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NEWS
Democratic upgrade The IVO Barometer survey graded Slovak democracy at 2.6 for the first half of 2011. It marks an improvement, returning the score to the same level as in early 2008 when IVO released its first evaluation. pg 2 Judicial changes Justice Minister Lucia itansk wants to amend Slovakias constitution to ensure that one person cannot simultaneously fill the positions of Supreme Court president and head of the Judicial Council. pg 3

Vol. 17, No. 27

Monday, July 25, 2011 - Sunday, August 7, 2011

of this issue

FOCUS

Fifth audit attempt thwarted

Supreme Court again blocks government auditors, despite Constitutional Court ruling BY MICHAELA TERENZANI
Spectator staff
THE FINANCE Ministry has attempted for the fifth time in less than a year to conduct an audit of the finances of the Supreme Court. Even though the Constitutional Court imposed a large fine on tefan Harabin, the courts president, for refusing to allow the previous audit attempts, the fifth visit did not go any smoother. On July 15 auditors from the Finance Ministry were received by the administrative director of the Supreme Court, Jozef Kaffka, with the intention to start their review of the courts accounts, but Kaffka refused to allow the auditors to begin, stating that to do so would be a violation of law. Due to the existing legal obstacle, represented by the ruling of the Supreme Court of the Slovak Republic from April 28, 2011, which confirmed the ruling of the Bratislava Regional Court from January 18, 2011, it is not possible to carry out the audit, the Supreme Court wrote in a press release. In April 2011 the Supreme Court found in its own favour, ruling that the Finance Ministry was not authorised to audit it. Finance Ministry auditors made their first attempt to review the courts accounts on July 29, 2010 but Harabin refused to allow them to do so. Though he stated at that time that the court had nothing to hide, he has refused to permit each subsequent attempt by auditors to begin their work. Finance Minister Ivan Miklo said last year that Harabin may be abusing the independence granted to courts and judges by blocking the audit.
See COURT pg 3

OPINION
All mouth, no trousers If politics were nothing but a source of entertainment, then some current parliamentary deputies might be considered perfectly suited to their role in the political reality show. pg 5
Police director Jaroslav Spiiak was caught exceeding the speed limit by over 30 kilometres per hour. What Spiiak Photo: Sme called his biggest failure in office will cost him a heavy fine and loss of bonuses for the past six months.

BUSINESS FOCUS
Inclusive growth The challenge for any fastgrowing economy is to make the expansion more inclusive: so says Indian Ambassador Rajiva Misra, whose country is experiencing record growth. pg 6 Asian investment Slovakia is seeking to attract more Asian investment. There is already a significant group from Taiwan: will mainland Chinese firms follow? pg 8

Labour Code prompts strong reactions

THE PATH to create tens of thousands of new jobs has now been paved: this is how Labour Minister Jozef Mihl characterised the adoption of one of the most important pieces of legislation pursued by the government in 2011, its amendments to the Labour Code. Prime Minister Iveta Radiov quickly backed her ministers assessment and added that the amendment, which was still awaiting the signature of Slovak President Ivan Gaparovi as of July 21, could boost employment levels and improve employees certainty about their jobs. The legislation is more accommodating towards employees and their families and it protects those who need it, Radiov stated, in-

BY BEATA BALOGOV
Spectator staff
stantly attracting criticism from the head of the opposition Smer party, Robert Fico, who insisted that the changes weaken the legal protection of working people in times when they have to be protected. While associations of employers and one foreign chamber of commerce quickly saluted several positives they see in the new code that will bring more labour market flexibility, Slovakias trade union confederation maintained that the previous Labour Code, amended under Ficos government, should have remained unchanged.

CULTURE
Enjoying India Several Indian dance and other cultural events have toured Slovakia in recent years and the two countries have found they have a surprising amount in common. pg 6

The changes introduced by the amendment to the Labour Code, in a nutshell, include: cancellation of parallel entitlements for a layoff notice period and severance pay; longer periods for fixed-term employment, which now can be agreed for up to three years, with extensions or renewals allowed three times in a three-year period; a longer layoff notification period for employees with long service in the same job; and greater protection for mothers and pregnant women. The amendment also restricts the voice of a small union within a workplace and sets a 3-percent limit on the profit margin for companies selling meal vouchers.
See CODE pg 4

Code vote stirs emotions; deputy alleges graft

BY BEATA BALOGOV
Spectator staff
THE VOTE on the key legislation of the year, the revision to the Labour Code, stirred tensions within the ruling coalition and prompted a round of claim and counter-claim among parliamentary parties. The drama started before the vote itself, when deputies from the ruling Christian Democratic Movement (KDH) and the Slovak Democratic and Christian Union (SDK) blocked three out of four proposals tabled by independent MP Igor Matovi, who among other things had sought to change the code to give employees the option of choosing between meal vouchers and cash payments. Matovi at first threatened that his four-strong Ordinary People parliamentary faction all of whom, apart from Matovi himself, are members of the ruling Freedom and Solidarity (SaS) caucus would vote against the Labour Code amendment. But then on July 13 they all left the parliamentary chamber, allowing the bill to pass. If the four MPs had stayed and voted against it, the ruling coalition would not have had enough votes to push the bill through. The bill, which introduces significant changes to the Labour Code and which was last modified under the previous government, led by Robert Fico received the votes of 74 MPs on July 13, with 70 MPs voting against, and no abstentions. Smer boss Fico blamed Matovi and his Ordinary People for the passage of the legislation, which he said damaged the interests of employees. Fico said that the group had not acted in a principled manner by letting the bill pass and used real ordinary people to wipe their behinds even though they had stated they would withhold support if their particular demands were not met. In return Matovi suggested that the ruling coalition made an agreement with Smer and the Slovak National Party (SNS) so that they would remain in the hall, saying that if the opposition had left the hall, parliament would not have had a quorum: at least half of all MPs must be present for a law to pass.
See CLAIMS pg 2

SELECT FOREX RATES

benchmark as of July 21
HUNGARY JAPAN POLAND USA
HUF JPY PLN USD

CANADA CAD 1.34 CZECH REP. CZK 24.41 RUSSIA RUB 39.70 GREAT BRITAIN GBP 0.88

267.93 112.09 3.99 1.42

July 25 August 7, 2011

NEWS

Slovakia's democracy marks improve

BY MICHAELA TERENZANI Action on communist crimes required
DENYING the Holocaust or other crimes connected with fascism or communism should soon become a crime in Slovakia, with jail terms of between six months and three years, according to an amendment to the Criminal Code submitted by four legislators from the Civic Conservative Party (OKS), part of the Most-Hd caucus, which parliament passed on July 13, the TASR newswire reported. The point is to ensure that no one gets away with denying all sorts of atrocities committed by the communist and fascist regimes, OKS head Peter Zajac said, as quoted by TASR. The more time goes by, the stronger the tendency not only to forget but also to trivialise the terrible things that happened under fascism and communism. The initiative has garnered support from a number of MPs from the governing coalition, as well as Justice Minister Lucia itansk. We cannot only pick out good things from the past, Zajac said. We have to process the evil things within ourselves, as this is the only way of making sure they don't occur again. A similar amendment was passed by MPs in 2002 but then-president Rudolf Schuster vetoed it and parliament failed to override his veto.

Spectator staff
ALTHOUGH the overall standard of democracy in Slovakia might be improving, the authors of a project that evaluates it who come from the non-governmental Institute of Public Affairs (IVO) say there are several areas which can still be regarded as neuralgic. The Roma issue stands out as the most obvious example of these, they say. The IVO Barometer survey graded Slovak democracy at 2.6 for the first half of 2011 on a scale where 1 is excellent and 5 is failing. The 2.6 grade represented an improvement of 0.2 points in comparison with the score at the end of 2010. The overall rating has returned to the same level as in early 2008 when IVO eval-

remained unchanged in the area of minorities and human rights, Mesenikov pointed out.
Human and minority rights questioned

Roma issues were highlighted in the report.

