The period covered in this chapter of the History of Corruption, 2013-2017, was defined in Slovakia by the one-colour government of Robert Fico. The skilful handling of the Gorilla case and the failure of political opponents brought the Směr-SD party a result that allowed it to govern independently. This fact, together with the Fico et al. cases from previous years, was met with increased attention by Slovakia’s international allies. Fico was aware of this and tried to look professional – he nominated non-party members to many ministerial positions. However, they often served as scrub and the real power was in the hands of a small group of politicians and their connected oligarchs. The period inevitably brought smaller and larger corruption scandals or suspicions.
Pavol Pavlis and his business
Pavol Pavlis – a business partner and acquaintance of Andrej Babiš, among others – became Minister of Economy. Pavlis did not stay in the ministerial chair for long. As we have reported elsewhere, he managed to approve massive state support for Babiš’s Duslo, but the biggest public criticism was directed at another event in his tenure.
The case involved a lawsuit by the company Port Services, where Pavlis was chairman of the board before entering politics, against the state he represented. It sought payment of EUR 60 million for the state’s allegedly discriminatory approach in the previous privatisation of the company Slovak Shipping and Ports.Pavlis denied any connection with the company, but it was impossible to discern who exactly was behind it. Its registered office was on the island of Curaçao off the coast of Venezuela.
Subsidies behind closed doors
Even impressive economic results and high profits did not prevent the company Duslo Šaľa from the Agrofert holding of Andrej Babiš from repeatedly threatening massive layoffs. The company has repeatedly done so and does so in every crisis, especially those related to the energy sector. High prices of energy inputs are objective for chemical companies, but it is forgotten that some of them exclusively privatise profits and socialise losses. And Andrej Babiš has been and is able to swim in this very well.
Duslo Šaľa achieved a pre-tax profit of EUR 50.3 million in 2015. Compared to the previous year, this was almost EUR 38 million more. It was the best result in the company’s history.
Even the good results from previous years did not mean that Duslo was able to achieve profit growth organically, as the government of Robert Fico approved a record subsidy of EUR 58 million in 2014, i.e. more than CZK 1.5 billion. The subsidy, in the form of tax breaks, went towards the inevitable modernisation that the company had been planning for a long time. Yet it was unwilling to finance it from previous profits. Both politicians and company officials defended the subsidy as a necessary compensation for unreasonably high gas prices. The company refused to describe the relief as a subsidy.
The circumstances of the granting of aid to the company have caused controversy. After several months of lobbying, support for Duslo was approved at the end of 2014 by the new Minister of Economy Pavol Pavlis, who had been involved in several companies with Andrej Babiš before taking office. Babiš and Pavlis sat on the boards of Port Service Bratislava and both come from the former Petrimex structures. The decision on the aid came just a few days after Pavlis’ predecessor, Tomáš Malatinský, resigned from his post as minister after refusing the subsidy for Duslo. The approval process also raised doubts. It was conducted quietly, and if it had not been for media warnings, no one might have known about the record state aid. The ruling Smer-SD party approved a legislative amendment that allowed it to discuss the matter only at the government level without discussion in parliament.
Babiš is also acquainted with Smer-SD MP Ivan Varga, who sat on the board of Biotika. The owner of Agrofert admitted that in 2006, when the popularity of Robert Fico’s ambitious new party was growing, he contributed to its running with a sponsorship donation. Slovak politicians, however, refused and the amount did not even appear in the party’s accounts. The donation to Duslo was not the last. In the following years it received millions more, and the same amount of 58 million euros was allocated to the company in 2023 by the fourth Fico government.
Broad paid out of taxpayer’s pockets
As we have already written in the passage devoted to the figure of Juraj Široký (see 1.9), the period of the one-colour government of the Smer-SD is also associated with a scandal in which the state decided to pay the debt of a private company owned by Široký from the state budget. The company in question was Váhostav. Politicians, like Široký, denied that Široký was behind Váhostav until the “anti-scams” law came into force, which forced them to admit the real owner of the company. Likewise, they denied his sponsorship of the Smer-SD party. Despite the fact that it was possible to discern from previous cases and leaked recordings that he was probably one of the shareholders of Fico’s project.
Váhostav has long overpriced public contracts for infrastructure construction. Nevertheless, it did not pay subcontractors and exported profits to tax havens. It ended up in debt and saved itself by restructuring. But this was itself controversial. It promised to pay most subcontractors only 15 per cent of their claims against Váhostav. To prevent hundreds of medium-sized construction companies and tradesmen from going under because of Váhostav, the state promised them a higher rate of payment, but from state money.
