Following moresophisticated paths

THE FALL of the communistregime in November 1989 inCzechoslovakia and the en-suing transformation of astate-controlled economy in-to a market economy openednew horizons and broughtpreviously unknown busi-ness opportunities to thosewho were ready for the risksof doing business. The 1990swas a period of both smalland large privatisations inSlovakia and the mushroom-ing of new businesses, a dec-ade sometimes referred to asthe ‘wild times’. It was alsowhen the first investmentand private equity groupsemerged in Slovakia.

In the 21st century, mak-ing private investments inSlovakia has become moresophisticated and attuned toWestern standards. Privateequity groups started to bemore sector-oriented and be-cause of the relatively small

size of the Slovak market theyextended their activities intoneighbouring countries andbeyond. What remains some-what different in Slovakiacompared with private equityfirms abroad is that Slovakprivate equity groups say theyare typically investing thefunds of their owners, whileforeign private equity firmsmore often draw on fundsfrom institutional investors.

The original investmentcompanies began to emerge inSlovakia in the mid 1990s andsubsequently transformedthemselves into private equitygroups. For instance, Penta,one of the oldest investmentfirms in Slovakia, started as aninitiative of a group of

schoolmates who wanted tobecome entrepreneurs andfounded Penta Brokers in 1993.Between 1994 and 1997 thefirm acted as typical stock-brokerage and investedmostly in options. The firm’sbreakthrough deal came in1996 when Penta gained con-trol of VÚB Kupón, the largestinvestment fund in Slovakia.Penta writes on its websitethat this deal brought a majorchange in its focus.

“After VÚB Kupón, we hadenough capital to gain major-ity stakes in companies, re-structure them, increase theirvalue and then sell at a profit,”Marek Dospiva, one of thefounding members of Pentawrites on its website. “These

are the principles of Penta'ssuccess to this day.”

In 2005, Penta changed itsstructure to that of a privateequity company but Pentanotes that it is different from atypical private equity fund inthat it is only capital from itsfive partners that is investedthrough an evergreen fundand it has not raised fundsfrom other investors.

“The fundraising questionappears periodically but wehave always decided thatfreedom and flexibility in de-cision-making is our toppriority,” writes JozefOravkin, a Penta partner, onthe firm’s website.

Penta later penetratedmarkets in the Czech Republicand Poland and diversified itsportfolio and began investingin real estate.

The history of J&T Group issimilar in that it also startedas an activity of two school-mates, Patrik Tkáč and IvanJakabovič. Slovintegra, on theother hand, was launchedwith the aim of enabling em-ployees of the Slovnaft oil re-finery to participate in thefirm’s privatisation. Slovin-tegra writes on its websitethat the firm withdrew fromSlovnaft in late 2005 andtransformed itself into an in-vestment company.

See INVEST pg 8

BY JANA LIPTÁKOVÁSpectator staff

The energy sector has proved attractive. Photo: Jana Liptáková

The crisis delivered a ‘tough lecture’

INVESTMENT and private equity groupseyed the boom in building and propertysales in the early years of this decade andmany entered what they thought was anunfailingly lucrative market by buildingoffice complexes, logistics parks, residen-tial properties and other kinds of commer-cial facilities. The economic and financialcrisis over the past several years was avery cold shower for those who had activereal estate projects and Slovakia’s invest-ment groups did not totally escape fromthe chilly water.

“Just during the deepest crisis periodin the fall of 2008, J&T Real Estate spun offfrom the J&T Group and under the owner-ship of Peter Korbačka created an inde-pendent holding,” Pavel Pelikán, the ex-

ecutive director of J&T Real Estate told TheSlovak Spectator. “This shows that eventhe crisis did not distract us from our trustin real estate projects.”

Pelikán conceded that J&T Real Estatefelt some blows from the crisis but em-phasised that this led to a change in its ap-proach to projects, leading the firm to paymore attention to the needs and require-ments of its clients.

Among the most well-known of J&T’sreal estate projects is the River Park com-plex on the north bank of the DanubeRiver in Bratislava, with its apartments,office space, hotel, restaurants, and otherattractions, including a seasonal outdoorice skating rink.

Real estate projects represent about 55percent of Arca Capital’s investments.

“Our group has historically not carriedout overly ambitious projects; we ratherwent into smaller projects or projects witha possibility of gradual realisation of theinvestment, such as in phases,” RastislavVelič, the financial and project manager ofArca Capital, told The Slovak Spectator.“Our biggest investment in either Slov-akia or the Czech Republic is the LiptovskáOsada tourist resort. We have projects

comparable in size and extent in Ukrainebut in the Ukrainian context these aresmaller or mid-sized projects. But thesefocus on the residential sector andlogistics.”

According to Velič, the crisis hasclearly defined certain limits in particularreal estate investment sectors andbrought a broader variety of projects.

“The crisis showed that a well-chosenconcept in a good locality is prospectiveduring any phase of the economic cycle,”said Velič, adding that projects which didnot take into consideration broader rela-tionships had to be changed and exagger-ated expectations had to be corrected. ButVelič sees this as natural in an environ-ment where demand is the driving force inthe market.

Penta Group began investing in thereal estate sector only in 2005. Currently,real estate developments represent lessthan 20 percent of Penta’s invested assets,said Martin Danko, Penta’s PR manager,adding that the investment group has 11ongoing projects in Slovakia and theCzech Republic.

See PROPERTY pg 8

BY JANA LIPTáKOVÁSpectator staff

6 February 14 – 20, 2011

The maturingof Slovak

investmentand private

equity groups

Real estate wasa mixed blessing forinvestment groups

INNOVATION

Next issue:BUSINESS FOCUS

INVESTMENT GROUPSLooking to Europe

Geothermal energy eyed

Page 7: Slovak Spectator1706

Arca buys Natura Food Additives

THE CLOSED-END fund ArcaCapital CEE acquired 80 per-cent of Natura Food Addit-ives company, the TASRnewswire reported inNovember, writing that thisacquisition was part of Arca’smain investment strategy: tomake private equity invest-ments in small and medium-sized companies in the CzechRepublic and Slovakia.

Arca used its own re-sources as well as funds froman acquisition loan from abank for the purchase, TASRwrote.

Natura Food Additives isa Czech company active inproduction of additives forall segments of the food in-dustry as well as serving as atechnological consultancy.