Photo: T. Somogyi

uated the state of Slovak democracy for the first time. The improved grade suggests that a trend towards stabilisation of democratic institutions in Slovakia is continuing, IVO president Grigorij Mesenikov said. The IVO Barometer evaluates the quality of democracy in Slovakia on a quarterly

basis in four key areas: democratic institutions and a lawful state (which in this survey received a grade of 2.5); legislation (2.25); protection of and respect for human and minority rights (2.75); and media freedom and public-service media (2.75). We have improved the rating in three areas, but it

Mesenikov admitted that the authors of the barometer had difficulty deciding on the grade in the area of minorities and human rights, since several positive things had happened. The atmosphere has improved, for instance SlovakHungarian relations are not as neuralgic as they were during the government of Robert Fico, and to some extent also at the very beginning of the current governments rule, when some not-very-positive trends from the previous period were still resonating, Mesenikov said.
See IVO pg 9

Police chief caught speeding

POLICE CORPS president Jaroslav Spiiak was caught driving at 33 kilometres per hour over the speed limit between the municipalities of Baj and Pribeta in Komrno district on July 19. He was spotted speeding by a police patrol. Spiiak said he considered the offence to be his most significant failure since he entered office one year ago. Im sorry for this, Spiiak told a press conference, as quoted by the SITA newswire. I am trying to observe the rules. Im not arranging any favours for myself. Spiiak also added that he had no good reason for speeding at the time he was stopped by the police officers. He said he was glad that the public had been informed about his offence as he would now be punished publicly. Spiiak will undergo a disciplinary procedure and have to pay a fine, said Interior Minister Daniel Lipic, as reported by SITA. Lipic, as Spiiaks boss, will set the fine. The minister announced that Spiiak would not receive bonuses for the last six months as a result of the disciplinary procedure, although he would deserve it for his work, SITA quoted. The officers who caught him were commended for their actions. They were in a place which was assessed as one where they should be, Spiiak said, praising the police officers. They were measuring [vehicle] speed. They officially reported the case.

CLAIMS: Evidence not forthcoming

Continued from pg 1

Police resume search for Mello

THE SPECIAL Task Force Department of the General Prosecutors Office was granted an international arrest warrant for Karol Mello, an alleged mafia boss, by the Nitra District Court on July 15, the SITA newswire reported. Mello, who is accused of organising a 2004 gangland hit which left a woman and child dead, is currently on the run for a second time. He was arrested late last year in Poland after being sought by Slovak police for several years and extradited and charged. However, a series of legal bungles led to a Bratislava court ordering his release from custody earlier this year. Mello was later reported to have fled again, as a wrangle continued over which court, if any, was authorised to issue a warrant for his re-arrest. The police had been waiting for a warrant for Mello for weeks, but judges in Topoany, Nitra and Bratislava passed the prosecutors filing from one court to another. After the Nitra District Court agreed to issue the international arrest warrant, the police immediately announced they were searching for Mello, and asked the public to help with any information about a 180-cm-tall man with short brown hair. Justice Minister Lucia itansk has meanwhile filed a proposal for disciplinary action against the Bratislava I District Court judges who, she says, were responsible for Mellos earlier release, SITA reported.
Compiled by Spectator staff from press reports

Fico wants to have the Labour Code passed, because if it does not pass then he would not have a topic to scorn and would not have any agenda, Matovi said, as quoted by SITA. Both Smer and SNS denied having made any agreement with the ruling coalition. Nevertheless, Darina Mallov, head of the Department of Political Sciences at Comenius University, sees a compromise in the way Matovi acted during the vote, which allowed the code to pass. Political compromises are part of the politicians process of maturing, Mallov told The Slovak Spectator. He understood that he would have been left holding the baby if this very serious change had not gone through. The bill needs to be signed by President Ivan Gaparovi to become effective as planned on September 1, 2011. Members of the governing coalition have already expressed doubts whether Gaparovi will sign the bill into law. Mallov would not speculate on how Matovi might act if the president sends the code back to parliament, suggesting that he is a very unpredictable politician and hence very hard to read. He has small proposals on which he has built his agenda, Mallov said, adding that he can easily change his position.
The voucher spat

this was the case, Bugr said, as quoted by TASR. In the final version of the law, a proposal by SDK deputy udovt Kank was approved to limit the revenues of mealvoucher providers, which could mean their incomes will fall.
Corruption claims

Matovi accused the coalition parties of selling out, claiming they had promised to support his proposals but then let him down. He threatened that if two ruling coalition parties, namely the SDK and KDH, did not change their approach, his faction might not guarantee to support proposals produced by these parties in future. Matovi said, as quoted by the Sme daily, that some people will become very rich but did not explain what he meant, or provide any evidence to substantiate his suggestion of impropriety. In response to Matovis claim, Bla Bugr, the leader of ruling coalition party Most-Hd, said he did not think that deputies had been bought. I can imagine that there was some lobbying, but this is a harsh thing to say [that they were bought] and I dont think

Arguments over the Labour Code had not completely died down before Matovi pulled out another topic: partisan nominations to state positions. I am accusing of corruption all the political parties which gained more than 3 percent in the elections, Matovi said on July 18. He went on to claim that the parties are abusing their power to nominate appointees to public positions in order to reward their sponsors and people who have been distributing flyers for them; he stated that professional qualifications were not considered in the appointments. Matovi also alleged that after it promised to publish a list of political nominees, his faction has been threatened by one ruling coalition party. The party, he said, promised to support mass lawsuits against Ordinary People by named nominees. Matovi said he wants to publish a list of partisan nominations to state positions before the next regular session of parliament. The Ordinary People faction leader said that partisan nominations are in fact corrupt behaviour, adding that though the current coalition has been trying to combat what he called the brutal corruption that existed under the rule of Fico, the parties are still involved in the kind of corruption represented by political nominations, while trying to present it as normal practice, SITA reported. The co-ruling SDK has said that Matovi is in fact just promoting a new party that he is about to establish. Mr Matovi is a liar, said the deputy chairman of the KDH, Pavol Abrhan, pointing to Matovis claim made to journalists shortly after the parliamentary election that he had been offered millions of euros to destabilise the ruling coalition. When pressed for more information, he withdrew the claim, saying it was just a joke by a friend. Mallov said that statements by Matovi are quite serious because he is no longer just a man off the street.

Though at the beginning he presented himself as a man from the street who was interested in politics and public affairs, he is now a member of parliament and thus his words carry weight and he has received wide publicity that he otherwise would not have had, Mallov said. The other reason why his statements count is that as a deputy he has much better access to information than the majority of citizens, Mallov added. But she conceded: Whether he is trustworthy is a question one has to ask, adding that so far Matovi has provided no proof to support his statements. Mallov said that despite Matovis statement that political parties have been installing political nominees in state jobs, this has been happening for many years and it remains questionable whether it is really a form of corruption. Mallov said that he had to explain how parties were benefiting from their nominations. He posed some very serious questions; questioned all the political parties, but so far he has given very little evidence. As for Matovis impact, Mallov said that he has damaged the already low credibility of politicians as a whole. One of the messages from his statements is that all politicians in Slovakia are corrupt and he himself is an exception, said Mallov, who believes this is how Matovi wants to generate popularity. How wide his popularity will be depends on how he is able to prove his credibility, which so far is quite weak since he is providing little evidence to support his claims. The political parties have been defending partisan nominations. SaS told Sme that the party, when selecting nominees, carries political responsibility for them. As long as other criteria are met, such as expertise, we do nominate party members, SaS leader Richard Sulk said, as quoted by Sme. Sme reported on July 20 that since last years parliamentary elections the ruling coalition has replaced the heads of 50 district offices and almost the same number of heads of district labour offices. None of the jobs were subject to a competitive selection process; instead, the cabinet appointed people who had been nominated by ministers, Sme reported.

