POLAND - Eureko has withdrawn its four representatives from the management boards of Polish insurer PZU because of what it says is "ongoing harassment and intimidation" from fellow board members.

The problem follows the verdict of an international tribunal of arbitrators last year, which found that the Republic of Poland, as majority stakeholder, had violated the Polish-Dutch Treaty on reciprocal protection of investments, the Dutch insurance holding said in an unusually sharp statement.

"The tribunal described the conduct of the Republic of Poland as ‘outrageous' and ‘shocking' and found that its clearly discriminatory conduct is a blunt violation of Eureko's rights," Eureko added.

Instead of engaging in Eureko's proposal for a settlement, the current behaviour of the State Treasury appears to be aimed at further aggravating this conflict, it said.

According to Eureko, the conflict with the Polish State revolves partly around the state backtracking on its decision and promise to privatise PZU - the largest insurance company in Poland - and to list it on the Warsaw Stock Exchange.

In addition, it accuses the Polish government of using PZU as a vehicle "for dispensing political favours", and not as "an independent, transparent and commercially-oriented company with good and effective corporate governance".

Eureko said its decision to invest €700m in PZU in 1999 - leading to a 33% stake currently - was based on the government's privatisation promise. Instead of reducing its stake to 5%, the government has held on to a control of 55%, it indicated.

"The State Treasury has actively frustrated the commencement of the second phase of the arbitration, its actions often directly flouting the tribunal's findings. It continues to challenge the verdict," Eureko continued.

After the recent replacement of key members of the managements boards by individuals with no experience of the insurance industry, including CEO Jaromir Netzel, the situation has deteriorated further. Intimidation and harassment of Eureko's representatives eventually ended in them being relieved of their portfolios, the insurer said.

Eureko has made clear that it isn't interested in selling its shareholding in PZU. "We will honour our obligations as an investor, and buy the additional 21% stake as contractually agreed in 2001," it stated.

Asked for a comment by IPE, the Polish Treasury responded by stating that two of Eureko's management board members "have recently shown a reckless attitude towards their duties".

According to the Treasury, one of them went on leave without notifying PZU, and her fellow-Eureko representative refused to take over her duties.

"This unprofessional behaviour failed to elicit any response from Eureko, nor did the company exert any pressure on its representatives to make them treat their duties seriously. The fact that Eureko is withdrawing its representatives from the management board, should be considered as an adverse act against the company," the Treasury said.