Arca Capital stated that itbelieves the food industry ishighly stable and that thiswas proven during the eco-nomic downturn whenmuch of the industry main-tained its sales and profits.

Compiled by Spectator staff

For more focus shorts go towww.spectator.sk

Slavia eyes geothermal energy

THE INVESTMENT groupSlavia Capital announcedlast May that it planned toinvest in geothermal energyin eastern Slovakia, specific-ally in the village of Ter-iakovce near Prešov. Thatmonth Peter Gabalec, thechairman of the board of dir-ectors of Slavia Capital,signed a memorandum ofunderstanding with PavelHagyari, the mayor ofPrešov, and MiroslavAngelovič, the mayor ofTeriakovce, to begin jointimplementation of the

project, the SITA newswirewrote in May.

The goal is to use geo-thermal energy in the vil-lage to generate electricityand heat, and to developleisure-time activities suchas an aquapark and a saltspa to support tourism inthe region, as well to heatgreenhouses for agriculturalpurposes. The total invest-ment in the project will beknown only after a feasibil-ity study is completed butfirst estimates were around€30 million.

Looking to Europe

THE SMALL size of the Slovakmarket places limits on theactivities of local investmentand private equity groups butthis characteristic is notunique to Slovakia. The maindifference, when comparedwith abroad, is that Slovakprivate equity groups typic-ally invest the money of theirowners, while foreign privateequity groups invest moneyon behalf of other institu-tional investors.

The Slovak Spectatorspoke with Stanislav Šumský,director of the mergers andacquisitions department atKPMG in Slovakia, RastislavGajarský, manager of Price-waterhouseCoopers Slov-ensko, and Jozef Mathia,senior manager in transac-tion advisory services atErnst & Young in the SlovakRepublic, about local invest-ment and private equitygroups, their appetite for ac-quisitions, and whether thecrisis has brought them somecheap purchases.

The Slovak Spectator (TSS):How would you assess theactivity of Slovak invest-ment and private equity

groups in Slovakia? What istheir current appetite forinvestment?

Stanislav Šumský (SŠ):With regards to its size Slov-akia is an insufficiently at-tractive market for importantforeign sectoral investors andlocally owned companies donot usually meet the requiredsize criteria. Transactionswhich abroad are consideredto be small or medium-sized,exceeding €100 million invalue, occur only very rarelyin Slovakia. In Slovakia,transactions of between €10million and €30 million, thesize that is attractive for localfinancial investors andprivate equity groups, are re-garded as large.

But this is not a specialcharacteristic of Slovakia: ingeneral it is valid for thewhole of central Europe, ex-cept Poland. This situationcreates an opportunity forfinancial investors andprivate equity groups who, byconsolidating more compan-ies, optimally at the centraland eastern European (CEE)regional level, can manage tocreate entities which by theirsize and scope can draw theattention of global players.

Rastislav Gajarský (RG):To assess their activity at themoment I would not focusonly on Slovakia as these

groups have ‘grown up’ to beregional central and easternEuropean players with ambi-tions to become players on aEuropean level. In this re-spect I would assess theiractivity positively, as theseprivate equity groups repres-ent a limited number of Slov-ak investors that make ac-quisitions abroad and arepresent on markets otherthan Slovakia.

In terms of investmentappetite I believe that allSlovak private equity groupsare looking for opportunitiesthat fulfil their investmentcriteria. Some Slovak privateequity groups are becomingmore sector-focused. For ex-ample, Penta focuses onhealthcare, energy, bankingand real estate, and J&T onbanking, hotels and the en-ergy sector. This helps themto become experts in respect-ive sectors and realise oppor-tunities more quickly andmore efficiently.

Jozef Mathia (JM): Let’sdivide the question into twoparts, i.e. operation of globaland local investment andprivate equity groups. Whilethe operation of global playersin Slovakia is negligible, theoperation of local players wasactive prior to the crisis. Thereason for the absence ofglobal players is quite simple.

The small market generatesinsufficiently large invest-ment opportunities, with rel-atively small revenues. Thesefall through the investmentnet of the global players.Czech, Slovak and centralEuropean financial investorsare starting to be optimisticand feel an improvement, es-pecially in financial condi-tions, i.e. loans available tocarry out new transactions.

TSS: What effect has theeconomic decline had onthese groups?

SŠ: There are only twopreconditions for carrying outa transaction. The first one isthat there is a seller with arealistic estimate of the valueof their company, and on theother side there is a buyerwho has enough funds at theirdisposal to wrap up the trans-action and is willing to reflectthe value of the company intheir offer.

Between 2009 and 2010 wesaw a drop in activity in termsof the number of realisedtransactions. But this doesnot mean that financial in-vestors and private equitygroups had no interest in ac-quiring companies. Instead,the crisis affected the expect-ations of financial investors.

See SURVEY pg 8

BY JANA LIPTÁKOVÁSpectator staff

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Page 8: Slovak Spectator1706

INVEST: Firms adapted to big changesContinued from pg 6

There are six main in-vestment and private equitygroups currently active inSlovakia, of which Penta andJ&T are the biggest. Over timeall of these groups have be-come more focused on specificbusiness sectors.

“Penta invests primarilyinto the energy, retail, healthcare, aerospace, machine en-gineering, private banking,telecommunications, facilitymanagement and enter-tainment industries,” MartinDanko, the PR manager ofPenta, told The Slovak Spec-tator. “Its partners aremostly prominent financialinstitutions operating incentral Europe and con-sultancy companies.”

J&T Group’s range of busi-ness investments is also ex-tensive and includes the en-ergy, banking, tourism andentertainment sectors.

Slavia Capital, which ori-ginated as a stockbroker in itsearly days and later became amajor institution providingopportunities to invest in se-curities that drew interest in-come from international mar-kets, has now established stra-tegic priority sectors to whichit targets its investments.

“These include the energysector, fuels and renewableresources, the food industryand agricultural production,mechanical engineering, thechemical industry and debt-collection business,” PeterBenčúrik, the spokesperson ofSlavia Capital told The SlovakSpectator, adding that thegroup does not exclude anyother investment opportunit-ies with an attractive returnon investment and that itscurrent geographic priority isthe region of central and east-ern Europe.

