From Dubai With Love

While pengovsky was addressing the wider aspects of multiculturalism, a true human resource drama of nearly Shakespearian proportions was unravelling in Slovenia at the end of which Prime Minister Borut Pahor had to say goodbye to one of his closest coworkers, chief of staff Simona Dimic, who could (had this been a different James Bond spoof) rightly be called Pussy Galore on account of her looks. She was accused of corruption and abuse after it was revealed that she took out a EUR 350,000 loan with state-owned Nova Ljubljanska banka to renovate the house, that workers of the embattled construction company Vegrad worked on her project and even took materiel from a larger Vegrad’s construction site and, tangentially, that her partner’s tourist agency had a suspicious spike in turnover since the new government took over. The pressure was mounting and days later Dimic resigned from her post and reportedly took refuge from the media onslaught in Dubai, accompanied by her partner and their child.


Photoshop job by yours truly

The snowflake which started the avalanche was a loan of some 350k EUR which she took out with state-owned NLB to renovate a house she and her partner own in a plush Ljubljana neighbourhood Murgle. This was combined with claims that builders worked on the site incognito and were in fact employed by the embattled construction company Vegrad and that materiel for renovation was taken from one of Vegrad’s nearly-failed housing projects in Ljubljana. This was an explosive enough mix which – combined with some very clumsy PR, a couple of unanswered questions and a few inconsistencies – led to her resignation.

Vegrad and NLB

Vegrad probably deserves a post of its own, but to put in the context, suffice it to say that the company (which recently filed for bankruptcy) became one of the major players in the construction during the construction boom and undertook to build a large housing project in Ljubljana but went under because of if due to combination of the financial meltdown and some gross mismanagement of its CEO Hilda Tovšak (who, by the way, is on trial in the Operation Clean Shovel). As the company started its protracted and painful demise it turned out that wasn’t paying its already miserably underpaid workers, mostly foreign labourers from Bosnia.

With social injustice still (and rightly so) being magnum crimen in Slovenian society, this was and still is a huge story which boiled thrice over, to the point where everyone jumps at the mere mention of the company, almost regardless of the context.

Ditto for NLB, which still suffers from overexposure to bad loans, awarded to various politically or otherwise well connected managers and manager wannabes in the past few years. As a result NLB requires somewhere between 200 and 400 million EUR increase in capital, which will probably come in the form of taxpayer’s money. And since a 350k EUR loan is not peanuts – at least from the point of views of the “ordinary people” (an populist angle Slovenian media are increasingly covering all stories from) – a conclusion that was immediately made (or at least inferred) that the loan was granted without the usual scrutiny and that Vegrad was continuing it’s practice of exploiting its workers – all for beautification of a senior official’s crib.

… the fuck?

It looked bad from the beginning and it got only worse. For all her cunning, Dimic reacted badly and denied allegations but refused to offer further explanations thus only fuelling speculations further. At some point she sort of caved in and presented some documentation. But it was too little to late.

Fair’s fair and it must be said that while big, 350k EUR loan is not impossible. Yes, initially the bank will probably have refused or place some impossible conditions. But since a bank is not a supermarket where you just walk in and pick stuff from the shelf (not any more, that is), there’s always room for negotiations. Especially if your credit is more or less OK.

Furthermore, journalists always pressed Dimic whether it was Vegrad which renovated her house and she continuously denied that. But “Vegrad” is not the same as “Vegrad’s workers”. Pengovsky is not trying to unnecessarily defend anyone, but I can totally see a scenario where a worker or a subcontractor who went without pay for months, simply takes on another job and uses materiel and tools from Vegrad’s construction site to do a quickie somewhere else, cash on the nail. This is pure speculation, but it is somewhat corroborated with inconsistencies in Dimic’s later explanations where it transpired that a) her spouse signed a very loose contract with a small construction company to handle the project and b) there were some cash transactions, possibly to avoid paying taxes.

Escape to Dubai

But that was only the start of a very bad week. An old story about Escape travel agency was revived. This apparently somewhat obscure travel agency is owned by Dimic’s spouse (together with another partner) and is mostly selling Dubai destinations. According to media reports the company’s revenue sky-rocketed after the new government took over and Dimic became Pahor chief of staff, with various government ministries and bodies apparently buying airline tickets directly through Escape. Pegovsky can not say for a fact that there was anything illegal going on, but it does look unhealthy, no matter how you look at it. Especially since there’s a government-wide system for purchasing airline tickets where short-notice tenders are issued and travel agents then bid with the lowest price.

Anyways, point being that the media onslaught was such, that despite expressions of strong support by the PM himself Simona Dimic resigned from her post last Friday by ways of a tearful letter to the Prime Minister, thanking him for all that he’s done for her and the trust he had shown her, but added that it was all just too much and that she can’t take it anymore. The very next day she was on a plane to Dubai together with her son and spouse.

So, what was really going on?

