Further Press Stories on Alleged Polish Bribery

UNCLAS WARSAW 000013

SIPDIS


Sensitive

STATE FOR EUR/NCE TARA ERATH AND MICHAEL SESSUMS
USDOC FOR 4232/ITA/MAC/EUR/JBURGESS AND MWILSON
TREASURY FOR OASIA MATTHEW GAERTNER AND ERIC MEYER
FRANKFURT FOR TREASURY JIM WALLAR

E.O. 12958: N/A
TAGS: EFIN ETRD PARM PREL PL
SUBJECT: Further Press Stories on Alleged Polish Bribery
Case

Ref: 2004 Warsaw 4013

(U) This cable is sensitive, but unclassified, and NOT for
Internet distribution.


1. (U) Summary: Polish papers continue to follow allegations
that a shadowy Polish tycoon, Marek Dochnal, bribed a
parliamentarian related to the privatization sale of a steel
mill. There are also allegations that Dochnal was involved
in the campaign by Russian companies to buy shares in
Poland's largest oil refinery. On December 21, the district
court in Lodz extended the term of Dochnal's detention by
three months to give prosecutors additional time to build
their case. While formal charges have yet to be filed,
parliament has lifted the immunity of the deputy whom
Dochnal allegedly bribed. End Summary


2. (U) Since his arrest in September for allegations of
bribery, Marek Dochnal has continued to attract considerable
attention in the Polish press. Polish prosecutors in Lodz
are still investigating his activities, but it has been
reported in the press that Dochnal bribed Andrzej Peczak, a
parliamentarian from the Social Democratic Left Party (SLD),
by giving him a Mercedes in exchange for information related
to the privatization of a Polish state-owned steel mill to
the Netherlands-Antilles based LNM company (reftel). Some
papers have also reported that Dochnal may have bribed
Peczak on behalf of a Russian client seeking to buy shares
in Poland's largest oil refinery, PKN Orlen. (There is an
ongoing parliamentary investigation into allegations that
Russian companies and their Polish agents distributed $80
million in bribes in pursuit of Orlen shares in what has
been dubbed "Orlengate.") Dochnal's spokesman has denied
all charges in interviews with the press, telling reporters
Dochnal "lent" Peczak the Mercedes.


3. (U) Prosecutors are also investigating allegations that
one of Dochnal's companies, Larchmont Capital Group, sought
to influence the privatization sale of PHS to LNM.
Larchmont earned substantial fees for its role in this
privatization (in which US Steel was an unsuccessful
bidder). Polish papers have also reported that Larchmont
was actively involved in a proposed sale of a second Polish
steel mill, Czestochowa, in which LNM and a Ukrainian
company were bidding. Polish papers have reported that
Dochnal was involved with LNM's Ukrainian competitor for the
sale, Donbas, in a conspiracy to rig the bidding to create
the impression of competition. An LNM spokesman told the
press the company "had no knowledge" of the allegations
against Dochnal.


4. (U) Meanwhile, Polish and British papers have reported
extensively on Dochnal's elaborate social connections,
having spent more than 5 million pounds over five years to
become a leading figure in British polo. Polish papers have
asserted that Dochnal pursued such social connections as a
way of gaining influence with top government leaders.


5. (SBU) Comment: We will continue to follow this case in
the press, although, for now, the primary impact seems to be
on the ongoing investigation into the commercial activities
of Poland's largest refinery, PKN Orlen. On December 21,
the district court in Lodz ruled that Dochnal would remain
in custody for a further three months to give prosecutors
more time to investigate the various aspects of this case.
We will watch carefully to see if Polish prosecutors file
any formal charges related to bribery of Polish officials on
behalf of foreign companies.

Ashe


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2005WARSAW00013 - Classification: UNCLASSIFIED