Benčúrik pointed out,however, that via theproducts that are made bycompanies within Slavia Cap-ital, the group is known onalmost all continents, citingthe mine sweeper Boženathat is made in Slovakia aswell as its Locust buildingmechanism.

Arca Capital is a privateequity group active mainly insupplying venture capital incentral and eastern Europe.

Rastislav Velič, the finan-cial and project manager forArca Capital, told The SlovakSpectator that the group hasprimarily focused its invest-ments in the construction,machine, information andcommunication technolo-gies, energy, food andgeodesy industries.

“This does not mean thatwe avoid so-called opportun-ity investments in othersegments,” Velič added.“Within the investment pro-cess we cooperate with con-sultancy companies and bank-ing houses and afterwardseach project has its own spe-cific circle of partners.”

Few ‘fire sales’materialised

“The economic crisis has aglobal character and it more orless hit all segments of themarket,” said Velič of ArcaCapital. “Of course, it affectedus as well. The impacts of thecrisis are visible in acquisitionfinancing as well as in in-vestment expectations, eitherours or those of our partners.When assessing opportunitieswe are more careful. Pre-crisisdevelopment scenarios whichwere characterised as pessim-istic have become realisticand optimistic scenarios havehad to be re-written. But themarket has already adapted

to the changes and we canagain apply economic modelswhich already take into ac-count the changes in themarket environment.”

Velič said Arca Capital hasnot needed to change any ofits criteria in terms of the sizeof an investment or its rate ofreturn.

Some investment groupshad expected that the eco-nomic crisis would bring newacquisition opportunities butthese have not come true.

“The expectations that wehad in 2008 have notmaterialised,” said Danko ofPenta. “During the economicdecline the [purchase] price ofcompanies has not decreasedsignificantly. Thus between2008 and 2010 there were onlya few acquisition opportunit-ies via so-called ‘fire sales’.”

Slavia Capital’s Benčúriknoted that the economic crisishas suppressed demand andhas also prolonged the periodrequired to keep investments,pointing out that one of themost negative impacts of thecrisis was the drop in em-ployment as companies re-duced costs through layoffs.

But as every cloud has asilver lining, representativesof the investments groupsnote that the crisis hasbrought new opportunitiesand forced their firms to bemore active and look for newapproaches.

“The economic crisis hasincreased the acquisition po-tential of industrial assetsand markets,” Benčúrik said.“During the time being ourcompanies are attacking newterritories. The behaviour ofglobal players has changed.They are looking for localpartners in efforts to reacheconomic effectiveness. As aconsequence, we have sever-al cooperative projects, for

example with the Yanmarconcern. Also due to thecrisis, the potential for ourbusiness with collecting re-ceivables has been growing.We are working on a numberof acquisition targets whichwe could reach this year ifthere is a positive develop-ment in the market.”

In 2009 and 2010 Pentacompleted 17 transactions;most were acquisitions.

“We have entered newbranches. For example, in late2010 we signed a contract forthe purchase of a majoritystake in Dexia Banka Slov-ensko and in this way we haveentered the retail bankingsector,” said Danko of Penta.“We also consider equally im-portant the acquisition of Ig-lokrak and its fusion with Ig-lotex that has made Penta andits partners the most import-ant market player in the pro-duction and distribution offrozen food in Poland.”

Velič of Arca Capital sees anew opportunity in recover-ing failed loans, either cor-porate or personal, sayingthat banks in general are notprepared to fully bear lossesand thus purchasing andmanaging receivables couldbe economically viable. Healso sees purchases of com-panies as appealing, sayingthat after years of optimismand investment madness,owners are coming back tothe earth and prices have be-come more realistic.

“We will focus on caseswhere after re-structuring onthe side of liabilities it is real-istic to expect survival anddevelopment of a project or aninvestment,” said Velič. “Orwe want to orient toward pur-chase of claims and their act-ive management, throughwhich it is possible to reach aneconomic return.”

PROPERTY: Becoming more selectiveContinued from pg 6

“Penta is focusing on office space, re-tail trade, and leisure-time and enter-tainment activities as well as prepara-tion of sites for new projects,” Dankotold The Slovak Spectator. “Penta’splanned real estate investments willtotal €1.1 billion by 2018.”

The crisis slowed down some ofPenta’s projects as it has had to respond tothe market situation and falling demand.

“We put stress especially on projectswhich were in the most advancedphase,” Danko said. “For example, thethird phase of the Digital Park officeproject, where the approval process issoon to be completed will see construc-tion start in March.”

The third phase of Digital Park willbring more than 21,000 square metres ofoffice space to the Bratislava marketand it is expected to be finished by theend of 2012.

Penta expects that the real estatemarket in the future will demand that in-vestors be more selective in choosingprojects than they were before the crisis.

“For example, in residential construc-tion the end-user who wants to buy anapartment for living and not as a

‘speculative’ investment will dominate,”said Danko. “Projects which will be asclose as possible to the optimal ratiobetween price, quality and locality willhave the best chance of success.”

Pelikán of J&T Real Estate expects amore balanced ratio in supply and de-mand and a greater degree of realism, say-ing that one should not expect massive

construction of speculative projects,either in the office or residential segment,like in the past when potential tenantswere sought only after construction hadbegun or even after a project was finished.

“Balancing supply and demand willalso put price levels of projects on a morerealistic basis: bad projects will be sold forlow prices, or not at all, and good projectswhich offer clients an added value be-cause of location, services or amenitieswill have a chance of higher prices andgood selling rates,” Pelikán said.

Velič agreed that the crisis has fixedcertain distortions in the real estate mar-ket and in 2011 his company expects a re-vival of investment in residential real es-tate because many of Slovakia’s ‘panelák’apartment buildings are approaching theend of their useful life, in industrial realestate because production is increasingand bringing demand for new logisticcentres, and in tourist facilities as thatsector is also waking up.

“But the lecture [delivered by thecrisis] was tough and for that reasongrowth in the real estate sector will begradual and more cautious,” Velič said,adding: “But only until we forget thislecture and again slip into exaggeratedoptimism.”

Digital Park II won an architecture award.Photo: Courtesy of Cigler Marani Architects

SURVEY: Doubleeffect of the crisis

Continued from pg 7

They assumed that sellerswould reflect the worsenedperformance of their compan-ies in lower price expecta-tions, and that investorswould acquire them morecheaply than before the crisis.This has obviously nothappened to the extent thatinvestors had assumed.

