Poland should heed the lesson: Security and transparency vital to foreign investors

WASHINGTON, D.C. — It isn’t every day that a Halifax company and its Scranton, Pa., partner get attention on the world stage. But that is what happened in Washington a week ago and in Warsaw on Tuesday during panel discussions presented by the Council for European Investment Security.

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This Washington- and Brussels-based interest group monitors the investment climate in countries evolving from dictatorial rule and command economies, and assesses the security of foreign investments in the region. Both in the Washington and Warsaw sessions, the spotlight was on Poland. The Washington segment flew an ominous heading: "Has Poland run its course as the place for FDI" (foreign direct investment)? How do the Halifax and Scranton investors fit into this overarching window? Dessaport International Corporation Inc., a Halifax engineering company heavily engaged in the construction of marine facilities, and Renaissance Trust, a modest private investment company in Scranton, joined forces in the mid-1990s to build a major grain terminal in Gdansk, Poland, principal port on the Baltic. They were welcomed by the Port of Gdansk, given a 25-year lease renewable to 50 years, affirmed by the government of Poland, even blessed by John Paul II, the Polish Pope, and started the project. Fully supported by leading grain trade experts, the Saskatchewan Wheat Pool prominently among them, and financed in a major way by the Royal Bank of Canada, EuroPort was well underway in restoring Gdansk to its historical pre-eminence in the Baltic grain transshipment business — and promising hefty profits for the Halifax and Scranton pioneers in Poland. But the lack of investor security in Poland, the unequal treatment of this Canadian-American undertaking that seemingly set aside Poland’s treaties with Canada and the U.S., and the disregard of Poland’s own arbitration court’s findings in favor of EuroPort have led to a stalemate. The Polish Treasury owns 85 per cent of the Port of Gdansk legal entity, but disclaims ultimate responsibility for claims and judgments against the port. In the eyes of the Polish Treasury, Dessaport’s significant share of all the money spent on EuroPort in Poland represents assets of "no commercial value." Mind you, where the Polish Treasury saw nothing, Poland’s Arbitration Board saw $31 million. And so what? By the time the draining and expensive legal battles in Gdansk and Warsaw were over last year, the $31 million had shrunk to something in the middle five figures. This is where the significance of the Council for European Investment Security (CEIS) and its Washington and Warsaw panels becomes brightly visible even to those uninitiated in evaluations and decisions foreign investors make before putting their money into this or that country. Joseph R. D’Andrea Jr., representing his father in Pennsylvania, EuroPort president Joseph D’Andrea, and Donald G. LeBlanc, president of Dessaport in Halifax, aired EuroPort’s experience in Poland at the Washington panel. Not surprisingly, Polish diplomats countered and rejected Mr. D’Andrea’s statements. However, his statements were supported by panel member Hilary Kramer, a financial analyst, foreign investment adviser and columnist for Forbes magazine; and Robert J. Shapiro, chairman of CEIS and chairman of Sonecon, an economic advisory firm in Washington and, arguably, the mainspring of the "Has Poland Run its Course?" query in Washington and Warsaw. Mr. Shapiro put it in a nutshell: Nothing is more important to foreign investors than the security of their money and the transparency of the legal and regulatory systems in countries they invest in. Poland is slipping in this grading and for Warsaw that should be "a little red flag." More was said by the CEIS panellists. Paraphrasing their words, there were repeated warnings that countries disregarding the basic concerns of foreign investors are risking their potential for economic growth and national prosperity. There were assertions that Poland is performing below its potential, and Warsaw’s reluctance to pay up on binding decisions and awards ordered by Poland’s own arbitration courts is a slow-motion prescription for national destruction. These were strong words, to be sure, and well over the top. But I bet Don LeBlanc in Halifax and Joe D’Andrea in Scranton would say Amen.