NEWS

July 25 August 7, 2011

Evaluation system proposed for judges

BY MICHAELA TERENZANI
Spectator staff
CHANGES in how Slovakias judiciary operates will continue to be pursued by Justice Minister Lucia itansk. After she was successful in getting amendments to the laws governing judges and prosecutors offices passed by parliament, she announced in early July that she will seek to amend Slovakias constitution to assure that one person cannot simultaneously fill the position of Supreme Court president and the chair of the countrys Judicial Council. Both posts are currently held by tefan Harabin. In addition she proposed that judges should receive regular evaluations of their work, conducted by three different evaluators. The main opposition party in parliament has already announced that its MPs will not support the first proposal, while Harabin has accused the justice minister of seeking personal revenge against him. But the idea of regular evaluations for judges may get a smoother ride in parliament. When Slovakias Judicial Council elected tefan Harabin, who at the time was justice minister, to the post of Supreme Court president on June 22, 2009, it also automatically made him the head of the council, which oversees the operation of all courts in Slovakia. At the time several nongovernmental organisations held protests in front of the Justice Ministry, where the Judicial Council was meeting, and the-then opposition

More white-collar fraud detected

The typical fraudster is a man holding a senior management position BY JANA LIPTKOV
Spectator staff
monly works in the procurement or sales departments. The finance department often plays the role of policing these areas. We most often register frauds leading to misappropriation of assets, embezzlement and other corrupt activities, said Kaeriak, adding that in other regions misstatement of financial results is more common. In this respect the CEE region bucks the global trend. Fewer frauds occur within the finance function, while most are committed within sales and procurement. In central and eastern Europe many multinational companies have tended to transfer trusted expatriate employees from the parent company into key financial positions at their subsidiaries in the region, to provide not only the necessary experience, but also to police the subsidiary from within the finance function, Jimmy Helm, KPMGs head of forensics in CEE, said, as quoted in the KPMG analysis. They act as whistleblowers, the initiators of investigations. Often they are further transferred from region to region as the company sets up new operations to ensure the ongoing integrity of the finance function. According to the KPMG findings, in eastern Europe some 89 percent of people investigated had been employed at the company in question for more than three years, of whom more than half had been employed for longer than six years. Fiftytwo percent of the frauds had been running for more than three years before they were detected, said Kaeriak. The results of the survey also showed that a typical fraudster does not work alone: in 61 percent of cases, the fraudster colluded with either an internal or external third party. The CEE cases followed this trend, with 63 percent involving collusion. This characteristic is further supported by a review of reported cases in Slovakia resulting in convictions, which indicates that there was collusion in more than 50 percent of cases. ubica Martauzov, a manager at KPMGs forensic services department in Slovakia, said that, interestingly, men have a far greater tendency to act in cooperation with somebody else than women.
Fraudsters motivations

More changes may come to Slovakia's courts.

Photo: Sme - T. Benedikovi

parties now mostly in government joined the criticism of Harabins selection. A year later the new government took power and the Movement for a Democratic Slovakia (HZDS), which had nominated Harabin to the justice ministry post, failed to make it into parliament. The incoming governments programme statement featured several bold changes that it would seek to make to Slovakias judicial system. The government pledged to amend the rules so that a person would no longer be able to switch immediately between posts in the judicial and executive branches. The four parties in the governing coalition also promised to exclude the heads and deputy heads of courts from holding posts in the judiciarys selfgoverning bodies and proposed to stop the same person

acting simultaneously as head of the Judicial Council and the Supreme Court by pursuing a constitutional proposal for the Supreme Court president not to be the chair of the Judicial Council. This change has now been proposed by Minister itansk, along with two further requirements: that votes taken by members of the Judicial Council be publicly recorded, and that the council publish information about the items it discusses. If the Judicial Council is to have any sense, these positions need to be separated, the minister said, as quoted by the SITA newswire. The separation of the two posts currently held by Harabin will require an amendment to Slovakias constitution and it does not seem likely that the justice minister will be able to find the 90 votes

needed in parliament to pass a constitutional amendment. MP Robert Madej, who serves as shadow justice minister for the opposition Smer party at least some of whose MPs votes would be needed to secure 90 votes in parliament said that his party will not support the amendment and believes it is a further politicisation of the judiciary. Its a fight against one person in the judiciary, which again betrays the coalitions frustration over Mr Harabin, Madej said, as quoted by SITA. He also stated that the current system, whereby the Supreme Court president also heads the Judicial Council, was introduced and promoted by the first government of Mikul Dzurinda from the Slovak Democratic and Christian Union (SDK) in 2001.
See JUDGES pg 5

COURT: Tussle continues with auditors

Continued from pg 1

If any other public official or minister acted like this, I would have submitted a proposal for his or her dismissal long ago, Miklo said after the first attempt, as quoted by the SITA newswire. tefan Harabin is using the fact that judges cannot be dismissed in this way. Harabin has repeatedly asserted that only the Supreme Audit Office (NK) wields the right to supervise the Supreme Court, alleging that an audit by the Finance Ministry would be politicised. Since then both the Justice Ministry and the Finance Ministry have been tussling with Harabin and the Supreme Court over the barred audits. The Finance Ministry imposed a 33,000 fine on the court, along with a 1,000 personal fine against Harabin, for hindering the auditors work. Harabin and Finance Minister Ivan Miklo also filed lawsuits against each others institutions. Justice Minister Lucia itansk then took action against Harabin by filing a

proposal with the Constitutional Court in November 2010 to launch a disciplinary proceeding against Harabin. She proposed the highest possible penalty against Harabin: a one-year, 70-percent reduction in salary. In response, the Supreme Court filed a criminal complaint against itansk for what it called suspicion of committing the crimes of abuse of power, intervening in the independence of the courts, libel and unauthorised use of personal data. In late June this year the Constitutional Court ruled on the Justice Ministrys disciplinary complaint and ordered a 70-percent reduction in Harabins salary for one year. The Constitutional Courts opinion stated that Harabin had violated his duties associated with management of the court, its financial control and internal audit by repeatedly making it impossible for the Finance Ministry to conduct an audit. The Constitutional Courts ruling cannot be appealed. Harabin responded to the Constitutional Courts ruling by stating that he perceived it to be politically-

motivated, arguing that it was punishment for his legal opinions. Other state institutions have voiced various opinions on the ongoing conflict. The General Prosecutors Office has stated that Harabin did not commit a crime by refusing to permit the Finance Ministers auditors to examine the courts accounts, while also dismissing a criminal motion filed by the Supreme Court against Miklo. Slovakias ombudsman, Pavel Kandr, has stated that Finance Ministry audits of expenditures at the Supreme Court had been a normal procedure in the past, conducted without any objection by the court. At the time The Slovak Spectator went to print it was not known what further steps the Finance Ministry might take in order to begin its audit of the Supreme Court. At this moment the Finance Ministry together with the Justice Ministry are considering what further steps to take, Patrcia Malecov epitkov from the Finance Ministrys communications department told The Slovak Spectator, adding that the Finance Ministry still intends to audit the Supreme Court.

