By: Sara Kovač / Moja Dolenjska
At the request of the coalition parties SDS, NSi and SMC, the 63rd extraordinary session of the Committee on Finance was convened recently to discuss the largest financial fiasco in the history of Slovenia, which happened in 2013 and 2014 and was caused by the government of Alenka Bratušek, which made the decision to expropriate more than 100 thousand owners of private capital, worth almost a billion euros. In the autumn of 2016, the Constitutional Court found that the expropriated persons did not have the possibility of using an effective legal remedy after bank deletions, and the European Court of Human Rights came to the same conclusion in September this year.
SDS MP Jure Ferjan highlighted the events that took place in 2013 and 2014, when the Bank of Slovenia issued decisions on emergency measures to the NLB, NKBM, Abanka Vipa, Banka Celje, Probanka and Factor Banka banks, on the basis of the Banking Act, prepared by the government of Alenka Bratušek. This is how shares, hybrid instruments and bank subordinated bonds were deleted, which caused financial damage to more than 100 thousand bank shareholders and more than 1,600 subordinate bondholders, in the amount of almost 1 billion euros.
Ferjan: “At the time, politics was clearly aware of what it was doing – namely, that it would violate human rights.”
Ferjan was critical of the reaction of the SAB party leader, Alenka Bratušek, who said at the announcement of the European Court of Human Rights – that the expropriated persons did not have the option of using an effective legal remedy after the bank deletion – that she expected this outcome. According to Ferjan, this proves that “at the time, politics was clearly aware of what it was doing – namely, that it would violate human rights.” Ferjan advocated that the injustices caused to the holders of the subordinated debt be eliminated as soon as possible. “A right, for which you have to wait for an unreasonably long time, is no longer a right, but an injustice,” he pointed out.
According to NSi MP Aleksander Reberšek, the damage caused to the holders of qualified liabilities of the bank, in the total amount of 960 million euros, to which interest must also be added, represents a serious threat to public finances in the future. Reberšek said that this amount of money could have been spent in much better ways – for example, the pensions could have been temporarily increased, or it could have been spent “on a more substantial increase in the salaries of doctors and nurses who are on the brink of burnout and are leaving our country,” Slovenian Press Agency reports.
Maja Hostnik Kališek, State Secretary at the Ministry of Finance, also pointed out that the European Court of Human Rights recognised the non-pecuniary damage and costs of proceedings, but not pecuniary damage (this will be decided by a court in Slovenia). However, she added that the problem is that the Act on Judicial Protection Procedure for Former Holders of Eligible Liabilities of Banks, on the basis of which this procedure will be conducted, is currently being assessed by the Constitutional Court. The ministry expects that the assessment of the constitutionality of the act will be finished within a reasonable time. If any changes to the legislation are needed after the assessment, they will start working on them immediately.
The director of the legal department of the Bank of Slovenia, Jurij Žitko, also called for the disputes to be settled as soon as possible. He also advocated finding solutions before the start of court proceedings; otherwise, the proceedings will last even longer and be even more expensive. Accordingly, a group of experts, including ones in the field of EU law, has already been set up to contribute to the design of an appropriate basis for timely legislative solutions, Žitko said.
Bratušek once again talked about how the troika was called, while they “rolled up their sleeves and got to work”
When former Prime Minister Alenka Bratušek took the stage, whose government was being criticised at the extraordinary session, she reiterated that the European Court of Human Rights, “just like the Constitutional Court, found that all measures, including the erasure, are in accordance with the Constitution.” However, she acknowledged that it was true that the holders of the deleted bonds did not have any judicial protection. The former Prime Minister said, among other things, that in 2013 the country was “in ruins, collapsed, on its knees, the money that was left in the budget would have only sufficed for three more months.” “While you called the troika, the foreign troika, while you were slandering the country abroad, talking about how we would fail and would go bankrupt, we rolled up our sleeves and got to work, trying to salvage the situation,” she added.
At the session, Bratušek also said that the bank hole was mostly created in the years 2005, 2006 and 2007, when the country was led by the SDS, NSi, and DeSUS parties. According to her, the main reason for it is the poor management of companies (including the state-owned ones) and banks. She also claimed that the Janša government supposedly appointed bank supervisors at its meetings, and then she listed certain companies that caused more than 550 million euros in financial holes. Among the companies on the list were also those that are supposedly friends and supporters of the NSi party.
Money from the European Stability Mechanism was significantly cheaper
In 2013, Bratušek, accompanied by the then-Minister of Finance, Uroš Čufer, said at the appointment of the new Governor of the Bank of Slovenia, Boštjan Jazbec, in July 2013: “All three of us, our troika, believe and are determined that we will be able to solve our problems alone, without the help of the second and the next troika.” With this, she further confirmed a statement that she had previously made in an interview with the American media house CNN, which resonated both at home and abroad – namely, that “We don’t need money, we just need time.”
Just like Alenka Bratušek, Čufer also kept telling the public that we do not need help from the European Stability Mechanism and that we could rehabilitate the banking system ourselves. Bratušek’s statements caused quite a stir both at home and abroad, as other European countries also asked the EU for help in rehabilitating their banking systems at the time. In order to determine the actual state of Slovenian banks, stress tests of banks began in the summer of 2013, on the basis of which the actual capital situation of the banking system would be clarified.
We should also point out that the money from the European Stability Mechanism was significantly cheaper than the money that Braušek then (additionally) rented on the international financial markets for the rehabilitation of banks. Interest rates also amounted to more than 7 percent, which was four times higher than what Slovenia could have obtained from the European fund. The condition for obtaining these funds was the establishment of the actual capital situation of the banking system in an individual country, which Bratušek prevented. She rescued tycoons, as well as Factor Bank and Probanka, which were privately owned, at the expense of the taxpayers. In 2013 and 2014, Slovenia borrowed almost 10 billion euros, and we paid almost a tenth of the annual state budget for interest, which amounted to around 900 million euros in a year.
Bratušek was on the supervisory board of the NKBM bank
In her response to the verdict, Bratušek talked about the robbery march, which created the banking hole, and shifted all the blame for the estimations of the costs and for the chosen method of rehabilitating the banking system on the Bank of Slovenia and the European Central Bank. It should be noted that Bratušek’s Minister of Finance, Franci Križanič, also appointed Bratušek to the supervisory board of the NKBM bank in the years from 2009 to 2011, where she actively participated in the creation of the banking hole or, in her words, participated in the “robbery march.”
The current coalition, which made the request to convene the session, proposed the adoption of three conclusions: “That the way the banking system was rehabilitated was inappropriate and detrimental to public finances; to urge the institutions to step up their efforts to identify perpetrators who caused or exploited the rehabilitation of the banking system for their own private interests, and to initiate appropriate proceedings against them, and task the Ministry of Finance with preparing an assessment of the costs of rehabilitating expropriated owners of bank securities and evaluating their impact on future fiscal policy.” However, the vote did not happen due to the adjournment of the session.