RG: The economic crisishad a double effect on theactivities of private equitygroups. The first was on theamount and price of externalcapital (debt) to finance theiracquisitions and ongoing in-vestments. The second wasin the form of disrupted IRR(internal rate of return) ex-pectations in some of theirportfolio companies. Basic-ally, all private equity groupsneeded to reassess their ex-pectations in IRR terms forsome of their portfolio com-panies. Slovak private equitygroups were no exception.

JM: Globally the numberas well as the value of acquisi-tions carried out by privateequity companies decreased.In total, private equity com-panies carried out 1,612 ac-quisitions in 2009, 35 percentless than in 2008. Deal valueshrank by as much as 56 per-cent. We saw a similar trendalso in Slovakia.

In 2011 we expect an in-crease in the number of an-nounced and completedtransactions, but the volumeof individual transactions willbe probably lower than duringthe pre-crisis years.

In general we can saythat expectations for returnson investment are lowerthan they were in 2008. Thistrend was significantly vis-ible already in 2009.

TSS: Do investment andprivate equity groups inSlovakia differ in any wayfrom those operatingabroad?

SŠ: It is necessary to dis-tinguish investment groups,which we can regard rather asloose groupings of investors,from private equity, which isa standardised term abroad.The latter represents a com-pany which via its funds ad-ministers investments inclearly defined sectors and/orcountries, has publiclyknown investment criteria,returns on investments, away of assessing assets, stableand specialised teams, is ableto obtain new financing, etc.In this respect it is necessaryto say that the private equitygroups operating in Slovakiaare taking a more and morestandardised path and thatwe have seen significantheadway over recent years.This is especially true for themost active private equitygroups, which are eyeingmany potential acquisitiontargets, taking part in stand-ard tenders, actively workingwith acquired companies

and increasing the value oftheir investments.

RG: The main differenceis that Slovak private equitygroups typically invest themoney of their owners (phys-ical persons) while foreignprivate equity groups investthe money of other institu-tional investors such as pen-sion funds and insurancecompanies.

JM: Global private equitygroups enter projects in Slov-akia rather as partners in fin-ancing projects for whichsmaller players in the regionlack funds. Or they enterSlovakia via acquisitions ofinternational firms whichhave Slovak subsidiaries. Ba-sically, each of them wants amaximal increase in the valueof their investment at a levelsomewhere between 15 and 30percent annually. On the oth-er hand, each of them hasspecific characteristics, in-vestment criteria, marketsand branches where they in-vest and especially access toindividual investments, andthis is the main distinction.

TSS: What benefits or down-sides do you see in the activ-ities of investment andprivate equity groups forSlovakia and its economy?

SŠ: In general, the bene-fits as well as the negatives ofinvestment activities andprivate equity groups inSlovakia are the same asanywhere abroad. A specialcharacteristic is that with re-gards to the absence of a cap-ital market in Slovakia,private equity investmentsare basically the only oppor-tunity to obtain financing viaequity as an alternative todebt financing. In some seg-ments private equity groupsrepresent the only possiblebuyer, thereby creating anexit opportunity for com-pany owners. Otherwiseowners would have no pos-sibility to leave their busi-nesses in a standard way.

JM: Investment andprivate equity groups are mo-tivated especially by returnson investment. These repres-ent in most cases 20-30 per-cent annually. This meansthat these groups investmostly in companies instrongly developing segments(for example the internet inthe early 1990s) or in seg-ments where they see spacefor consolidation of the mar-ket (for example a lot of smal-ler companies which can util-ise synergies). Thus we thinkthat these companies repres-ent certain benefits for Slov-akia because they support de-velopment of the marketwhere it is difficult to obtainfinancial capital directly frombanks. On the other hand, it isa bit of a pity that they do notemploy their rich experiencefrom various branches tocarry out more acquisitions insegments and companieswhere returns are lower.

8 BUSINESS FOCUSFebruary 14 – 20, 2011

Page 9: Slovak Spectator1706

SALE: Six plants may go on the blockContinued from pg 1

The state privatisation agency, the Na-tional Property Fund (FNM), has now beentasked with designing a privatisation pro-cess. The sale will happen in the form of atender and the state will be looking forstrategic investors.

The heating plants affected are locatedin Bratislava, Trnava, Žilina, Martin (inŽilina region), Zvolen (Banská BystricaRegion) and Košice.

Robert Fico, the leader of Slovakia’slargest opposition party, Smer, said thathe would be keeping an eye on the plannedprivatisation, which he dubbed “one of thebiggest robberies ever seen in Slovakia”.

“We rejected this sale of stateproperty,” Fico said, as quoted by theSITA newswire, referring to the gov-ernment he led between 2006 and 2010.“It was worth it, because the firms wereproviding households with heat in astable manner at stable prices. Thisprivatisation has no other goal than tofill someone’s pocket. It is senseless be-cause privatisation will increase theprices of heat.”

However, the FNM in its analysisleans towards a sale of state shares inthe heating companies, citing a long-term fall in the volume of heat sold and arelated drop in profits. The FNM alsopointed to the need for investment tomake the heating plants more envir-onmentally friendly, and to reduce theirdebt burden.

The generally outdated heat-produ-cing technology in use and the need forinvestment in development, as well ashuge opportunities for cost-cuttingwere also listed by the FNM as reasonswhy the companies should be sold. Oth-er factors supporting a sale were theirrecord of disadvantageous procure-ment, low return on investment and de-clining competitiveness.

According to the FNM, the existingmanagement teams have preferred topursue short-term goals rather thanlong-term needs, in fundamental contra-diction to the needs of businesses in theheat production sector.

“We expect that after privatisationinvestors will speed up the introductionof modern ways of management and ser-vices with added value,” the FNM wrotein its analysis. “Improved managementof the companies will bring higher prof-itability and higher collection of taxes forthe state budget.”

Though the exact volume of sharesthat will be put up for sale has not yet beendecided, the state will sell at least 51 per-cent of its stake in the companies. Accord-ing to Mikloš, an analysis by relevant min-

istries and the privatisation agency willdecide the share that will be sold.

One day before the cabinet made itsdecision, Cofely, an energy company,stated that it fully supported thegovernment’s plan to privatise the heat-producing companies. The company in-dicated it would be interested in invest-ing if the privatisations were to go ahead.