Simona Dimic was one of Pahor’s closest advisers for the past twelve-or-so years, especially during his stint as a Member of the European Parliament. With his ascent to the premiership Pahor picked her as his chief of staff. Dimic was reportedly very effective in this powerful position. Some would say even too powerful, which was probably what caused her downfall. According to media reports her influence over who gets picked to various para-government positions was enormous, but little birdies tell pengovsky she increasingly had a say over various government policies. And with that she presumably overplayed her hand.

There are various competing theories as to what exactly happened:

1) Dimic has outlived her usefulness to Pahor and was starting to reach over his head.

2) The scandal was coalition-induced as a sort of revenge by other coalition parties and their leaders for the shit they had to go through, especially with Ultra Affair and Canine Scandal (Zares and LDS respecitvely)

3) It’s all Janez Janša’s doing, as a warning to PM Pahor that he too is vunerable and that Janša will do everything to destroy Pahor should the Patria Case proceed.

Let’s deal with No. 2 first, as it is highly unlikely. Neither Zares nor LDS at the moment have the capacity to launch a full-scale media offensive on the largest coalition party. In addition, this would require plenty of coordination on the highest levels of both parties, not to mention that it would all have to be planned during election campaign. However, it is highly likely, that all junior coalition parties and their leaders, Katarina Kresal of LDS, Gregor Golobič of Zares and Karl Erjavec of DeSUS just sat back and enjoyed the ride, since Pahor didn’t move as much as a muscle when each of them hit their respective badlands.

But Brutus is an honourable man…

Well, that’s not exactly true. What Pahor did each of those cases is to state very strong support for the embattled leaders of coalition parties. But there’s a twist. Each and every time Pahor publicly supported them but then left them out to dry. It is a shrewd tactic, not unlike what Shakespeare had Mark Anthony say in Julius Cesar but in this case serves mostly to save face and curb his political allies.

I’m not saying that Pahor initiated the whole thing, but if you will look closely, he – publicly at least – didn’t do much to help Dimic either (save the aforementioned expression of support) and not unlike Karl Erjavec of DeSUS she too buckled under pressure and resigned of her own free will, thus diverting at herself all the mud that was beginning to stick to the polished figure of the PM as well. Parallels with Erjavec’s protracted removal from ministry of environment are stunning, in fact.

If I wanted to kill you, you’d be dead by now

It was Virgil Sollozo who said that to Tom Hagen in The Godfather, but it is possible that the media onslaught was orchestrated by Janez Janša of SDS who has his ever increasing pile of elephant shit to deal with. The Patria Case is progressing and the prosecution just upped the ante, changing the indictment from “attempted bribery and corruption ” to “complicity in bribery and corruption” which is a notch or two more serious a charge. If we presume for a moment that the prosecution does in fact have a case, then Janša is probably worried sick. And if that is the case, then he might have just sent Pahor a message, basically saying “I can get to you”.

While we’re on the deep end of the conspiracy pool: in 2005 Pahor and Dimic were returning from Brussels by car and it caught fire in a tunnel on Ljubljana-Koper motorway. Officially foul play was excluded, but some people claimed that it was in fact an assassination attempt. It’s more or less a crack-pot theory, but I thought I’d mention it while we’re on the issue 😀

Wrap it up, will ya?

Regardless of what actually happened, even if it was just media sort-of-performing their role in society (although they get no marks for style and only average marks for technical excellence), bottom line is that the PM is now probably better off then he was a month ago, because he removed (or had removed) a powerful courtier whose ego started issuing cheques her body couldn’t cash (to quote another favourite film of mine). And in the final analysis the story was a welcome diversion, steering the public away from other, quite possibly more important issues.

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Lahovnik To Quit As Minister And MP (His Schwartz Just Ain’t Big Enough)


Lahovnik and Golobič while they were still on the same team (source)

Yesterday the government communication office released the infamous letter minister of economy Matej Lahovnik sent to Prime Minister Borut Pahor in which he detailed grievances against his former party boss and ministerial colleague Gregor Golobič. Lahovnik’s adios to Zares was not really a surprise, but the timing left a lot of people, yours truly included, a bit baffled. Pengovsky speculated on reasons why Lahovnik took the Fatboy Slim approach (right here, right now) and now it turns out that he thought his Schwartz was bigger than anyone else’s and he turned out to be dead wrong. As a result, he announced his resignation earlier today and even said that he will not re-take his position as MP.

The letter was widely expected to be a bomb-shell. It turned out to be a dud. Basically, Lahovnik complained that companies owned by or connected with Ultra (a company in which Gregor Golobič owns a 7% stake) applied for public tenders and such. Lahovnik’s main grievance – at least according to the letter – was the very fact that a company in which a sitting minister owns a stake runs for public funds. But the devil is – as always – in the details. Lahovnik goes on to write that in no instance (at least no instance which he detailed) did any of the companies win any tenders, but – and this is where he seems genuinely pissed – in one case the company files a lawsuit against his ministry for kicking it out of the tender.

