Trying to keep investment afloat in Poland

The New York Times ran a revealing story on Poland last Sunday after Times correspondent Judy Dempsey got the ear of Aleksander Grad, minister of the Treasury, and Krzysztof Walenczak, his chief economic adviser.

---

Indirectly, the story sheds light on problems a Halifax marine engineering firm and a Scranton, Pa., investor are struggling with as owners of EurPort, Poland. But first, the Polish backdrop. Poland is on the move, having done the undoable. Its economy didn’t tank when all other countries in the European Union and far beyond were bailing water in the financial torrent that surged over the world in mid-September 2008. "Even during the height of the crisis last year, Poland managed to post a 1.4 per cent rise in gross domestic product," Ms. Dempsey writes. She points out that the Vienna Institute for International Economic Studies sees the Polish economy growing 2.5 per cent this year, and an additional three per cent in 2011. What’s more, big IPOs — initial public offerings — are doing well on the Warsaw exchange and attest to confidence on the part of Polish and foreign investors. Credit for this island of stability goes to Prime Minister Donald Tusk, head of a centre-right government that behaved like the usual promise-much-and-do-little model for the first two years in office, and then got serious. The prime minister deserves medals for reasoned judgments and a cool head, one of my sources in Warsaw told me several months ago, when fear still gripped bankers, investors and governments. He is a distinguished journalist, author of books on banking, credit, insurance and other heavy topics few in the media anywhere would be able to tackle. This prelude is appropriate in view of Mr. Tusk’s acknowledged drive for more foreign investment in Poland. Mr. Tusk intended to make his pitch in Canada six weeks ago when he was to meet with Prime Minister Stephen Harper. His mission was aborted when a plane crash in Western Russia killed Poland’s president, Lech Kaczynski. But Mr. Tusk will resume his drive for Canadian money. At this point, the local Halifax and Scranton investors cut in. I am not well enough informed about Poland’s ambitions for American capital, but I do know that the Canadian government sees the wrong done to EuroPort as "the single biggest irritant" in commercial relations with Poland. Ironically, the very positive New York Times appraisal of Poland’s economy and investment ambitions coincides with further serial foot-dragging in Warsaw about EuroPort’s, and Joseph D’Andrea’s, bid for justice. Mr. D’Andrea is president of EuroPort, Poland. They were building a state-of-the-art grain-handling terminal in Gdansk, on the deepest ship channel on the Baltic Sea. They poured at least $40 million in cement, loading and reloading equipment and buildings in the port. Their enterprise had every permit required by Polish law. Their project, called EuroPort, Poland, was praised by government leaders in Warsaw, and blessed by the "Polish" Pope John Paul II. Then came a new government in Warsaw — made up of old former communists and their allies — and the co-operative climate gave way to bribe-seeking, hostility and port police attempting forceful eviction, with guns at the ready. Oh yes, the Port of Gdansk got a new board of directors and operating management. The treasury ministry now headed by Mr. Grad, 85-odd per cent owner of the port, appointed the new crews. In due time, the laundered communists lost the elections. The year was 2005. Mr. Tusk’s is the second government since those difficult, shall I say, years. But the people running the port have not changed their style. They want EuroPort out. Meanwhile in Warsaw, Jan Bury, Mr. Grad’s deputy minister, writes in correspondence with EuroPort’s lawyers that EuroPort has "no value." Millions of dollars worth of concrete in place, costly grain loading equipment, not to mention sheds and other structures, are worthless rubbish, eh? An unappealable Polish arbitration court valuation exceeding $30 million for the physical assets alone seemingly means nothing. And even so, the final legal step in the process, Donald LeBlanc, EuroPort’s executive and president of Dessaport in Halifax, and Mr. D’Andrea learned on Monday, would be delayed another couple of weeks. That would be just days shy of the gates slamming shut on a $30-million solution. But stiffing EuroPort by inaction followed by delay, or any other wilful blindness to fair treatment, is bound to cast an ugly shadow over Mr. Tusk’s hopes for investment capital from Canada. What can I say? Maybe Mr. Grad and his boss, the prime minister, should have a word.