“We’re convinced that privatisationof the heating plants is a good way to se-cure effective management and the fu-ture of the energy sector in Slovakia,”Cofely general director and managementboard chairman Peter Strýček said in astatement.

Cofely is part of the GDF Suez energygroup and has been involved in heatingmanagement in Slovakia since 2009, whenit became part of Hetech Services Holding.It is also the biggest company in the sphereof facility management in Slovakia, man-aging more that 2,000 properties.

Another company, Dalkia, has alsoindicated an interest, with Vincent Bar-bier confirming that the company wouldenter negotiations about conditions forthe sale. However, he also said that atthis point, due to the fact that over thepast five years the economic conditionsof the heating companies have changed,it is not possible for the company to spe-cify which heating companies Dalkiawould target.

The Union of Towns and Cities ofSlovakia said that the cities the compan-ies serve should be allowed to obtaineither 100 percent, a majority share of 51percent, or at least a minority share inthe firms being sold.

“Heating production is unambigu-ously a business of local importance,which means that it is not a strategicproperty and it can be successfully de-veloped only when it intertwined, interms of property, with themunicipalities,” Marián Minarovič, theunion’s chairman, wrote in a statement.

Ongoing problems troubles

One issue that has attracted signific-ant media attention is the golden para-chutes given to managers at Košice-basedheating plant TEKO, where two execut-ives received severance payments of€100,000 and €90,000 respectively, des-pite holding their posts in the companyfor only a few weeks or months.

Radičová admitted that the practiceof selecting and remunerating managersin companies where the state holdsstakes has proved problematic and thegovernment is therefore planning to in-troduce normal competitive selectionprocedures with the results made public.

“The coalition is moving away frompolitical nominations,” Radičová said,adding that her team does not want topursue a pattern followed by its prede-cessors which had been proved wrong.

Economy Minister Juraj Miškov, anominee of the Freedom and Solidarity(SaS) party, suggested that he would pro-pose banning political nominees in state-owned companies from receiving sever-ance payments, or would at least placelimits on them.

“State nominees on managementboards and supervisory boards won’t beentitled to any severance paymentswhatsoever,” Miškov said, as quoted bythe TASR newswire.

Media reports suggest that consid-erable mismanagement at some heatingcompanies took place under the2006-2010 Fico government. Specific-ally, several questions have been raisedabout activities under managers nom-inated by Fico’s junior coalition partner,the Slovak National Party (SNS). In oneexample, the Žilinská Teplárenská heat-ing company, while headed by an SNSnominee, Juraj Králik, sold 60,000tonnes of excess emissions quotas in2008 at half the market price. SaS sub-sequently nominated Králik to a seniorposition at another heating companyafter last year’s election. The party saidafter the publication of reports aboutthe dubious sale of emissions quotas atŽilinská Teplárenská that Králik wouldbe dismissed.

The Trnava heating company, nowcontrolled by the Most-Híd party, alsohad its own scandal over a dubious sale ofemissions quotas. Between 2008 and 2009the company sold emission quotas at€0.01 per tonne despite the market pricebeing around €20 per tonne. Most-Hídsaid it had instructed the new director ofthe company to sack two managers.

Adam Valček contributedto this report

Košice heating plant. Photo: TASR

RATE: Pricey mortgagesContinued from pg 1

Vladimír Dohnal, direct-or of Symsite Research, athink tank, said he has no in-formation about cartelagreements and does notconsider it likely that anyformal arrangement exists.

“Banks do not have tocreate any formal cartel;when three banks control 75percent of the market theyhave quite extensive powerto control prices and otherconditions without formalagreements,” Dohnal toldThe Slovak Spectator.

The Financial Policy In-stitute (IFP), a think tankwhich is part of the FinanceMinistry, on February 4 re-leased a report suggestingthat Slovakia’s citizens areprobably paying too muchfor their mortgages. It ar-gued that changes mightnow be necessary.

According to the IFP,property loans make up twothirds of total loans tohouseholds and regularmonthly mortgage paymentssignificantly burden thebudgets of families and indi-viduals. The IFP highlightedwhat it called a relatively un-derdeveloped rental housingsegment in Slovakia andwrote that for most Slovakstaking out a loan is the onlyway to buy property.

In long-term loans likemortgages even a smallchange in the interest ratecan mean a relatively largedifference in the amount ofthe monthly payment, theIFP stated.

The IFP also noted thatthe market is displayingsigns of significant concen-tration among the largestbanks.

At the same time, it said,mortgage providers haveaccumulated an informa-tion advantage. And, ac-cording to the IFP, banksmay have profited to thetune of tens of millions ofeuros at the expense of cli-ents because of deficienciesin the way rules governingpayment of the state sub-sidy for mortgage loanswere drafted.

The IFP compared in-terest rates in Slovakia andsix other countries in theeurozone. The countrieswere picked based on sever-al criteria such as geograph-ic proximity or similarity inthe structure of their eco-nomies.

Within this comparison,Slovakia had the highest in-terest rates for all fixed-rateproperty loans. The interestrate for loans with one-yearfixed-rates in October 2010stood at 5.7 percent in Slov-akia, while the eurozone av-erage was 3.8 percent – andthe rate in Austria was only3.3 percent, the IFP reported.

Interest rates in Slov-akia did not mimic trendsobserved in other countries,where there was a signific-ant drop in interest ratesduring 2009.

The IFP recommendedthat setting the interest ratefor a loan should be mademore transparent by defin-ing it as a market bench-mark plus a client risk sur-charge based on theapplicant’s risk profile.

However, Laznia, repres-enting lenders, cited aEuropean Commission sur-vey from 2009 which he saidfound bank fees in Slovakia tobe among the lowest not justacross the European Unionbut also among the EU’s new-er member states.

Nonetheless, Dohnal saidthat mortgage interest rateshere are too high, consideringSlovakia’s economic funda-mentals.

“A concentrated marketdoes not bode well forcompetition,” Dohnal said,adding that clients them-selves have a way of influen-cing this situation.

“If clients, in large num-bers, started using cheaperoffers by smaller banks – be-cause in general it is true thatsmaller and medium-sizedbanks offer cheaper loansthan the three large banks –the larger banks would haveto reduce their prices,”Dohnal said.

