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Tusk Links Surveillance to Russian Coal in Polish Crisis

June 25, 2014

Poland’s push to help its coal industry by limiting cheaper imports from Russia may have helped trigger the illegal eavesdropping scandal that has rattled the country, Prime Minister Donald Tusk said today.

The political scene has been in uproar since Wprost magazine released recordings of a July 2013 conversation in which central bank Governor Marek Belka allegedly discussed possible steps to stimulate the economy before next year’s elections with Interior Minister Bartlomiej Sienkiewicz. Tusk defended both men at a June 16 news conference, saying they didn’t appear to violate any laws. The prime minister asked for a vote of confidence today.

“Trading Russian coal on a big scale is in the background to recent events,” Tusk told lawmakers in Warsaw. “I know that people linked with those who stood behind eavesdropping are involved in businesses toward which the Polish government has recently taken certain steps.”

The prime minister oversaw the creation of a task force in May to determine how to rescue Kompania Weglowa SA, the European Union’s biggest coal producer. The plan for Kompania, which is Poland’s third-biggest employer with 55,000 workers, included case-by-case reviews of why power generators and coal distributors are buying imported instead of domestic fuel. The state may create a special coal distribution network for retail buyers, Tusk said at an industry summit in Katowice on May 6.

Traders Detained

On June 5, prosecutors charged 10 people from coal retailer Skladywegla.pl with organized crime, tax abuse and money laundering, according to the website of Poland’s national police headquarters. Marek Falenta, who according to Gazeta Wyborcza earlier this year bought a stake in Skladywegla.pl for about 100 million zloty ($33 million), was detained yesterday by prosecutors in connection with the tapes scandal, the newspaper reported.

Prosecutors charged two employees at two Warsaw restaurants where the recordings took place with illegal eavesdropping. They detained two other people yesterday, spokeswoman Renata Mazur said, declining to identify them.

“Tusk’s speech was vague, full of question marks and without clear-cut facts,” said Jerzy Polaczek, a lawmaker from the Law and Justice opposition party representing the Upper Silesian coal region. “The most grotesque thing is that Europe’s biggest coal producer has seen its market damaged, while a do-nothing government has been eavesdropped by a bunch of waiters.”

‘Harmful Comments’

Coal distributors have already had “a very difficult year” after mild winter weather curbed demand, according to Lukasz Horbacz, chief executive officer of coal distributor Sam-Bud-Rol Sp. z o.o.

“It was made even harder by the prime minister’s harmful comments in May about coal distributors making windfall profits, about coal costing 200 zloty a ton at the mine and 800 zloty a ton retail,” Horbacz said today by phone.

Hawe SA, the company where Falenta directly holds 7.7 percent, said in a regulatory statement today that Deputy CEO Krzysztof Rybka was detained in connection with the eavesdropping case. Hawe also said that a shareholder “mentioned in the media” in the context of the taping affair doesn’t sit on its management or supervisory boards and has no direct influence on the company’s day-to-day operations. It didn’t name Falenta in the statement.

’Possible Connection’

“This may not be the sole angle to the case, it could even be a minor one, but there’s no doubt it’s present,” Tusk said. “While there are no grounds yet to make any direct link between the surveillance and government measures to rescue the coal industry, there’s also no reason to ignore the possible connection.”

That “backdrop” could be even broader and encompass “people involved in the gas trade” between Poland and Russia, Tusk told lawmakers. He added that the gas “context is the most worrying, and the scope of these events matches the scale of interests involved,” involving foreign as well as Polish companies.

Poland, one of the most outspoken countries against Russia’s annexation of Crimea and its part in the growing civil war in Ukraine’s eastern provinces, depends on Russia for more than 95 percent of its oil and two-thirds of its gas. Tusk has said the European Union urgently needs to wean itself from Russia with a profitable and sustainable energy policy. He’s traveling to Brussels tomorrow to an EU energy security summit.

Effective Talks

Tusk said today he called for the vote of confidence to enable him to hold “effective” talks in the Belgian capital.

Polskie Gornictwo Naftowe i Gazownictwo SA, the state-controlled company that is Poland’s biggest gas distributor, dismissed its chief executive officer and deputy CEO in April 2013 following a row over Russia OAO Gazprom’s pipeline expansion plans.

Tusk also fired his treasury minister for failing to inform him about a memorandum between the two companies to study a proposed 15 billion cubic-meter pipeline called Yamal-Europe 2 from Russia via Poland to Slovakia, bypassing Ukraine.

“Anyone who paid attention to the gas pipeline inter-connector that was to bypass Ukraine, also remembers people linked to those events who also appear in the context of taping scandal,” Tusk told lawmakers. He didn’t give any names.

To contact the reporters on this story: Maciej Martewicz in Warsaw at mmartewicz@bloomberg.net; Marek Strzelecki in Warsaw at mstrzelecki1@bloomberg.net

To contact the editors responsible for this story: James M. Gomez at jagomez@bloomberg.net David McQuaid, Paul Abelsky


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