ENIOR executives are committing more fraud, a survey by global consulting company KPMG has found. A comparison of the results of surveys from 2007 and 2011 indicates an increase in fraud and fraudulent behaviour by senior managers. The global survey by KPMG shows that CEOs were involved in 26 percent of cases, up from just 11 percent in the previous survey. The survey was based on the findings of fraud investigations conducted by KPMG member firms. One finding, identified as alarming by KPMG, is that companies are continuing to ignore warning signs of fraud. This, and the fact that more than one half of the investigated frauds had run for more than three years before they were detected, suggests that more white-collar fraud may emerge in the future. The KPMG study follows a 2007 analysis of fraudulent behaviour across Europe, the Middle East and Africa. Since that report proved so popular, KPMG extended the 2011 survey worldwide. KPMG sought to identify patterns among individuals who have committed acts of fraud and compared the value and duration, as well as many other characteristics. The 2011 survey is based on 348 cases investigated by KPMG across 69 countries, including Slovakia, between 2008 and 2010, covering the start and the main part of the recent financial and economic crisis.
The typical fraudster

The 2011 research found that the typical fraudster is a man aged between 36 and 45 who works in a finance or finance-related role, has been with the company in question for more than 10 years, and holds a senior management position. Often such individuals will be better placed to override controls and may have accumulated a good deal of personal trust. They are most likely to engage in embezzlement or procurement fraud. Viliam Kaeriak, a manager at KPMGs forensic services department in Slovakia that covers the central and eastern Europe (CEE) region, noted that in Slovakia the typical fraudster most com-

Martauzov explained that based on the theory of fraud, three basic preconditions must be fulfilled in order for a fraud to be committed: pressure, opportunity and rationalisation.
See CON pg 9

July 25 August 7, 2011

BUSINESS

CODE: Unions mourn for old rules

Continued from pg 1

State changes investment aid rules

THE RULES that Slovakia will use when providing investment assistance to firms will change based on an amendment to the Act on Investment Assistance signed by President Ivan Gaparovi on July 18. The conditions and limits for receiving investment assistance from the state will vary among Slovakias eight regions so that the state assistance supports more job creation in regions with high unemployment and focuses more on investments with higher added value, the TASR newswire reported. Economy Minister Juraj Mikov, who proposed the changes, said that assistance will be aimed particularly at eastern Slovakia and to the ilina and the Bansk Bystrica Regions, stating that, an investor will have no chance of getting investment assistance in Bratislava, as quoted by TASR. The amendment also reduces by half the minimum level of investment required to seek state financial support. The ministry believes this will broaden the range of firms that are eligible. The states investment support will typically be provided only in the form of tax relief. We dont want to give investors money, Mikov said. After all, we dont have much of it in the budget. The maximum period for receiving assistance was also increased from five years to ten years.

The revision also removes a restriction on longer overtime hours; eases drawing of compensatory leave; sets lower premium payments for overtime work and allows more night shifts; mandates a longer probationary period for managers; establishes five weeks of annual holiday for employees aged 33 and older; eliminates special advantages held by state managers; and gives the go-ahead for employers to share one work position among two or more employees. Six different minimum salary or wage levels are continued in the Labour Code, based on the nature of the job and its qualifications. The amended code requires that at least 30 percent of employees in a particular firm must be members of a union for it to have the right to negotiate on their behalf.
Employers reactions

have asked President Gaparovi not to sign the bill into law and have also requested MPs to challenge the legislation before the Constitutional Court. KOZ has also written to the International Labour Organization and to the European Trade Confederation, requesting assistance from them.
More changes needed?

Parliament amended the Labour Code on July 13.

Photo: SITA

EU banks' stress-test results released

MOST European banking groups that have affiliate operations in Slovakia are sufficiently capitalised to withstand macroeconomic turmoil, according to the results of EU stress tests that were released on July 15 by the European Banking Authority (EBA), the SITA newswire reported. sterreichische Volksbanken AG of Austria, active in Slovakia via Volksbank Slovensko, was the only bank with operations in Slovakia that was among the seven banking groups whose core Tier 1 capital ratio fell below the 5-percent minimum required by the EBA. Regarding the results of the stress tests, the appropriate Austrian bodies have taken necessary steps, the Finance Ministry stated, as quoted by SITA. Although Volksbank Slovensko, the Slovak arm of the [sterreichische Volksbanken] banking group was included in the tests only indirectly and although the results do not require intervention on the part of the Slovak authorities, the National Bank of Slovakia (NBS) will closely watch the situation at the bank. Fourteen Slovak banks, including eight that were indirect participants in the EU-wide stress tests, underwent a national stress test based on individual scenarios and methodologies earlier this year. The outcome of tests carried out by the NBS has proved the resilience of the Slovak banking sector against adverse macroeconomic scenarios as well as the sectors stability, the Finance Ministry wrote in a statement, SITA reported.

Unemployment rate rises to 13 pct

THE UNEMPLOYMENT rate in Slovakia grew from 12.84 percent in May to 12.98 percent in June and was 0.46 percentage points higher than last year, the Central Office of Labour, Social Affairs and Family (PSVaR) reported on July 20, according to the TASR newswire. A slight year-on-year drop in the number of longterm unemployed was recorded from 48.6 percent to 48.2 percent of all unemployed. PSVaR said this was mainly due to 6,696 jobs opening in seasonal work and in anti-flood projects. PSVaR added that the unemployment rate was affected by university graduates and school-leavers entering the labour force. Around 7 percent of registered job applicants (or 27,000) were new entrants from this group and their numbers accounted for a 0.5 percentage point monthly increase in the unemployment rate according to PSVaR. Slovak job centres reported 9,078 vacancies in June, an increase of 34 percent from the number available a year ago. This indicates a gradual revival in the labour market in Slovakia, PSVaR stated, as quoted by TASR. The number of recipients of unemployment benefit stagnated in June. The social security provider Socilna Poisova paid out the benefit to 43,300 individuals in June this year, the same figure as in the previous month.
Compiled by Spectator staff from press reports

Robert Kiina, the head of the Business Alliance of Slovakia, agreed with the government that the modifications will help create new jobs. It is enough to take a look at countries with [more] flexible labour codes, for example Switzerland, Denmark, Sweden, Great Britain, Australia, and New Zealand and to see that long-term unemployment has been kept at a rather lower level, somewhere around 6 percent, Kiina told The Slovak Spectator. Markus Halt of the German-Slovak Chamber of Commerce said that German investors will appreciate the new code and view it as a step in the right direction. The new regulation increases flexibility in the labour market that is crucial for attracting foreign investment, Halt told The Slovak Spectator. Some of our major requests have been realised, such as making working times more flexible, by providing a longterm legal basis for [working] time accounts, the so-called flexi-accounts that help companies in dealing with fluctuations in their orders. Halt praised the abolition of parallel entitlements for advance layoff notification and severance pay, saying it had served as a barrier to employment, as well as the introduction of a statutory basis for non-competition clauses for managers and specialists, a concept that is common in Germany and Austria, as well as in the Czech Republic since last year. Kiina also listed elimination of the parallel notice period and severance pay as a positive change, along with reducing severance pay after layoffs from 6 months salary to a maximum of 3 months, as well as making layoffs easier when a firm finds itself in financial trouble. I also positively assess the weakening of the managerial

authority of labour unions, the introduction of the flexi-account, longer probationary periods for managers and more flexible working time, Kiina told The Slovak Spectator. Jn Oravec, president of the Entrepreneurs Association of Slovakia (ZPS), told The Slovak Spectator that he evaluates the revision to the Labour Code as a mixture of measures that will moderately increase labour market flexibility in certain areas but also will be accommodating to the needs of employees as well. However, the revision to the Labour Code, with its cautious nature, is a disappointment for everyone who had expected that it would contribute to the acceleration of growth in Slovakias economy, Oravec said. The Federation of Employers' Associations (AZZZ) said it agreed in principle with Mihls assessment of job creation, while adding that cancelling the parallel entitlement for layoff notice and severance pay is one of the most beneficial changes, along with shared job positions, more flexibility in fixed-term employment contracts, and extending the use of the flexi-account. But AZZZ believes that preserving a minimum wage in Slovakia might have a negative impact on the business environment. In principle, the adopted changes to the Labour Code can be evaluated positively from our point of view; however, the code does not contain all the necessary measures we proposed, Miriam pnikov, spokeswoman for AZZZ, told The Slovak Spectator, adding that it could have been more decisive in order to help increase employment.
Unions reactions