The state paid EUR 12.6 million for the rescue of Váhostav. As a sign of goodwill, the company returned almost two million to the state in 2018. The state even set up a company called Slovenská reštrukturalizačná to settle with Váhostav’s creditors. It is also known that only creditors to whom Váhostav owed a maximum of EUR 400 000 agreed to the restructuring. Dozens to hundreds of subcontractors declared that they would not enter into an unfair agreement with the State and would rather close their business.
Široký is also well known for his hockey. Back in the days when he managed the Harvard Funds, he took over the management of Slovan Harvard Bratislava, which also played in the prestigious Kontinental Hockey League. Široký was also the honorary president of the Slovak Ice Hockey Association.
During the first Fico government, Váhostav was awarded a state contract for the reconstruction of the Ondřej Nepela National Hockey Stadium in Bratislava. The state paid it almost one hundred million euros. This made the venue the most expensive ice rink per square metre in Europe. In addition, contrary to the original plans, Široký added a hotel as part of the contract, which he later took over for the most part. Thanks to the lucrative contract, he now has his DoubleTree by Hilton in the wider centre of the Slovak capital.
The situation has changed for the corruption environment in Slovakia with the definitive end of the golden calf called the National Property Fund. It was definitively abolished on 1 January 2016 with the signature of President Andrej Kiska. Some groups have thus lost the easiest opportunity to influence the sale of state property through their influence on a small group of management.
Shredded subsidies
The non-transparent distribution of business support is one of the most traditional mechanisms of corruption in the Czech Republic and Slovakia, which is difficult to distinguish and prove, and therefore also to investigate. Since the 1990s, loosely written legislation has given wide scope for officials and politicians to reciprocate business support. The link between a sponsorship donation, whether official or hidden, and support can only be proved with extreme labour.
This is also why “small houses” have been used in the region for years. From small projects by regional entrepreneurs to large subsidies for industrial giants. If the subsidy policy of some companies is already coming under criticism, there is an attempt to downplay the amount of support or even to cover up the traces of who decided on what basis and how.
In Slovakia, there is a flagrant case of this behaviour in the case of multi-year state subsidies for the ironworks in Košice. Whether it was the wild 1990s or more modern history.
Hundreds of millions in tax breaks, discounted energy or co-financing of corporate investments worth billions of crowns and hundreds of millions of dollars. All this has been forgotten in Slovakia as if by magic.
Neither U. S. Steel Košice nor its predecessors VSŽ, VSŽ U. S. Steel and VSŽ Ocel ever received any state aid. All the ministries involved calmly say so. “The Ministry of Economy of the Slovak Republic did not provide direct or indirect state aid to U. S. Steel Košice or its predecessors,” the Ministry of Economy of the Slovak Republic said in an official response to a request from Biztweet in 2016. It was a reply from Wonderland, and the portal continued to investigate how it is possible that the state does not keep any documents about the massive and often publicized subsidies.
Questions were directed at direct and indirect aid, including aid in the form of tax breaks or energy rebates. The question referred to the period since 1990, including the predecessor of the Ministry of Economic Affairs – the Ministry of Privatisation.
According to the Ministry of Finance and the Office of the Government of the Slovak Republic, it is the Ministry of Economy that is supposed to keep records of subsidies. Although the government itself voted on some of the subsidies, no official records were kept.
The reason for the ignorance of the government, the Ministry of Economy and the Ministry of Finance is the fact that documents on state aid do not exist in the archives. According to the findings, the documents were allegedly shredded. When asked why and on whose instructions the state destroyed documents on hundreds of millions of taxpayers’ euros, no one from the ministries and the government contacted answered.
Even after decades, the name of Štefan Harabin has not disappeared from the discussion of corruption. According to diplomatic cables published on the WikiLeaks server, Harabin was also behind the activities aimed at abolishing the Special Court, which is in charge of corruption and organised crime. In addition, the dispatches state that Harabin also proposed changes to the criminal code that would lower the rates for repeat offenders and limit the tools for prosecuting them.
Harabin lost his position as president of the Supreme Court in 2015, but he continued to serve as a judge in that institution. In 2024, he toured Slovakia with his next campaign for the presidency (he had run in the past, lost, but declared himself the winner). Peter Pellegrini won the election.
The environment that the Fico government has been building for years is also evident in a 2015 US State Department report, which described Slovakia as “a country of primary interest”. The State Department’s International Narcotics Control Strategy describes Slovakia as a country with “high levels of domestic and foreign organised crime, primarily originating in Eastern and Southeastern Europe.” According to the US document, Slovakia was a transit and destination country for counterfeit and smuggled goods, stolen cars, value-added tax fraud, human trafficking, arms and drugs. Organised crime was also involved in the laundering of the proceeds of these crimes .
Know Your Country, a website focused on global illicit financial flows, has identified Slovakia as a medium risk country, meaning there are concerns about its ability to independently investigate financial crimes and help other countries freeze the assets of potential criminals.
