Polish fund MCI Management loses PLN 46.5 mln in latest court battle
The Supreme Court ruled to retract a payment of PLN 46.5 mln (EUR 11 mln), previously awarded to Polish fund MCI Management as damages for a decline in share value of its subsidiary IT company JTT Computer, Polish economic daily Puls Biznesu reported November 13.
“It is a lie,” MCI Management CEO Tomasz Czechowicz told the paper. “There was absolutely no conspiracy. After reading the court sentence, all I have to say is that I am happy that Poland is in the EU. I do hope, though, that we will not be forced to seek justice in the European tribunal,” he commented.
In June 2012, the Supreme Court accused the fund of conspiracy, with a purpose to extort money from the Treasury by bypassing tax regulations.
JTT Computer was set up in 1990 and quickly grew to generate PLN 400 mln in revenues. Two years later, the Education Ministry issued a public tender for the delivery of IT equipment to Polish schools. JTT was contracted by the winning parties to deliver the computers, its contracts totaled some PLN 23 mln.
JTT signed an agreement with the Education Ministry, whereby the company would export the equipment abroad and then import it back to the country, thus avoiding paying the income and excise tax. In turn, the schools were able to claim the VAT back from the Treasury and buy more computers – seemingly golden arrangement.
However, the Treasury Ministry launched an investigation into JTT Computer’s operations, ending with a call to payment of PLN 10.5 mln in unpaid taxes.
In 2003, the Supreme Administration Court acquitted the company?s bosses and canceled the Treasury’s decision. A lengthy court battle pushed the company into bankruptcy, and in 2004 a bailiff seized control of its assets.
A consequence of the bankruptcy was the liquidation of a 40% stake by majority shareholder MCI Management for a mere PLN 45,000, a loss of almost PLN 10 mln in value. The fund sued the Treasury demanding retribution.
In April 2011, the Wroclaw appeals court finally awarded MCI Management PLN 46.5 mln in damages.
The incident could be seen as a typical example of contradictions innate in the Polish legal system. According to MCI, it was acting in accord with Polish law, but the Treasury takes a different view.
What will happen of the fund’s retribution remains to be seen, but the 12-year-long trial may indicate that some time will pass before the fund hears a verdict.