In response to Mihls assertion of more jobs flowing from adoption of the revised Labour Code, Otto Ewiak, the spokesman for Slovakias Confederation of Trade Unions (KOZ), said employment does not hinge exclusively on the provisions of the Labour Code. Substantive reasons for the high unemployment rate are the weak enforceability of the law and corruption, as well as the course of public procurement and financial flows in which a negative role is

played by firms' secondary insolvency, Ewiak told The Slovak Spectator. A shortened [layoff] notice period or multiple fixed-term contracts or other tricks reducing the protection of employees and restricting the rights of trade unions will not solve it [unemployment]. Ewiak said that permitting an employer to sign repeated fixed-term contracts with an employee does not mean that the employer will boost employment and said it will only cut the employers expenses and increase its profit while keeping employees tense. The revision to the Labour Code does not create a balanced relationship between an employer and an employee that is what we are criticising, Ewiak said, adding that the unions did not want any changes in the law. Ewiak said the previous code was balanced and the unions sought to protect it from being completely stripped by the government and employers, who he said are now suggesting that the modified law still does not completely suit them. Though minimum wages have been preserved, Ewiak listed many changes that the unions do not agree with, such as reducing employee rights in the event of mass layoffs and the multiple signing of fixedterm contracts. The end of parallel entitlement to layoff notice and severance pay and what KOZ calls more limited protection of employees during layoffs are on the confederations black list. The increased number of weekly work hours and the required overtime work is at odds with balancing work and family life and also has a negative impact on employment, Ewiak stated. Ewiak said the changes in the Labour Code will increase employers flexibility but do so at the expense of employees security. The measures that limit the rights of unions are unacceptable, Ewiak added. He believes the new requirement that a union must prove that at least 30 percent of employees in any workplace are members is at odds with Slovakias constitution and KOZ views it as an unjustified limitation on unions activities. Ewiak told The Slovak Spectator that the unions

Halt of the German-Slovak Chamber of Commerce sees room for some additional changes in the labour law. The government could have gone a step further, as some unfriendly rigidity remains in the labour market, Halt stated. Halt noted that Slovakias Labour Code does not permit termination of employees when they reach pensionable age, adding that in Germany and Austria an employment contract automatically ends at that time, arguing that not mandating this in Slovakia hinders the employment opportunities of younger employees. Wage compensation that courts can order is too high under the new rules, too, Halt said. Due to the long [legal] proceedings in Slovakia this may lead to unjustifiably high severance payments in practice. While Halt noted that the declared aim of the changes was to make the labour market more flexible and to reduce costs for employers so as to stimulate employment, he sees some contradictions in the amendment. It seems questionable, however, as at the same time these cost reductions are partially offset by increasing the holiday entitlement for younger employees and tightening the minimum wage requirements, Halt stated. Kiina identified the multiple minimum wage levels as a hurdle to business, viewing it as a needless complication in hiring qualified employees. In developed EU countries there is only a basic minimum wage and everything else is defined by the demand and supply in the labour market, which is better suited to determine wages than a legislator, Kiina told The Slovak Spectator. Oravec as well is critical of the six different minimum wage levels and noted that ending this was one of the 16 demands by employers that were accepted by the government but that parliament refused to approve this change. We do not expect further change to the Labour Code in this election term, thus the room for its further improvement is minimal, Oravec told The Slovak Spectator, adding that other changes are still possible through modifications of other labour-related legislation such as workplace safety and health regulations.

OPINION / NEWS
QUOTE OF THE WEEK:
Nobody doubts what Ordinary People did with ordinary people. They wiped their behinds with them. Smer leader Robert Fico comments on the Ordinary People factions conduct in the Labour Code vote. IF POLITICS were nothing but a source of entertainment, and if the only harm its gallery of weirdos could potentially do to their audience was to serve up indigestible mental junk food, then some current parliamentary deputies might be considered perfectly suited to their role in the political reality show. But parliaments have an incomparably weightier impact on the audience than just deforming their sense of aesthetics or cultural values. This does not stop some people, the political Narcissuses, from treating the chamber as an outlet for their surges of self-importance, all the while observing their own image reflected in the eyes of their voters, in different poses, statements and calls. The people who voted Igor Matovi and his Ordinary People faction into parliament on the slate of Freedom and Solidarity (SaS) party may have hoped they were opening the gates to a new generation of politicians who would stand for principled, reasonable and fair politics, intended to benefit the public and not exclusively those who somehow managed to get inside the political machinery. Yet anyone following Matovis brief career as an MP will by now be suffering serious doubts about him being the bringer of light to a system so vulnerable to cronyism and corruption. It is not that Matovi has not been talking the anticronyism talk. But he has done so in a way that has gradually exhausted his credibility. Without political credibility, seriousness and most importantly the demonstration of evidence, some assertion will remain merely bombastic statements seasoned by suspicions of populism and selfpromotion. I am accusing of corruption all the political parties which gained more than 3 percent in the elections, Matovi said recently, adding that the parties are abusing political positions so that they can reward their cronies, sponsors and people who have been distributing flyers for them, and stating that professional qualifications are not important. To make his story more credible, Matovi referred to what he called the district roads administration office. But this is an institution which, as the Sme daily pointed out, does not in fact exist. He was presumably referring to the roads administration authority of one of Slovakias eight regions. Strangely enough, Matovis outburst came after the ruling coalition failed to back his demand, made dur-

July 25 August 7, 2011

All mouth and no trousers?

ing the debate on the revision to the Labour Code, to replace the meal vouchers that employers currently provide to regular employees with cash. In response to the coalitions rejection, Matovi responded by suggesting that there had Matovi has adopted the approach of trying to buy his place in the media spotlight at any price, usually in the form of bombastic statements rather than weighty legislative proposals. Some say that given the fragile nature of the ruling coalition, Matovi, for whom it sometimes seems politics is a huge gaming room where he can try out different bids and risks while hoping for the largest possible gain with no fear of the consequences, in fact possesses more influence than he is able to handle or deserves. The price he has to pay, however, is that after a certain time not even his past voters will take him seriously. It could be that some information he throws into the public arena has some realistic basis, but given the style he has adopted, few will bother to check out whether what he is saying actually contains any serious revelations. While partisan nominations at all levels of state administration deserve a closer look, and though parties have promised to reduce nominations based on party affiliation, there are still armies of nominees administering various areas of public life. But the fact that Matovi has raised the issue means that little progress, if any, is likely to be made. Most recently, Matovi said that his group has faced threats from one of the ruling coalition parties following his promise to publish a list of political nominees and that the party in question says it would support mass lawsuits by nominees against Ordinary People. Matovi claims that political nominations represent corrupt behaviour. But what if most peoples response is only to say: Who said this? Matovi? Oh well

Zmena
BY LUK FILA Special to the Spectator
WHY DO police officers always come in pairs? So that there is one who can read and one who can write. The old Slovak joke now needs revision there should also be a third one, who can check your identity. The recent zmena (switch) which the justice system fell victim to is unique even by local standards. Sure, the country remembers attempts by criminals to pay someone to go and serve their sentence. But a criminal pretending to be his own brother and going to jail under the false name? That seems almost as surprising as the fact that in the age of fingerprints, DNA testing, and, not to for-

SLOVAK WORD

OF THE WEEK

get, photography, a former convict can spend eight months in prison before anyone notices that he is not who he says he is. Slovak police have in recent years had their share of

comic moments. Putting explosives on a flight to Dublin, letting a suspected thief escape through a hospital toilet window, or allowing an unsuspecting truck driver to unknowingly drive a substance crucial for the production of heroin across half of Europe and spend Christmas in a Turkish prison as a result: these are all admirable feats. But yes, the force does seem determined to push the limits ever higher. On the positive side, the News of the World scandal in Britain makes one realise that things are not necessarily much better abroad. The West is often used as a role model for Slovakia. And, on the whole, rightly so. But there are rare moments when it seems that one wouldnt gain much by switching.

