Poland's new Treasury Minister Resigns amid

UNCLAS SECTION 01 OF 02 WARSAW 000007

SIPDIS

Sensitive

STATE FOR EUR/NCE DAVID KOSTELANCIK AND MICHAEL SESSUMS
USDOC FOR 4232/ITA/MAC/EUR/JBURGESS, MWILSON, JKIMBALL
TREASURY FOR OASIA MATTHEW GAERTNER
FRANKFURT FOR TREASURY JIM WALLAR

E.O. 12958: N/A
TAGS: EFIN ECON PREL PL
SUBJECT: Poland's new Treasury Minister Resigns amid
Corruption Allegations

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

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SUMMARY AND INTRODUCTION
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1. (SBU) Begin Summary. On the evening of January 3, Prime
Minister Marcinkiewicz accepted the resignation of Treasury
Minister Andrzej Mikosz. Mikosz's resignation was forced by
an article published in the daily "Rzeczpospolita" detailing
a loan worth US $300,000 which Mikosz's wife gave to an
individual accused of shady dealings with a legendary
gangster and of illegal transactions on the Warsaw Stock
Exchange. The former minister failed to provide a
convincing answer as to why his wife lent the money, but
hinted that his resignation was the result of a massive
assault triggered by his privatization plans, which he said
put at risk the interests of some powerful players. PM
Marcinkiewicz announced that he expects to name a new
Treasury Minister within days. Rumors are also circulating
that Minister of Labor and Social Policy Michalkiewicz and
Minister of Finance Lubinska will also resign or be asked to
leave. End Summary.

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Rzeczpospolita Accuses Mikosz's Wife of Questionable Loan
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2. (U) According to an article in the daily
Rzeczpospolita, reported on its front page on January 3,
Krystyna Mikosz, the wife of Treasury minister Andrzej
Mikosz, in 2002 lent US$300,000 to the mother of Witold W.,
an investor who has had legal problems for over 10 years.
(Note: In Poland, suspects' initials, rather than their
surnames, are used to protect their innocence until found
guilty. Post has been unable to determine the investor's
surname. End note.) The funds were used by her son.
During an interrogation in 2003, the woman said she had no
idea where the money in her brokerage accounts came from.
Witold W. was the financial advisor to the deceased gangster
Nikodem Skotarczyk, known as "Nikos," and both are accused
of money laundering. Witold W. is also accused of
manipulating the share price of the company KOPEX, listed on
the Warsaw Stock Exchange.

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Marcinkiewicz Consults with President Kaczynski
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3. (U) PM Marcinkiewicz was reportedly reluctant to accept
Mikosz's resignation, but accepted it late in the day after
consulting with President Kaczynski. After accepting
Mikosz's resignation the PM said that "not even the
slightest shadow of doubt may hang over those who are to
implement the master plan of cleaning up all areas of public
life." Marcinkiewicz, in a TV interview, praised Mikosz
for his work at the Ministry and stated that he plans to
continue Mikosz's privatization strategy.

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Some Applaud while Others Bemoan Dismissal
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4. (U) Opposition parties welcomed the resignation, with
Civic Platform's (PO) Jan Rokita speculating that the Law
and Justice (PiS) leadership wanted to dismiss the minister
anyway. Rumors about Mikosz's dismissal began before
Christmas, with one of the reasons cited being his objection
to Unicredito taking over Bank BPH. (Note: Italian Bank
Unicredito is merging its subsidiary Pekao SA with BPH in a
deal that will create the largest bank in Poland. Mikosz
publicly opposed the deal, alleging that Unicredito breached
the Pekao privatization agreement. The deal has not been
finalized and is awaiting Banking Supervision approval.
Brokers believe the deal has a better chance of approval now
that Mikosz is gone. End note.)


5. (U) Commentators are divided on Mikosz's dismissal.
Some believe he had to go because of his murky contacts and
extensive business experience, while others regret his
dismissal, citing his technical expertise and liberal
economic approach. Supporters noted that Mikosz was a
minister with a vision and implementation plan, but was a
technocrat and not a politician, which hampered his
effectiveness. Mikosz's aggressive privatization plan,
which included continuing privatizations in the energy
sector, chemical sector, and coal industry, and his plans to
settle the long-standing Eureko-PZU dispute, while supported
by Marckinkiewicz, ran afoul of less market-oriented
politicians. A number of influential PiS and LPR members
publicly opposed Mikosz, including Jaroslaw Kaczynski, who
stated that if he were heading the government, Mikosz would
not be a part of it. According to Adam Szejnfeld (PO),
Mikosz's privatization plan did not go far enough for PO,
but went too far for the League of Polish Families (LPR).
Szejnfeld opined that Mikosz's successor will have a more
conservative approach to the market economy and
privatization process.

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Speculation about New Minister
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6. (U) PM Marcinkiewicz stated that he will name a new
Minister of Treasury within a few days. The next minister
will undoubtedly have a political background and support
within PiS. There is speculation that Wojciech Jasinski (a
PiS MP, head of the Sejm's public finance committee, and
known to be a Kaczynski ally) will take Mikosz's place.

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Who's Next?
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7. (U) Warsaw is rife with rumors that Mikosz is only the
first minister to go. According to press reports, Minister
of Labor and Social Policy Krzysztof Michalkiewicz plans to
submit his resignation within days. Finance Minister Teresa
Lubinska might be dismissed, but PM Marcinkiewicz refused to
comment on this during yesterday's press conference. The
rumor mill has PiS insider and Lubelskie region Voivoid
(governor) Adam Cichocki, tipped for Michaelkiewicz's
replacement, and former PO member and economic expert Zyta
Gilowska named as Lubinska's replacement. Gilowska has
denied the rumors.

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Comment
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8. (SBU) Minister of Treasury Mikosz's forced resignation
removes a technical expert with excellent economic and
business credentials from the Marcinkiewicz cabinet, but it
is too early to tell if this will hurt Marcinkiewicz
politically. Mikosz's privatization plan, while less
aggressive than some in Platforma would have liked, would
have speeded up the process - Mikosz was widely quoted as
saying that he wanted to be the last Minister of Treasury.
While Marcinkiewicz's assertion that the government will
follow Mikosz's plan is heartening, Post believes it
unlikely that PiS will be able to implement the plan absent
a new minister with stronger political support in PiS.
Hillas