Mikloš also said that an-other problem is a certain “in-formation asymmetry”between a loan applicant andthe bank, which puts clientsinto a rather weak negotiatingposition in relation to thebank when a new interest rateis being decided, the TASRnewswire reported.

Dohnal stated it is neces-sary to increase the level ofpublic access to information,and said the Finance Ministrycan help.

“Increasing the total in-formation literacy of clientswould help and here the statecould, for example, help bychanging the curricula andadding an emphasis on finan-cial literacy at schools,”Dohnal said.

Laznia said that the SBAwill not resist the efforts of theFinance Ministry to make cli-ents better informed, as longas the proposal is meaningful.

“However, we think thatthe state should not forgetabout activities aimed at in-creasing the financial literacyof the population,” he said.

To back his point Lazniacited the example of an indic-ator of annual percentage ratecosts which has been used inSlovakia for comparing con-sumer loans for more than 10years.

He says that an SBA sur-vey found that less than a fifthof Slovaks were able to under-stand it.

The Finance Ministry hasprepared several changes tothe system that subsidiseshousing loans; these are nowundergoing interdepartment-al review.

The ministry also in-tends to foster more compet-ition among the banks,which it says should result inlower banking fees.

REAL ESTATE

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9BUSINESS February 14 – 20, 2011

Page 10: Slovak Spectator1706

Devínska Nová Ves’ Croats

THIS PHOTO of DevínskaNová Ves dates back to 1933 –the period before the muni-cipality was swallowed byBratislava.

The village was oncecalled ChorvátskaNová Ves (CroatianNew Village) – notcoincidentally, asCroat refugees flee-ing the Balkansfrom Ottoman invaders choseit as their new home.

The newcomers quicklyadapted to this environmentand started earning their liv-ing in the same way as they

had back home – through agri-culture and viticulture.

Cultural and tempera-mental differences broughtproblems when it came to co-existing with the locals, at

least at first. The Croats’demonstrative nature andself-confidence were oftenperceived negatively by Slov-aks, and their habit of fre-quently moving from one

place to another did little toburnish their image.However, gradually theysettled in and melted in.

Not in Devínska NováVes, however. Croats re-

tained their cultureand language andin the 16th centurythere were moreCroat residentsthan Slovaks in

Devínska Nová Ves.The village preserved its

predominantly Croat charac-ter until the end of the 19thcentury.

By Branislav Chovan

HISTORY TALKS

Western SLOVAKIA

Bratislaval MUSICAL: Rámajána – Thisoriginal Slovak musical, in-spired by an ancient Indianepic, combines the story ofPrince Rama with modernEuropean culture. Composedby Ľubomír Dolný and cho-reographed by MarianaMalatincová, it is directed byIgor Šimeg.

Starts: February 15, 10:00and 19:00; DK Dúbravka,Saratovská 2/A. Admission:€10. Tel: 02/6920-3030; 02/5293-3321, www.ticketportal.sk,www.ramajana.sk.

Bratislaval BALKAN GYPSY MUSIC:Boban I Marko MarkovičOrkestar – The Serbian gypsytornado Boban, with his sonMarko and his band, hasalready visited and enchantedSlovakia. Now he’s back.

Starts: February 15, 20:00;Majestic Music Club, Kar-patská 2. Admission: €19.90-€25. Tel: 02/5293-3321; www.majestic.sk.

Bratislaval LIVE MUSIC: Krst CD MichalBugala Group – A new SlovakCD is launched in traditionalstyle with a “krst”, i.e. bap-tism, offering a combinationof jazz and electronic music,supported by DJ Lion Dee.

Starts: February 14, 21:00;Nu Spirit Club, ŠafárikovoSquare 7. Admission: €5. Tel:0948/855-449; www.nuspirit.sk.

Bratislaval EXHIBITION: Bratislavskékonfrontácie 1961-1965 – TheBratislava Confrontations ex-hibition presents the works ofthe members of an informalartists' association (M.Čunderlík, J. Jankovič, R. Fila,J. Kočiš, E. Ovčáček, M.Urbásek, and others) who or-ganised an underground ex-hibition to compare theirworks at least among them-selves during communism.

Open: Tue-Sat 14:00-18:00until February 26; Galéria C.Majerníka, Ventúrska 9. Ad-mission: free. Tel: 02/5920-1605.

Bratislaval EXHIBITION: Berlin-Yog-jakarta – An exhibition organ-ised by the Inakosť (Other-

ness) initiative highlights thefact that as well as Jews andother ethnic and religiousgroups and political oppon-ents, the Nazis also perse-cuted homosexuals, bisexualsand transsexuals.

Open: Tue-Sun 14:00-19:00until February 25; OPEN Gal-lery, Baštová 5. Admission:free. Tel: 02/5441-3316; www.ncsu.sk.

Skalical LIVE BLUES: Bonzo & TheResonators – Within the Hud-ba v meste / Music in theTown concert programme,this performance brings aveteran of the Slovak bluesscene to the local audience.

Starts: February 18, 20:00;Corgoň Pub, Pod Hájkom.Admission: €2. Tel: 034/6648-152; www.hvm.lubosbena.sk.

Central SLOVAKIA

Banská Bystrical FLAMENCO LIVE: LosRemedios Trio – The Zelenétóny / Green Tones cycle of in-timate concerts begins with aperformance by the threemembers of Los Remedios,who play genuine flamencomusic combined with otherethnic, world and jazz influ-ences.

Starts: February 20, 16:00;Central Slovak Museum,Thurzov dom, SNP Square 4.Admission: €3.50. Tel: 048/4125-897; www.stredoslovenskemuzeum.sk.

Námestovol EXHIBITION: Oravskádrevená plastika / Orava WoodCarving – An exhibition ofitems from the collection ofthe Orava Cultural Centre in-cluding wooden statues by A.Smoleň, J. Podskalan, S. On-drík, R. Veselý, P. Pohucký, Ľ.Orság, J. Špuler and J. Šeliga.

Open: Weekdays 9:00-16:00 until March 4;Námestovo House of Culture.Admission: free. Tel: 043/5864-978; www. osvetadk.sk.

Eastern SLOVAKIA

Prešovl MUSEUM: Kapitoly z dejínodievania / Chapters from theHistory of Clothing; Portrétypanovníkov a šľachtyRakúsko-uhorskej monarchie/ Portraits of Emperors andNobles of the Austro-Hun-garian Monarchy – These twoexhibitions offer an overviewof two quite different periodsin local history.