EDITORIAL

BY BEATA BALOGOV
Spectator staff
been massive lobbying by the firms that currently distribute meal vouchers. Yet he did not turn to the police, thus repeating the pattern set during his many previous assertion. When Matovis name is mentioned, one immediately recalls how his parliamentary career began: with a claim made to journalists that he had been offered millions of euros to destabilise the fragile ruling coalition. When pressed for more information, he withdrew the claim, saying it was just a joke by a friend. Another incident which instantly recalls Matovi is the educational slap on the face he received from former Slovak National Party deputy chairwoman Anna Belousovov after he referred to her, in one of his newspaper pieces, by the disrespectful diminutive, Ana.

JUDGES: 'Excellent, good or fail' grades to be awarded

Continued from pg 3

Harabin reacted that he regarded itansks proposal as personal revenge against him. Its no reform, just personal political purges which result in prolonging judicial procedures, Harabin stated, as quoted by the TASR newswire.
Grades for judges

The proposed evaluation system for judges is a change that might have a chance of passing in parliament since many persons inside and outside government and the judiciary consider the current system to be non-functional. If judges want an individual approach to their work and if we want to do away with the simplification that an error of an individual judge is an error of all judges then we need to give the evaluation system real content and make the results accessible to the public, itansk stated as she set out her proposal. The Justice Ministry proposal would require evaluation of a judge every five years, with the judge receiving one of three grades: excellent, good, or fail. Receiving the fail grade would be regarded as a disciplinary offence. If a judge gets failing grades three times, consecutively or otherwise, he or she would be dismissed. Judges would receive points from three different evaluators: an evaluation committee created by the Judicial Council to evaluate the judges fluency and dig-

Justice Minister Lucia itansk

Photo: Sme - T. Benedikovi

J N PAL LO - Publisher

nity in leading court proceedings; by the president of the college of judges, who would evaluate statements of appellate courts and the judges compliance with judicial ethics; and the judges court president, who would primarily evaluate whether there had been unnecessary delays or procrastination. If a judge disagreed with the latter persons evaluation, he or she could turn to the Judicial Council to review the accuracy of the evaluation. Slovak judges appear to be split over the proposed evaluation system. While judges who are part of the For Open Justice initiative have said they agree with the

proposal, the Association of Judges of Slovakia has stated its opposition. There are judges among us who for a long time have been professionally proving that they should be excluded, Judge Katarna Javorkov from the For Open Justice initiative told the Sme daily. But Judge Dana Bystrianska from the Association of Judges of Slovakia fears that the evaluation system could be abused by judges' superiors, adding that judges are facing a work overload. They have more duties than their human powers are fit to bear, Bystrianska told Sme.

EDITORIAL
B E ATA B AL O G OV - Editor - In - Chief J AM E S THO M S O N - Assistant Editor D O NAL D S PATZ - Assistant Editor J ANA L IP TKOV - Staff Writer M IC H AE LA TER ENZANI - Staff Writer ZUZANA V IL IKOVS K - Staff Writer D O M INIK A UH R KOV - Staff Writer

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B EATA F OJ TKOV - Sales Executive M AR TINA M ATL KOV - PR and Marketing Manager M AR TA F UK AS OV - Advertising Assistant TO M K EL L EY - Circulation Manager
The Slovak Spectator is an independent newspaper published every Monday by The Rock, s.r.o. Subscriptions: Inquiries should be made to The Slovak Spectators business office at (+421-2) 59 233 300.
Printing: Petit Press a.s. Distribution: Interpress Slovakia s.r.o., Mediaprint-kapa s.r.o., Slovensk pota a.s. Mail Distribution: ABOPRESS. EV 544/08. 2010 The Rock, s.r.o. All rights reserved. Any reproduction in whole or in part without permission is prohibited by law. The authors of articles published in this issue, represented by the publisher, reserve the right to give their approval for reproducing and public transmission of articles marked The Slovak Spectator, as well as for the public circulation of reproductions of these articles, in compliance with the 33rd article and 1st paragraph of the Copyright Law. Media monitoring is provided by Newton, IT, SMA and Slovakia Online with the approval of the publisher. Advertising material contained herein is the responsibility of the advertiser and is not a written or implied sponsorship, endorsement or investigation of such commercial enterprises or ventures by The Slovak Spectator or The Rock s.r.o. ISSN 1335-9843. Address: The Rock, s.r.o., Lazaretsk 12, 811 08 Bratislava. IO: 313 86 237.

July 25 August 7, 2011

Slovakia seeks to boost its exports to India Indian and Slovak educational institutions partner up

INDIA
BUSINESS FOCUS
ent regions, which creates a challenge that needs to be addressed. A major challenge for us now is to make growth more inclusive. TSS: Regional disparities are among Slovakias problems and this small central European country has been asking the same question: how to make growth more inclusive? RM: I think the approach is twofold: one is when the weakest regions or groups get direct help from the government. In the past few years, a very successful employment generation programme in the rural areas, the Mahatma Gandhi Rural Employment Guarantee Scheme providing for minimum guaranteed employment to one member of each family below the poverty line, has been applied. People are paid for working on rural infrastructure: they create water facilities, digging wells, or they work on rural roads. Thus the state in some ways addresses rural employment and rural poverty while creating rural infrastructure. The second approach is when the government directs state funding into higher-priority sectors such as education or health. Over the longer term, growth will become broader only if the benefits of education and health spread to everyone. This is what we have been trying to do over the past few years, while a much higher percentage of governmental resources have been devoted to education, health and social issues.
See RM pg 11 The Taj Mahal in Agra, India.

Next issue:
BENELUX

Making growth inclusive

BY BEATA BALOGOV
Spectator staff
THE CHALLENGE for any fastgrowing economy is to make its growth more inclusive so that the disparities and gaps between regions, and between the rural and urban parts of countries, which growth often brings with it, can be bridged. So believes Rajiva Misra, Indias ambassador to Slovakia. Misra, who previously served in Croatia as the representative of his country of over a billion people and hundreds of languages and dialects, says that Slovakia has a distinct character, like that of an individual, and for him the description little big country is very apt. The Slovak Spectator spoke with Misra about Indias economic growth and the challenges it brings, about regional disparities, the potential for cooperation in the energy sector, and about the phenomenon of outsourcing, which continues to fascinate people. The Slovak Spectator (TSS): Economic growth in India has been averaging between 7 and 9 percent over the last five years, a pace of development which puts India among those countries with the fastest growth. What has been fuelling this growth and what challenges does it pose for your country? Rajiva Misra (RM): I think now we seem to be heading towards somewhere around 8.2 percent average growth for the years 2007-11, while we targeted 9 percent in our five-year plan. This marks a little slip-

Photo: Beata Balogov

Indian Ambassador Rajiva Misra

Photo: Jana Liptkov

page, but one could have not foreseen the global economic crisis, from which we did not come out completely unscathed. But yes, our economy has been doing pretty well. We attribute this growth to a number of things: in the early 1990s we carried out a series of fundamental economic reforms which have made the economy much freer and have integrated us into the global economy. We were able to free the entrepreneurial drive of Indian businesses, which had been held back by the previous model of development, the so-called mixed economy. It was clearly a fundamental move from which everything else flowed. As for Indias advantages, we have a large pool of collegeeducated, English-speaking people as well as a large number of students graduating from science-oriented faculties, which works to our benefit. We also have a considerable number of people graduating from managerial disciplines, accounting and information technologies. The focus on information technologies, which certainly

is one of our major strengths, has helped us to link with the global economy. Nevertheless, the economic momentum has become broader than just the IT sector and it has now spread to other sectors as well. TSS: Tuning the education system to meet the demands of business is a challenge that Slovakia has been facing as well. RM: In India, the availability of human resources to fit the needs of business was very helpful and it also pushed the education system to expand further. But now, due to our high growth rate, we are beginning to run into a scarcity of human resources with the right skills and the right education. We need to expand higher education and secondary education even further. So one of the challenges is to expand the base from which qualified human resources come. But the high growth rate has also brought deeper disparities, disparities between different sectors, between rural and urban India, differ-

