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The tender which exposed the capture of the government

Where did the real anxiety of the government lie when it was exercising pressure on the Assembly regarding the Strategy for the privatization of PTK?
Which are the companies and individuals who controlled the process of the preparation and voting of the privatization of PTK, since year 2007?

Prishtinë, 23 November 2011

The tender for the sale of PTK has failed, since Hrvatski Telekom was convinced that the winner in the tender for buying PTK in the end would be Telekom Austria AG. This company abandoned the race since it saw clear tendencies by the government to award PTK to Telekom Austria AG at any cost. The abandonment of the race by Hrvatski Telekom caused the failure of the tender for the selling of PTK in the phase of pre-qualification.

The tender for selling PTK failed since the government tried to satisfy the requests of the company which has a history in the telecommunications market in Kosovo, Telekom Austria AG. In 2007, Telekom Austria AG was one of the contenders to win the license for the second mobile telephony operator in Kosovo. After having lost the race to acquire the license for the second mobile telephony, this company initiated legal action against Kosovo authorities, due to violation of tender procedures. Since then and further, this case presented by Telekom Austria AG was never reviewed by justice. Back then, representing Telekom Austria AG in Kosovo for the tender of the second mobile telephony operator was precisely the government advisor on the privatization of PTK, Tibor Kartik from Telco Ag and Wolf Theiss.

This research by “Preportr” shows that the entire process of the preparation of the basis for this privatization and the tender as such was partial and oriented towards one aim cooked up in 2007. The government aimed at giving PTK to Telekom Austria as a change coin, the advisors of which have controlled this process ever since the beginning.

Why did “Hrvatski Telekom” abandon the race?

Since the withdrawal of Hrvatski Telekom brought the tender for the sale of PTK to an automatic collapse, the reasons that made this company take the decision were gravely important for the public. In some media statements, the minister for Economic Development, Besim Beqaj has said that the main reasons for the withdrawal of Hrvatski Telekom are due to the failure of this company, respectively to its principal Deutche Telecom, to sell shares in America.

The company itself, on the other hand, gives another official reason. “The reasons why we are withdrawing are the accusations for corruption towards the management of PTK”, says Hrvatski Telekom officially for Preportr.

However, people close to representatives of Croatians in Kosovo have said that since the preparation of the report by the transaction advisor of Telco AG and the indirect advantages that the government made towards Telekom Austria, have made Hrvatski Telekom withdraw from the race.

Read the newspaper #4

In a recording obtained by Preportr of a private conversation between the director of PTK, Shyqyri Haxha and Sinisha Gjyranoviq, an official of the Croatian Telekom, both parties speak about the reasons of the withdrawal of the Croatian operator. Haxha has inquired from them if they had said that the management is corrupt, since this statement according to him, would damage him, especially in the wake of the court process initiated against him.

In the meantime, the Croatian representatives say that they have requested two months ahead from the Government to suspend the process until the issue of accusations against the management of PTK on corruption are clarified. “We have never said that you are corrupt, but we have said that the process should temporarily be suspended until the accusations are clarified, we were not aware that there would be a court hearing and we did not have any intention of causing you trouble, we do not want to prejudge” Gjyranoviq has said to director Haxha through the phone.

This phone call reveals that the Croats requested from the Government to suspend the process of the sale of PTK, but despite these requests, the government went ahead with the process of the privatization of PTK, till the moment Hrvatski Telekom officially withdrew from the race.

Sources from Hrvatski Telekom say that the real reason behind the failure of the privatization of PTK has to do with the suspicions that the process for the sale of this company was rigged, and for this reason Hrvatski Telekom has withdrawn from the bid. “Hrvatski Telekom has observed the tendency that the Government is supporting Telekom Austria, due to the fact that the Transaction Advisor in 2007 was a representative of Telekom Austria during the tender for the second mobile telephony, and the same has been hired by the Government as an Advisor for the privatization of PTK”, says anonymously a representative of Hrvatski Telekom for Preportr.

Pre-qualification as guardian against failure

At the end of last year, the government made the selection of five companies that would run for the phase of pre-qualification in the tender for the sale of PTK: “AlbTelecom” Sh.A from Albania (most of the shares belong to “Calik Group” and “Turk Telekom”), “Hrvatski Telekom” d.d. (HT) from Croatia (most of the shares of HT are in the property of “Deutche Telekom”), “Orascom Telecom Holding” S.A.E. from Egypt, “Telekom Austria” AG from Austria and “Sabafon” from Yemen. A few months later, on June 2 of this year, three companies were eliminated and only two remained in the race, “Telekom Austria AG” and “Hrvatski Telekom d.d.”, and the government stated that the process ended successfully. “The Governmental Commission on Privatization declares this phase of pre-qualification for the privatization of shares of PTK as very successful”, says a statement of MZHE issued on June.  The Ministry for Economic Development had also issued a statement on June 20 which says that “The process of the privatization of Post and Telekom of Kosovo is being conducted according to the foreseen strategy and plan, based on legal provisions and in full transparency”.

Thus it was decided that the tender should go ahead, and neither the Government, nor other mechanisms involved in this process did reveal the least of suspicion, while the Transaction Advisor submitted the  first evaluation report of PTK for the shareholder, that is, for the Government. The source of Preportr tells that with the publication of the evaluation report of PTK from Telco AG in July of this year, the process of privatization enters into unclear waters. “With the publication of the evaluation report of the transaction Advisor, as well as having in mind the relations of the advisor, Tibor Kartik, with Telekom Austria, it has become clear as to who has the odds of winning the tender”, says for Preportr a source close with the Croatian operator. This report provoked a dispute between the director of PTK, Shyqyri Haxha, and the Transaction Advisor, Tibor Kartik, and where this evaluation of PTK was seen as a tendency to damage PTK.

