Tuesday, August 05, 2008

Poland: State-owned military supplier faces corruption allegations

WBJ has learned that a subsidiary of state-owned military equipment producer Bumar may have improperly hired a construction firm for a renovation project, and that subcontractors were left unpaid.

A construction project for a new zl.70-million headquarters facility for military optical-equipment producer Przemyslowe Centrum Optyki (PCO), a member of the state-owned military equipment giant Bumar group, has led to allegations of corruption after subcontractors claimed that they were not paid for their work.
One of the developers involved in the project, Warmet, was responsible for renovating several of the older buildings within the complex. Subcontractors hired by Warmet claim that they were not fully paid, and are now holding PCO responsible.

Why Warmet?

Warmet is a very small company, consisting of just a few people, according to a source close to the case. Documents obtained by WBJ indicate that the firm has not submitted financial statements to the National Court Registry (KRS) since 2004. The company’s bank accounts have been blocked and it has previously been sued a number of times for not paying its subcontractors, Jaroslaw Kowalczyk, president of Kowalczyk Incaso, a vindication company that is representing the subcontractors, told WBJ.
All of this begs the question as to why PCO decided on Warmet to carry out the renovation.

Tender required

Public companies such as PCO are legally required to hold a tender for construction projects worth more than zl.5 million. However, Kowalczyk claims that a tender was never held. "Instead, the project was divided into several smaller parts, and each part had its own selection process," he told WBJ.

When asked for specifics about the selection process, Ryszard Kardasz, the president of PCO, pleaded ignorance. "I do not know any details," he said, claiming that PCO’s technical director and a member of the board, Robert Wrona, was in charge of the process. "If you want any details, call Wrona, because he is responsible for this," he said.

According to credible information obtained by WBJ, Mr. Wrona is accused of having a close relationship with Warmet executives and of intentionally granting Warmet the project without a tender.

WBJ attempted to contact Mr. Wrona several times, but was told he was unavailable for comment.

Costly mistake

Whatever the reason, PCO’s failure to thoroughly investigate Warmet may cost them. According to Polish construction law, a project’s investor is responsible for payment for all work on the construction site, including work carried out by subcontractors.

Records show that PCO regularly paid Warmet for the work being carried out. Why Warmet’s subcontractors never got their share is unclear.

According to Kowalczyk, Kardasz claims that PCO has stopped payment to Warmet.

PCO, Warmet and Kowalczyk Incaso met at the end of July in an effort to try to hammer out a resolution, but none was found. The companies are expected to meet again in the coming days.