Eureko has withdrawn its representatives from the management boards
of Polish insurance companies PZU Life and PZU Non-Life. The move,
said the Netherlands insurer, was “to protect its representatives
from ongoing harassment and intimidation from fellow PZU board
members appointed by the Polish Ministry of State Treasury”. Eureko
is the strategic partner and the largest private shareholder of the
two insurers’ holding company, PZU SA, in which it has a 33 percent
minus one share stake.
The latest development is a continuation of an ongoing conflict
between Eureko and the Polish government that began in 2005. In
August of that year, Eureko explained that an international
tribunal of “arbitrators of international repute found that the
Republic of Poland had violated the Polish-Dutch Treaty on
reciprocal protection of investments, including a total about turn
in its privatisation strategy”.
Eureko added that the tribunal described the conduct of the
Republic of Poland as “outrageous” and “shocking” and found that
the clearly discriminatory conduct of the Republic of Poland is a
blunt violation of the rights of Eureko under the treaty.
Following the verdict of the arbitration tribunal, Eureko proposed
a settlement, requesting performance of the agreement, estimating
its damages at about PLN6 billion ($2.42 billion). In these
circumstances, it could be expected that the State Treasury would
be actively seeking a compromise solution as the damages are
mounting, said Eureko. However, added the insurer: “To Eureko’s
astonishment, the current behaviour of the State Treasury in PZU
appears to be aimed at further aggravating this conflict.”
According to Eureko, the Polish government replaced key members of
the PZU management boards in late 2006. The newly appointed
individuals include a lawyer, who has no previous experience
of the insurance industry, as president of the management board of
PZU SA. Eureko added that it “strongly believes” that the
government’s action “will prove to be detrimental to the best
interests of PZU and its stakeholders”.
Eureko concluded that withdrawal of its representatives, who are
all “seasoned insurance professionals”, sends a clear message that
Eureko cannot condone the recent developments in PZU, nor take any
responsibility for decisions being made there. Eureko left the door
open to further negotiations.