Seeing the risk that Hrvatski Telekom might withdraw from the tender, and thus bring about the failure of the tender, the Government in September decided to extend the phase of pre-qualification for another two weeks, in this way giving the opportunity for the second time to the companies which only three months earlier were disqualified due to non-fulfilling of the criteria to enter the bidding again. “This decision (Of the Committee for privatization) has been taken with the purpose of reaching a higher level of competition in the process, always aiming at ensuring a fair and equal treatment of all companies participating in this process”, says a statement issued by the Ministry for Economic Development on September 2 of this year.

Nevertheless, how it came to be that in June, the government declares twice that everything related to the tender is in order, and suddenly in September decides to extend the phase of pre-qualification for another two weeks, and in this way give a new chance to companies to participate in the tender, companies which were disqualified in June?

From this perspective, it comes that the Government might have had indications that one of the pre-qualified bidders, Hrvatski Telekom d.d. might withdraw, and as a consequence, awarding Telekom Austria as the winner of the tender would become impossible.

In an interview given to “Preportr” by the Minister for Trade and Industry, Mimoza Kusari-Lila, even in beginning of October, when at that time authorities publicly still spoke of an entirely normal process of the tender and without problems, the minister had indicated that it was possible that the tender for the privatization of PTK might fail. “In the phase where it is, as a process it might not be implemented. We are seeing that there are delays, there are possibilities that the situation of the bidders might change, it is something actual and real due to the overall European economic situation”, the minister had said for Preportr.

The favoring of Telekom Austria AG

In fact, the powerful influence of Telekom Austria AG on the decision-making authorities in the process of the privatization of PTK has been evident even earlier. The current director of PTK, Shyqyri Haxha says in an interview for “Preportr” that there was a request by the representative of Telekom Austria during a donor’s conference in Prishtina on March 2010 that an important contract of PTK should be cancelled by ex-minister Ahmet Shala, namely the contract with Amdocs for the billing platform. According to officials of PTK, the cancellation of this contract and consequently of the billing system by the government, has caused a huge drawback for this company and has thus limited it in facing up to competition with other operators.

High officials in PTK have stated for Preportr that the main purpose of withdrawing from this project and other capital projects, such as the project for the optical fibers or the sixth phase of expanding capacities, was the devaluation of the value of PTK in the wake of privatization with one purpose in mind, that of selling it as cheap as possible. “I can tell you sincerely and with full responsibility that the real purpose of the interruption of these projects has been the devaluation of the value of PTK”, says this high official in PTK. Furthermore, this official admits that there has been a verbal conflict with the representatives of Telekom Austria, “that we cannot dictate the investments in PTK”, says the PTK source to Preportr.

A rather odd relationship between privatization of PTK and two companies which advised the government regarding this privatization is revealed to us by the very profile of the company advising the government, Wolf Theiss. In this profile, along with many works implemented by this company for KTA, the Government and PTK, there is another activity of this company in initiating court procedures against Kosovo authorities for violations in the tender for the second mobile telephony operator by ART in 2007.

Wolf Theiss, hired to advise on the privatization of PTK has also been the advisor of Telekom Austria AG during the tender for the second mobile telephony operator. In the profile of the Company it says, “Since the tender did not succeed, Wolf Theiss has initiated a number of court procedures regarding the procedures of the tender in some courts and institutions of Kosovo”.

This relationship and the fact that Telekom Austria AG, at some point represented by Wolf Theiss, was the main contender in buying PTK, created a potential for a tender in the sale of the most profitable kosovar company under the conditions of a conflict of interest which seriously endangered the good governance of PTK.

The contract for advising the Government on the privatization of PTK, the ex-representative of Telekom Austria, Tibork Kartik had acquired in consortium with another company with which in Kosovo have been fierce enemies. Wolf Theiss was involved in numerous other projects by KTA during the time when Ahmet Shala was office director. As Minister of Economy and Finance, Shala again engaged this company in the privatization of PTK, this time together with Tiborg Kartik, ex-representative of the company Telekom Austria AG in the tender for the second mobile telephony operator in Kosovo.

In the profile of company Wolf Theiss, published in December 2010, it is shown that this company has been involved in Kosovo in the economic sector where for a long time the name of ex-minister Shala was omnipresent.

As it can be seen, Wolf Theiss has practically been present in Kosovo in the sectors in which former KTA director and ex-minister, Ahmet Shala has been in the top leadership. This company, together with Telco AG has been hired again from the same person to advise the government on the privatization of PTK, ignoring thus the fact that they have been close with one of the main bidders, Telekom Austria, as the only company remaining until the end of the process in buying PTK.

Head-on with the same old story

Now that the tender has failed, the government plans to repeat the tender for the sale of PTK based on the same documents drafted up till now.

According to official statements from the information office of the Ministry for Economic Development, the process for the privatization of PTK, whenever it happens, shall be based on the same documents and reports produced so far. “So far, thousands of documents have been analyzed and tender reports and documents have been prepared in a volume of more than 3000 pages and they shall be used whenever a new process is to commence”, says the information office of the Ministry for Economic Development.

Furthermore, the Government does not plan to present any new decision regarding the privatization of PTK before the Assembly of the Republic of Kosovo, considering that the Act 4 of the Law on Budget of year 2011 represents sufficient legal basis to continue with a new tender. They confirm that although the Law on Budget of 2011, incorporating the Strategy for the Privatization of PTK and the decision for selling it expires at the end of this year, the process of the privatization of PTK will continue without changes..

“We have consulted with local and international legal counselors, and the strategy and legal basis remain the same”, Minister of Finance Bedri Hamza has said for Preportr.