Let’s be brutal. The fact that a company, where a sitting minister (or any other elected and/or public official) owns a stake,  no matter how small, runs for a public tender, is not entirely cricket. The world would be a much nicer place if these things didn’t happen. However, the Ultra issue was over and done with. At least on relation Golobič-> Zares-> Coalition-> Government (the opposition is still trying to keep the whole affair simmering on a low temperature).  If Lahovnik had a problem with that, he should have quit months ago.

From a legal point of view, however, there is nothing wrong with Ultra (or any other similar company) running for public funds. The law stipulates that a company where a public official and/or his immediate keen hold more than 20% stake cannot take part in public tenders. And if it does it anyway, it simply gets thrown out. Pengovsky should know, it happened once with The Firm™. No ifs, not buts, one simply gets a nice letter saying “Sorry, you can’t take part due to anti-corruption legislation”.

But Golobič’s share in Ultra is not above 20%. It is not even, say, 19.5%, which would imply that he is following the letter if not the spirit of the law. No, he holds a 7% share, which he apparently earned by working for the company and that’s it. There are scores of public officials which own various stakes in various companies. After all, we are running a sort of capitalism in Slovenia. But Lahovnik goes on to say, that he finds it hard to believe that Golobič would not use his influence to put Ultra at an unfair advantage vis-a-vis other companies running for tenders. That may be, but in all honesty, you don’t need to have a sitting minister among your stakeholders to better your business positions. All you need to do is know the right people.

However, as noted above, Ultra did not win any of the tenders Lahovnik takes issue with. So, not only was no law broken by Ultra running for tenders, even if pressure was brought to bear, the system worked and threw Ultra’s application out on merit. The fact that the company then filed a suit against Lahovnik’s ministry over it only reiterates the fact that the system worked, because seeking legal protection against what an applicant deems an unfair decision is perfectly normal. It is done by scores of companies practically on a weekly basis.

So, on the face of it it looks as if Lahovnik doesn’t really understand how the system works. Which is kind of hard to believe for a minister who runs a pretty important ministry and (among other things) gave thins country a electronic one-stop-shop system (e-VEM) for setting up your own company.

So, waddafuck is going on? It looks more and more that there was a clash between Lahovnik and Golobič. Either there was some sort of a leadership challenge (less likely, as Lahovnik reportedly refused taking over Zares) or – more likely – Lahovnik felt Golobič was pissing in his pool and wanted to put an end to it. Only he played his cards wrong and put an end to his political life (at least temporarily).

Namely. One area Lahovnik specifies in the letter is the energy sector. There’s a relatively huge debate going on right now in Slovenia whether to invest in Bloc 6 of Šoštanj Coal Power Plant (so called TEŠ6) or to start building the second reactor in Krško Nuclear Power Plant (known as NEK). Pengovsky says “both” and there seems to be a general consensus that Slovenia will need both investments in the mid-term, but the real question is which comes first. Lahovnik was very much in favour of TEŠ6, as it will replace the ageing blocs 3,4 and 5 and produce much less carbon dioxide to boot. However, since Šoštanj is part of Lahovnik’s electoral unit (constituency, if you will), this can also be seen as “bringing the bacon home“, to use an Americanism. Which would all be fine and dandy, had it not been for the fact that some dubious contracts were being signed for TEŠ6 even before the project started for real. I’m not saying that Lahovnik had a hand in this (he probably didn’t) and regardless of his feud with Golobič, energy still is Zares’ turf right now and if there’s a screw-up, Zares as a whole will take the blame anyway. But it seems probable that he felt he was being side-tracked and he took it personally.

The more pengovsky looks at this the more it seems as if Lahovnik only tried to do as much damage as possible and brought up the Ultra affair for no reason other than to hurt Golobič. But he took it too far and forced PM Pahor to choose between a seemingly competent minister and a whole coalition party. Pahor obviously knew where his priorities are and Lahovnik achieved nothing but maybe yet another dent in the government’s already ridiculously low ratings. As a result he really had no other option but to quit his post and PM Pahor undoubtedly told him that his credit just ran out.

This goes for his MP status as well. Upon quitting as minister he could have re-taken his MP seat as he was elected to the parliament first and made minister second. Thus he would have ousted Alojz Posedel of Zares, chipped off one sure vote for the coalition and would even help form a new parliamentary group “independent MPs”, as parliamentary Rules and Procedures specify three MPs are needed for establishing a specific group and there are already two independent MPs (Franci Žnidaršič and Vili Rezman who quit DeSUS months ago), all of which would probably weaken the coalition grip on parliamentary majority, if not immediately, definitely some time in the future.

However, Lahovnik was probably told in no unclear terms that he would be branded a political leper had he returned to the parliament and started stirring shit, so he is apparently returning to the Faculty of Economics from whence he came – and will possibly be awarded membership in one or two low-key supervisory boards somewhere out there. He might have thought he was doing a good thing, but in politics, just as in real life, the road to hell is paved with good intentions. Such is the nature of the beast.

Oh, and just a technicality. Some Slovene media erroneously report that Lahovnik’s function will cease tomorrow. Not entirely true. While he has already tendered his resignation, he will remain in office in a care-taker capacity until a new minister is appointed.

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