India: General facts

Political system: parliamentary democracy Capital: New Delhi Total area: 3,287,263 square kilometres Population: 1.189 billion Principal languages: Hindi, English Currency: Indian rupee
Source: www.cia.gov/library

Indian institution in Slovakia

Embassy of India Ambassador: Rajiva Misra www.indianembassy.sk

India in Slovakia
India Club (India klub), Mlynroviova 24, Bratislava Slovak India Friendship Society (Spolonos Indicko slovenskho priatestva), Povask 49, Trenn www.slovindia.greenheart.sk Indian restaurants Ashoka, ivnostensk 2, Bratislava Bakchus Vinre (traditional Slovak cuisine complemented with Indian meals), Hlbok cesta 5, Bratislava, www.bakchus-vinaren.sk Delicious India, Aupark, Bratislava Petralka Shopping Palace, Bratislava Zlat Piesky Ganesh Utsav, Vysok 2A, Bratislava, www.ganesh.sk Gvinda, Obchodn 30, Bratislava, Pukinova 8, Koice Hlavn 70, Preov, www.govinda.sk Krishna, Botel Marina, Nbreie arm. gen. L. Svobodu, Bratislava, www.indickarestauracia.sk Sale of Indian food Namaste India, Dom techniky, kulttyho 1, Bratislava www.popy.sk Ayur Ganesh Medical Centre Ayurvedic Medical Centre Ayur Ganesh in Bratislava is the first centre of its kind in Slovakia, www.ayurganesh.sk
Compiled by Spectator staff

Enjoying India with all ones senses

BY ZUZANA VILIKOVSK
Spectator staff
QUITE different but still with some essential similarities: the cultures and traditions of India and Slovakia reveal some common points and several interesting facets that are attractive to people of both countries. Traditional genres that attract Slovak audiences are Indian classical and folk dances, classical-folk and pop music and movies, especially the renowned Bollywood-style production. But other aspects are popular as well: traditional yoga and Ayurveda and, of course, Indian cuisine, well-appreciated by many Slovaks. Several Indian dance events have been offered in Slovakia in recent years Bansk Bystrica, a visit by the Kathak Dance Troupe led by Vaswati Misra in Bratislava and ilina, the Kuchipudi Dance Troupe led by Yamini Reddy in Bratislava, and most recently a contemporary dance troupe led by Priyadarshini Shome performing in Bratislava in February. Folk dances from the Indian states of Punjab, Rajasthan and Orissa were also recently organised, the Indian Embassy in Slovakia told The Slovak Spectator, and an Indian classical Kuchipudi dance performance is planned for autumn 2011. In Koice, the Gauranga Festival 2011 was held on June 16 at the citys Lower Gate, offering classical Bharata Natyam Indian dance demonstrations, Kirtan and Bhajan traditional songs and mantras, Indian literature and traditional cuisine.
See MULTI pg 10

Scholarships to study in India

Indian universities and educational institutions are recognised the world over as seats of learning. For information about opportunities for Slovak students to get a scholarship in India, contact the embassy or go to: - University Grant Commission, www.ugc.ac.in - Association of Indian Universities, www.aiuweb.org - ICCR, www.iccrindia.net
Source: Embassy of India

Yamini Reddy

Photo: J. Liptkov

such as a performance by the Mohiniattam Dance Troupe led by Deepti Omchery Bhalla in Bratislava and

BUSINESS FOCUS

July 25 August 7, 2011

Prospects for cooperation

Many Indian investors are still unaware of Slovakias advantageous location in central Europe BY JANA LIPTKOV
Spectator staff
Koice Region. Similar opportunities could also be explored in the pharmaceuticals sector. When discussing how Indian investors regard the Slovak business environment, Puri said that they need to be made aware of the advantages resulting from the unique location of Slovakia in Europe. Its pro-business and proinvestment environment, political and economic stability, uniform flat-tax rate, relatively low labour costs in the EU, skilled manpower, growing infrastructure, strong macroeconomic fundamentals, EU intellectual property protection and large scale investments between 2000 and 2005 contribute to make Slovakia an attractive investment and business choice, Puri said. The large amount of foreign investment attracted by Slovakia between 2002 and 2008 has also opened up further opportunities.
Tourism

FOCUS shorts
Hopes for Indian car plants dashed
PLANS for the arrival of a new Indian car manufacturing plant in Slovakia have apparently fallen through, the Hospodrske Noviny daily wrote in late May. Daniela Pirelov, spokesperson for the Ministry of Economy, told the daily that the ministry has received no official application for support of the investment, nor do they have any information about any further plans. According to reports, plans for the Indian carmaker were solid last spring. The investment had been confirmed not only by the ministry, but also by the parent company of the carmaker, Vectra Group, the daily wrote. With a planned investment of about 60 million, the plant was projected to employ about 1,000 Slovaks in the manufacture of 20,000 to 30,000 electric cars annually near Bnovce nad Bebravou, where Vectra Group has a production unit. The daily also reported that plans by Chinese carmaker JAC to produce cars in Slovakia have failed as well. According to Rbert Kiina, the executive director of the Business Alliance of Slovakia (PAS): "Producing in Slovakia was apparently not advantageous enough given the higher production costs." He added that since the planned arrival of the carmaker was announced just prior to the parliamentary election, it might have been part of a pre-election campaign aimed at increasing the popularity of certain politicians who had claimed credit for the projects.

INDIA has approximately 200 times more inhabitants and is about 60 times larger than Slovakia. But in spite of this Goliath-David ratio, Slovakia could be an interesting partner for India. While it is one of the most populous countries in the world and is the fourth most important trading partner of Slovakia in Asia, both sides see a lot of as-yet untapped opportunities for further development of economic cooperation. Although we are a small country, with our strategic location in the heart of Europe we have lot to offer. We could become a gateway to Europe for you, Andrea Gulov, the deputy chief executive of the Slovak Investment and Trade Development Agency (SARIO), told potential investors in mid April during a visit to India. SARIO representatives were part of an official delegation accompanying Slovak Economy Minister Juraj Mikov and Defence Minister ubomr Galko on their trip to India. SARIO coorganised investment seminars during the trip to inform potential Indian investors about the business and investment environment in Slovakia. The scope of potential fields of cooperation is extensive, ranging from the defence industry through the energy sector including nuclear energy to car production, IT, and tourism. India, like Slovakia, sees room for the development of Indo-Slovak economic relations, saying their potential has not yet been realised. Slovakia was preoccupied in its neighbourhood till 2006, but we welcome the Slovak initiative to expand relations with India, R. K. Puri, counsellor at the Embassy of India in Bratislava, told The Slovak Spectator. We believe that there are many areas in which we could cooperate for mutual benefit. According to SARIO, some Indian entrepreneurs know Slovakia well since they are successfully doing business with local businesspeople. It cites Tanax, ArcelorMittal Slovakia, the daughter company of the steel giant, and K1 Engineering India Private as examples. There are also several Slovak firms successfully operating in India, for ex-

India's popularity as a travel destination is rising. Photo: AP/SITA

ample Slovak India Trading, which produces shoes and employs about 400 people. Even though Slovakia regards India as an interesting business partner, SARIO perceives current interest from the side of Indian investors in Slovakia as being very small. In the past we worked on some prospective Indian investments, of which the most interesting was the Apollo Tyres project, SARIO spokesman Richard Drer told The Slovak Spectator, adding that the investor opted for Hungary, but later abandoned the whole project. Plans for Indian carmaker Reva to set up shop here have not materialised either.
Trade with Asia keeps rising

