Poland’s New Government Rejects Privatization, Focuses on Corporate Governance Reform

Despite a significant increase in state ownership under the previous nationalist government, Poland’s new pro-European coalition has no plans to sell off major assets back into private hands, Bloomberg reports.

Instead, the government is prioritizing improving corporate governance and transparency within its state-owned enterprises.

Jakub Jaworowski, the newly appointed Minister of State Assets, announced that there are “no direct privatization plans” in the works. He aims to revitalize the performance of these companies by strengthening minority investor oversight and promoting more accountable management practices.

“As far as privatization is concerned, there are no direct privatization plans,” Jaworowski told reporters in Warsaw.

The previous government, led by nationalist leaders, had expanded state control over the economy. This included acquiring competitors, pushing out foreign banks and utilities, and building national champions. While companies like oil giant Orlen SA grew significantly, stock valuations lagged behind peers, leading to concerns about political risk.

While Prime Minister Donald Tusk criticized the previous government’s nationalization spree, he has confirmed that the current administration does not intend to reduce state ownership. This stands in stark contrast to Tusk’s previous tenure as Prime Minister (2007-2014) when his cabinet sold off stakes in companies, boosting Warsaw’s capital market.

Jaworowski, a former McKinsey consultant, has met with private shareholders in state-owned companies, criticizing their lack of involvement in the past eight years. He wants to see their representatives given seats on more supervisory boards to enhance transparency and governance.

The government is also pushing for greater financial returns from state firms, aiming to increase dividend payments by 1.1 billion zloty ($1.4 billion) this year. The Ministry of State Assets has initiated audits of its portfolio companies to identify and address corruption and political interference.

Jaworowski revealed that investigations have uncovered irregularities within companies like Orlen and Grupa Azoty, potentially leading to billions of zloty in costs for these companies.

“The companies are gigantic and the irregularities there are also immense,” Jaworowski said. “In September, we would like to say that this elementary justice has been done and we can move forward and build the value of the firms.”