Open: Tue-Fri 9:00-17:00,Sun 14:00-18:00 until February28; Krajské múzeum, Hlavná86. Admission: €0.60-€2. Tel:051/7734-708; www.muzeum-presov.sk.

Košicel EXHIBITION: Slovenskopomáha / SlovakAid - Slovakiahelps – This exhibition showsa selection of pictures fromhumanitarian projects, to-gether with S čím sa hrajú /What They Play With, an ex-hibition of original toys ofchildren from the poorest re-gions of our planet.

Open: Mon-Fri (exceptTues) 8:00-19:45, Sat8:00-13:00 until February 28;Public Library of J. Bocatio,Hviezdoslavova 5. Admission:free. Tel: 055/6225-290;www.vkjb.skwww.fotoklubnova.sk.

By Zuzana Vilikovská

EVENTS COUNTRYWIDE

THE CENTRAL European Jazz Connection was put together byPolish pianist Kuba Stankiewicz and apart from him, it includesCzech counterbass player Jaromír Honzak, Hungarian trum-peter Kornél Fekete-Kovács, Slovenian saxophonist PrimožFleischman, Slovak drummer Marián Ševčík and Slovak guitaristMatúš Jakabčic. Jazz is an international language that can non-etheless also include national specifics, as visitors will experi-ence at a concert on Thursday, February 17, in Bratislava’s Klubza Zrkadlom, Rovniankova 3; tickets cost €5-€7. For more in-formation, please visit www.kzp.sk. Photo: Courtesy of KZP

THE 6TH Slovak Championship in riding the traditional “krne”wooden sleigh, Krňačkové Preteky 2011, also marks the 38th yearof the Krížna Prize & STV Cup competition. It takes place at theTurecká ski resort near Banská Bystrica on February 19 and thetraditional Slovak “horny” sleighs – made from a single piece ofwood, without any nails – are expected to draw visitors from farand wide.

Photo: Sme - Ján Krošlák

10 CULTURE

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Organizers: Slovak National Theatrein cooperation with the organizer of Crystal Wing

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A Slovak’s name day (meniny) is as important as his or her birthday. It is traditional to present friends or co-workers with a small gift, such as chocolates or flowers, and to wish them Všetko najlepšie k meninám (Happy name day)

N A M E D A Y F E B R U A R Y 2 0 1 1

Monday

Valentín

February 14

Tuesday

Pravoslav

February 15

Wednesday

IdaLiana

February 16

Thursday

Miloslava

February 17

Friday

Jaromír

February 18

Saturday

Vlasta

February 19

Sunday

Lívia

February 20

February 14 – 20, 2011

Page 11: Slovak Spectator1706

Bust of Dubček unveiled in Rome

A CITY square in Rome has anew addition: a bust of reform-ist communist leader Alexan-der Dubček that is within sightof the building housing theItalian Foreign Affairs Min-istry. The Dubček bust was un-veiled in a square now calledLargo Bratislava – Capitaledella Repubblica Slovacca – onJanuary 20 in the presence oftop-ranking Italian guests,many of whom knew Dubčekpersonally.

Italian President GiorgioNapolitano, Italian ForeignMinister Franco Frattini andother leading representativesof Italian political, economicand social life were present.The Slovak delegation was ledby Pavol Hrušovský, Slovakia’sdeputy speaker of parliament,representatives of BratislavaCity Council and Dubček’ssons, Pavol and Peter. Thebronze bust is a work by Slovaksculptor Igor Mosný mountedon a travertine stand.

Dubček is a highly es-

teemed political figure in Italy.Before the Velvet Revolution,which started in November1989, the University of Bolognahad granted him an honorarydoctoral degree for his workadvocating human rights.

“It was Italy which liftedthe taboo laying on Dubčekand keeping him hidden, evennon-existent and isolated inBratislava, for almost 20years,” Stanislav Vallo, theSlovak Ambassador to Italy,said in a speech at the cere-mony explaining the close re-lationship between Dubček,Italy and Slovakia. “In Novem-ber 1988, the University of Bo-logna granted AlexanderDubček an honorary doctoraldegree and the Czechoslovakstate representatives wereforced to allow him to travel toItaly to receive the degree.”

Vallo further quoted astatement made by Dubček ina book by Luciano Antonettito emphasise why placing hismonument in Rome is so jus-tified and how the degreefrom the Italian universityhelped Dubček to return to in-ternational political promin-ence. When answering aquestion by a French journal-ist about his journey from onecapital, Bratislava, to the fed-eral capital of Prague wherehe became speaker of federalparliament after 1989, Dubčeksaid “the way from Bratislavato Prague was uncomfortableand, in particular, long fromboth the view of time as wellas geography because I trav-elled first via Rome and Italy”.

“For us it was a great ges-ture and honour,” TomášZálešák, an adviser to Deputy

Speaker Hrušovský, told theTASR newswire after the ce-remony.

He added that this is a suc-cess in Slovak diplomacy andmeans further development ofcontacts between Italy andSlovakia as well as Rome andBratislava.

It was also during histravel to Rome and Bolognathat the deep relationshipbetween Dubček and ItalianPresident Napolitano wasborn, Vallo added.

It was Napolitano whosuccessfully pressured theItalian Communist Party tocondemn the invasion, led bythe Soviet Union, of WarsawPact troops into Czechoslov-akia in August 1968, the ČTKnewswire wrote.

The invasion swept awaythe leadership of theCzechoslovak CommunistParty (KSČ) under Dubček.Dubček (1921 – 1992) was one ofmain leaders of the reformistwing of the KSČ and the prin-cipal organiser of the PragueSpring movement. After the re-form process was suppressed,Dubček resigned from his topposition in the party and waslater ousted as a member.

Dubček returned to polit-ical life after the fall of the to-talitarian regime, becomingthe speaker of the new federalparliament. He died inNovember 1992 from injuriessuffered in a car crash.

