POLAND - The Polish government and Dutch financial group Eureko have agreed any compromise reached in talks over Polish insurer PZU will be made subject to approval by a Polish court.

This is one of the details on the meetings recently held on solving the decade old dispute over PZU, which was disclosed in the "negotiation memorandum" signed before Easter.

Both parties want to have reached a settlement by the end of June and expect the court to sanction it in autumn of this year.

"Any arrangements made by them in the course of those negotiations will not constitute binding obligations until the settlement has been sanctioned by the court or unless the Parties agree otherwise, to mutual satisfaction," the memorandum states.

A spokesperson for Eureko confirmed to IPE "both parties have agreed that any solution reached will be put before a Polish court".

Eureko has also accepted the involvement of the European Bank for Reconstruction and Development (EBRD), which will prepare its own proposal for the resolution of the dispute. (See earlier IPE story: Polish gov't asks EBRD for help over PZU)

In a statement issued after his first 100 days in office, the new Polish minister of the treasury, Aleksander Grad confirmed his aim was to "reduce the state's share in the economy".

Eureko took the Polish government to an international court of arbitration for breaching a privatisation promise made in 1999 when the Dutch insurer bought 30% of PZU.

The arbitration court later confirmed the Polish government had breached a bilateral agreement between the Netherlands and Poland by not selling its stake in the country's largest insurance company.

But elections last autumn brought a change in government and this led to the first movement in the dispute for years.

Eureko noted in its annual report its 33% minus one share stake in PZU is estimated to have brought the Dutch group a share in PZU's net profit of €333m.

But "for the measurement of Eureko's investment in PZU S.A. as at 31 December 2007, no published or audited financial data of PZU were available", the insurer noted.

"Therefore, Eureko has made an estimate of its share in PZU's total equity as at 31 December 2007 and of net profit for the year."

Lack of financial information on the Polish insurer has been another major bone of contention in the conflict.

PZU's PLN18.5bn (€5.25bn) pension fund OFE PZU "Złota Jesień" performed worse than the average in January, by delivering a negative return of -4.2%.

All 15 funds saw their assets drop by a record amount of PLN5.5bn or 3.9%.

If you have any comments you would like to add to this or any other story, contact Julie Henderson on + 44 (0)20 7261 4602 or email julie.henderson@ipe.com

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