Agenda: Was CRH, one of Ireland's most successful - and controversial - companies involved in bribery in Poland? That's what a parliamentary inquiry there has been told. Denis Staunton reports in Ozarow.
The giant cement kiln at Ozarow, a great tangle of pipes, funnels and chimneys, is Europe's largest and is visible for miles amid the bleak landscape of central Poland. The CRH plant is the biggest employer in the region and the tax the company paid to the local government over the past 10 years has funded a water supply system, a gas network, a new town hall and a swimming pool.
"The cement works always pays on time. It enables us to make realistic expense plans," Ozarow's mayor, Marcin Majcher, told the Polish daily newspaper Rzeczpospolita earlier this year.
A parliamentary inquiry has heard, however, that this prosperity may have been built on corruption.
Marek Dochnal, a flamboyant, polo-playing lobbyist, claims he arranged a $1 million bribe to a government minister to ensure that CRH could acquire the plant in 1995.
Dochnal has been in prison since last September, when he was arrested in Cracow after he stepped off a private aircraft from London. Investigators had intercepted phone calls during which he had sought to bribe a member of parliament in an unrelated case, offering the politician a Mercedes, with a driver and a monthly stipend.
The story Dochnal told the inquiry is one of greed, graft and ruthless business practices in the "Wild East" years that followed the fall of the Berlin Wall.
As Poland emerged from communism and embraced the free market in the 1990s, foreign investors saw great potential in this country of 40 million people that boasted high educational standards but poor infrastructure. By the mid-1990s, a cash-starved government set about privatising state assets, hoping to attract foreign investment and expertise while boosting tax revenues.
For the past year, a Polish parliamentary commission has been investigating some of the most high-profile privatisations and Zbigniew Wassermann, a member of the commission from the conservative Law and Justice Party, says evidence points to deep irregularities and corruption.
"There were certain decisions taken at the highest level that made these things possible, such as the liquidation of the anti-corruption squad within the police, the liberalisation of the law and they neglected to investigate and prosecute operations that were blatantly against the law. The main reason was probably lack of capital in Poland," he said.
As minister for privatisation from 1993 until 1997, Wieslaw Kaczmarek was one of the most powerful men in Poland. He was central to every major privatisation of the period - well over 100 - and played a key role in determining which foreign bids to consider.
Soon after he entered office, Kaczmarek decided to sell off the state-owned cement plant at Ozarow, one of two modern cement facilities in the country. Built during the 1970s, Ozarow was profitable but its privatisation had been on the cards since the beginning of the decade.
The company needed more capital because, although its plant was still modern and reliable, the need for modernisation and new investment had become ever clearer.
Wassermann believes that the sale of Poland's cement plants was ill-advised, even if they were almost guaranteed to produce a profit for the new owners.
"As is well known, Poland has a very underdeveloped road system. So it seems obvious that a country which wants to develop a road system ... should have its own supply of cement. The fact is that the decision was taken to sell the cement plants, not only in Ozarow but in other places as well.
"There was a lot of lobbying in connection with privatisation and it had pathological features," he said.
Kaczmarek called a public tender and received more than a dozen offers but chose to engage in "a period of exclusive negotiations" with Holding Cement Polski (HCP), a group in which CRH had acquired a 40 per cent stake.
CRH sources said last week that the company acquired its stake in HCP from Larchmont Capital, in which Dochnal was the principal shareholder.
Kaczmarek told the parliamentary commission that, although he did not know Dochnal, he had heard his name linked to the Irish company.
"At a certain stage I was informed that the main lobbyist, the person who intended to bring the Irish CHL group into the Polish cement industry, was Mr Marek Dochnal," he said.
The Polish journalist, Juliusz Cwieluch, who has followed Dochnal's career, said the jailed lobbyist would have been an attractive figure for foreign investors arriving in Poland in the 1990s.
"They arrive in a foreign country which has a new economy, where the law keeps changing and they have no idea whatever about it. They don't know the language, they don't know the realities, they don't know who is a minister or prime minister in this country. And he is nice and smiling, he speaks English and seems to be well-connected," he said.
Dochnal told the parliamentary commission that, during negotiations surrounding the sale of the Ozarow plant, Kaczmarek's representative demanded a bribe on behalf of the minister.
"I met with a specific demand and it was a very unpleasant experience," he said.
Dochnal claims that the sum agreed was $1 million and that he paid $250,000 into a Swiss bank account and between $600,000 and $700,000 in cash. He admitted he did not pay the full sum agreed to Kaczmarek.
"And did the Irish meet their commitment as far as you were concerned? Did they pay you the amount you agreed on?" a member of the commission asked him.
"Yes," he replied.
Dochnal told the commission that Kaczmarek snubbed him at a party at the Irish embassy in Warsaw.
"We met at a reception held by the Irish ambassador on the occasion of St Patrick's Day. There was a whole group of us. He ostentatiously refused to shake hands with me. We were facing each other and we all shook hands. The ambassador, the CRH head, myself and someone else.
"While he greeted everybody he ostentatiously omitted shaking hands with me, and that caused a small scandal," Dochnal said.
Kaczmarek denies requesting or receiving a bribe and says he does not remember the encounter with Dochnal at the Irish embassy.
Trade unions at Ozarow opposed the sale of the plant to the CRH-backed group and favoured a rival bid from Ciech, a state-owned chemicals and oil company. Ciech withdrew its bid and Kaczmarek threatened to float the cement plant on the stock market unless the trade unions accepted the CRH bid, which they did.
CRH sources say the company's involvement with Dochnal was limited to the acquisition of his company's stake in HCP.
Dochnal retained an interest in Irish affairs, however, holidaying in Ireland with his wife, Aleksandra, in 1996 and sending her to Dublin later that year to study English. Dochnal was photographed meeting President Mary Robinson during her visit to Poland and accompanying President Aleksander Kwasniewski when he came to Ireland.
As the 1990s progressed, Dochnal appeared to prosper, moving first to Monte Carlo and later to the Home Counties of south-east England. He bought a farm in Argentina and established his own polo team, becoming a member of the Guards Polo Club and having his photograph taken with the British queen.
Everything changed last September, however, as Dochnal approached Cracow on a hired jet from London and the pilot told him he would be arrested when they landed.
"He tried to persuade the pilot to turn back to London but he refused," recalls Aleksandra, who has given birth to a daughter since Dochnal went to prison.
Charged with bribery, Dochnal agreed to co-operate with the parliamentary commission in the hope of gaining better treatment from the prosecution.
He volunteered his claim about bribing Kaczmarek and the parliamentary commission concluded he had indeed been a helpful witness.
Wassermann says Polish prosecutors are investigating Dochnal's allegationsand he believes that, if the transfer of funds can be confirmed, charges should be pressed.
"No one has been charged yet. It's a huge case and Ozarow is just one among many more important privatisations," Wassermann said.