Slovak bestseller nowhas an English version

KNIHA o cintoríne (BookAbout a Cemetery), a novellawritten by DanielaKapitáňová but originallypublished under the pseud-onym Samko Tále, who is thestory’s main character, hasbeen translated into Englishby Julia Sherwood with thetitle Samko Tále’s CemeteryBook. Sherwood began trans-lating the book into Englishimmediately after she hadfinished reading the originalversion, without even havinga contract. After the transla-tion was completed, sheoffered it to a publishinghouse specialising in easternEurope but was rejected.However, Garnett Press ac-cepted the manuscript andfollowing its initial success,it seems that a second book byKapitáňová, Nech to zostanev rodine (Let It Stay in theFamily), could also be pub-lished in English.

The translator, who hasSlovak origins and had first-hand experience of the com-munist regime, told the Smedaily she was enchanted andmoved by Kniha o cintoríneas it truly evoked the grimatmosphere of 1970sCzechoslovakia in which con-formism was encouraged andfree thinking and free livingwere suppressed.

Kapitáňová’s first work,

originally published in 2000 inSlovak and since reprintedthree times, was translated in-to eight languages, includingArabic and Belarusian.

Rajendra A. Chitnis, whoteaches Russian, Czech andSlovak languages and liter-ature from the 19th centuryto the present at Bristol Uni-versity, wrote in a reviewpublished in The Times’ Lit-erary Supplement entitledHell in a Handcart: “SamkoTále is a physically and men-tally stunted, forty-three-year-old resident of the Slov-ak border town of Komárno,who supplements his disabil-ity pension by collectingcardboard, and is writing his‘book about a cemetery’ be-cause an alcoholic at the sta-tion pub predicted it. His ed-dying ‘stream-of-conscious-ness’ takes in the period fromhis grand- mother’s wartimeacquisition of Jewish property(‘why would Jews need thingslike a piano in a concentrationcamp, right?’), the Commun-ist period and post-independ-ence Slovakia. Observingpeople on his rounds, Samkonotes behaviour that he con-siders to be against ‘the law’and reports it to the ‘High-Ups’, as he has done since hisschooldays underCommunism.”

Compiled by Spectator staff

BY JANA LIPTÁKOVÁSpectator staff

Largo Bratislava in Rome now features a bust of AlexanderDubček. Photo: Courtesy of the Slovak Embassy in Rome

11CULTURE

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Books in English now availableFreedom. Jonathan

Franzen. Fourth Estate,2010.

In his first novel sinceThe Corrections – which wonthe National Book Award in2001 – Jonathan Franzen hasgiven us an epic of contem-porary love and marriage viathe family of Patty and Wal-ter Berglund. Freedom com-ically and tragically capturesthe temptations and burdensof too much liberty: thethrills of teenage lust; theshaken compromises ofmiddle age; the wages ofsuburban sprawl; the heavyweight of empire. In chart-ing the mistakes and joys ofthe intensely realised char-acters as they struggle tolearn how to live in an evermore confusing world, Fran-zen has produced an in-delible and deeply movingportrait of our time.

Room. EmmaDonoghue. Picador Fiction,2010.

Another book by EmmaDonoghue, an Irish writerliving in Canada, this is asober, simple but disturb-ingly and provokingly toldstory of a small boy who liveswith his Ma in the Room,which is just 11 feet by 11 feetlarge and has a locked doorand a skylight. He watchesTV and understands that thethings he views are not real,and that reality is just theRoom and him and Ma. Until

one day Ma admits that thereis a world outside… Roomwas shortlisted for the ManBooker Prize 2010.

Kim. Rudyard Kipling.Edited and with an intro-duction by Alan Sandison.Oxford World’s Classics, re-issued 2008.

Kim, by Indian-born Brit-ish author Rudyard Kipling(1865-1936), who spent muchof his youth in the region hedescribes here, is the story ofKimball O’Hara, theorphaned son of an Irish sol-dier who spends his child-hood as a vagabond inLahore, India (now Pakistan).With an old Tibetan lama hetravels through India, en-thralled by the “roaringwhirl” of the landscape andcities of richly colouredbazaars and immense di-versity of people. Kiplingcreated a vision of harmony –and of India – that unites thesecular and the spiritual, thelife of action with that ofcontemplation.

Perceptions of Kipling’sworks, although they en-joyed contemporary acclaimand popularity, have sincebeen influenced by criticismof his political opinions.This book, published longafter his death with an ex-pert preface, introductionand explanatory notes,provides an opportunity toreconsider his remarkablelieftime achievements.

The Cobra. FrederickForsyth. Bantam Press2010.

Bestselling thriller-writer Frederick Forsyth inthis book peels back the real-ity of the global cocainebusiness, from jungle air-strips in Brazil to the man-grove swamps of Guinea-Bis-sau, from the barrios ofBogotá to the boardrooms ofWashington. One man, PaulDeveraux, intellectual, ded-icated, utterly ruthless andex-CIA special ops, is givenwhat seems like an im-possible task: stop the drugbarons, whatever the cost. Athis disposal is anything hewants – but he must notcease until his mission iscompleted.

Up till now, the drug car-tels have been accustomed tothe forces of global law andorder attempting to preventthem plying their trade. Andup to now those forces haveplayed by the rules. But thatis about to change. The rulesno longer apply – and a dirtywar is about to get a wholelot dirtier.

This column is a selection by TheSlovak Spectator of English-lan-guage books recently released inSlovakia; it does not representan endorsement of any of thebooks selected. The column isprepared in cooperation with theOxford Bookshop Bratislava,located at Laurinská 9.

February 14 – 20, 2011

Italy helpedbring the Slovak

politician toprominence

Page 12: Slovak Spectator1706

Namaskar –A Warm Welcome!

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islands with fantastic dive sites,

3000 kilometers of spectacular

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Unlimited Holiday Opportunities

Culture lovers may simply combine arts and cultural highlights with a beach or wellness holiday in the country of origin of Ayurveda and Yoga. Enthusiasts of outdoor holy-days are spoilt for choice by a large variety of activities: from ballooning to trekking. Or how about hang-gli-ding, skiing in the Himalayas, camel safari in the fascinating desert of Rajasthan?

Invitation to a Magical Journey

We are inviting you to a magical journey. Come with us to the most beautiful beaches, discover enchan-ting palaces and mystical temples, join us for a pilgrimage to the holy sites of Buddhism, go on a tiger safari or immerse yourself into the stunning world of the Himalayas, its spiritual monasteries, colourful markets and magical festivals.

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India-50 Advi_258x345_GB.indd 1 09.02.2011 15:47:23 Uhr


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