Eva Sadovsk, an analyst with Potov Banka, told The Slovak Spectator that Asias exports to Slovakia make up almost one fifth of total imports, leaving Slovakias exports to Asian developing markets in the shade: the latter account for only one twentieth of Slovakias total. However, both figures keep growing and the outlook is promising. While goods imported from Asia to Slovakia make up 19 percent of Slovakias imports, exports from Slovakia to Asia account for only 5 percent, said Sadovsk. Thus exports from Slovakia remain in the shadow of imports. For example, during the first four months of 2011 imports from Asia exceeded exports by almost 2.4 billion. Imports from Asia to Slovakia rose 30 percent year-on-year during the first third of the year while exports rose by less than 13 percent. Sadovsk regards Asia as a promising destination for Slovak products. We can imagine that developing Asian countries might be very interesting consumers for Slovakia in the future and that the share of Slovakias exports to these economies might be even higher, Sadovsk commented. Slovakia currently has a negative trade balance with India and the mutual trade

between both countries is not reaching its full potential, Sadovsk said. During the first four months of 2011, Slovakia exported goods to India accounting for 0.1 percent of its total exports , while imports from India to Slovakia made up 0.4 percent. According to Puri, IndoSlovak bilateral trade grew by about 28 percent in 2010 compared to 2009, and stood at 232 million. There has been a dramatic growth of almost 60 percent in Indian exports to Slovakia, which stood at 50 million for the first three months of 2011 as compared to 31.3 million during the same period last year, Puri said. As regards Slovakias exports, India, being a large and open market, would welcome items such as machinery, chemicals, plastic materials, transport equipment, iron and steel, and pharmaceutical products. Puri also believes that the Slovak spa and wellness industry could offer business opportunities and tie-ups with the Indian Ayurveda health sector. There are opportunities for mutually beneficial business exchanges in sectors such as auto ancillaries and pharmaceuticals, especially the supply of Indian generic drugs which can help lower the costs of procurement of medicines by Slovakias public health system. In addition, trade growth in traditional sectors such as textiles, garments, leather goods, and others is also feasible. However, [as] Slovakia [is] a relatively small market, trade flows alone cannot add substance to our economic relationship, said Puri. It can attain higher levels if Indian companies can be persuaded to avail themselves of opportunities for using Slovakia as a regional hub to supply the larger EU markets and countries of the Eastern Partnership. Slovakia could also be a base for Indian information technology (IT) companies to provide IT services, using Indo-Slovak know-how and resources. According to Puri, some partnerships in the IT sector are already functioning in

Slovakia is an interesting destination and India would like more and more Indian tourists to travel to Slovakia. But according to Puri, there is a need for greater promotional efforts and for facilitation of visas, which require elaborate documentation. The beautiful landscape of Slovakia, the breathtaking High Tatras, the free-flowing Danube with its exotic tourist spots, historic monuments, spa resorts, and so on, should attract all types of tourists, said Puri. Spa tourism and fusion with Indian Ayurveda could also be an area of interest for tourists. The Embassy of India has noticed small groups of Indian tourists visiting Bratislava city centre, but these generally come as day trippers from the neighbouring city of Vienna. There is a need to broaden the horizon of Indian tourists by projecting famous Slovak tourist attractions, like its medieval castles and the High Tatras, to bridge the awareness gap, said Puri. For this, Slovak tour companies and operators could be encouraged to launch a publicity campaign to educate tourists and develop tour itineraries aimed at the Indian market. The embassy has been registering a steady increase in tourist traffic from Slovakia to India. It issued 1,231 tourist visas in 2008, increasing to 1,356 in 2009 and 1,572 in 2010. During the first half of 2011, we have so far issued 798 tourist visas, said Puri. The Embassy of India, which would like to see more Slovaks travelling to India, also provides and distributes informational material relating to tourism in India. It also participates in cultural events and charity bazaars, which is another channel to promote India as a tourist destination.

More Slovak exports to India sought

SLOVAKIA registered a negative trade balance of 89 million with India last year. While imports from India to Slovakia amounted to 160.83 million, Slovakias exports to India totalled 71.76 million. Slovakia has a highly negative balance in foreign trade with India which we want to change, the Slovak Ministry of Economy stated in mid April, as quoted by the TASR newswire. This is why it is important to focus especially on energy, mechanical engineering and the car industry, where Slovakia has a real chance to reduce the negative balance. Improvement of the negative trade balance as well as enhancement of trade and investment between Slovakia and India were aims of negotiations Slovak Economy Minister Juraj Mikov held during his meetings with representatives of the Indian government and businesses. Mikov reported that India sees room for cooperation in building small hydroelectric power stations since India has struggled with a shortage of electricity generating capacity. India is Slovakias fourth most important trading partner in Asia. Annual economic growth in India has been running at between 7 and 9 percent over the last five years, making the country one of the fastest growing economies in the world.

Aptech Europe partners with AV

APTECH Europe, the computer education centre that Aptech Limited of India launched in Bratislava, clinched a partnership with Akadmia Vzdelvania (AV), the largest and the oldest lifelong learning organisation in Slovakia in March, Aptech Europe wrote on its website. By doing so Akadmia Vzdelvania has extended its training programmes by adding a twoyear ACCP (Aptech Certified Computer Professional) course. ACCPs graduates can continue their studies at City University of Seattles campus in Bratislava and obtain a bachelor's degree. Partnering with AV is another step by Aptech Europe to increase the number of qualified IT workers in Slovakia. Owen Fernandes, director of Aptech Europe, welcomed the partnership as a way to offer top education and increase the competitiveness of people in the labour market, both in Bratislava and in other parts of the country, as Akadmia Vzdelvania operates 36 educational centres across Slovakia. Our company has just the right programme to bridge the gap between the practical needs of the IT segment and what academia offers, said Tom Bok, commercial director of Aptech Europe. Study at Aptech is an entry step for further university education, either in the form of daily or distance education around the world. In addition to its centre in Bratislava, Aptech Europe also opened a second ICT centre in Koice this April.
Compiled by Spectator staff from press reports

July 25 August 7, 2011

Plans announced for a Chinese business centre near Senec Slovak-Taiwanese Chamber of Commerce established

Attracting Asian funds

Asian firms see Slovakia as a gateway to Europe BY JANA LIPTKOV
Spectator staff
THERE IS now a global economy and neither large nor small countries can avoid this reality. Transportation systems of the 21st century have shortened distances, opening more and more global business opportunities and offering opportunities for intensive business contacts between even distant countries like China or Taiwan in Asia with Slovakia in Europe. These growing global interrelationships are attested to by the arrival of several major Taiwanese companies in Slovakia, by the establishment of a new Slovak-Taiwanese Chamber of Commerce as well as by plans to build a Chinese business centre in western Slovakia for the country to gain better access to Europe. Slovakia is the gateway to Europe for businesspersons from Taiwan and Taiwan serves Slovaks as the gateway to Asia, said MP Ivan tefanec, the head of the SlovakiaTaiwan Friendship Group in the Slovak Parliament, as he led a parliamentary delegation to Taiwan in March, as cited by the SITA newswire. The intensified business ties between Taiwan and Slovakia were also marked by the launch of the SlovakTaiwanese Chamber of Commerce in Slovakia in mid July. Its founding members include AU Optronics, Foxconn, Delta Electronics, Eson, China Airlines and Eva Air, all Taiwanbased companies, along with the Taipei Representative Office, the Slovakia-based representation of the Government of the Republic of China (Taiwan), the SITA newswire, and the Slovak Union for Small and Medium-Sized Businesses, the chamber wrote in a press release. The idea to launch a chamber of commerce emerged at the beginning of 2011, by which time investments by Taiwanese companies in Slovakia had reached a total of 450 million and had created thousands of jobs in Slovakia. The Taipei Representative Office, led by David Nan-Yang Lee, has been one of the promoters of this idea, while communication with the Slovakia-Taiwan parliament-

EAST ASIA
BUSINESS FOCUS
a European Chinese business centre near Senec in western Slovakia are in the works, with the aim to help Chinese businesses to better penetrate European markets. The plans foresee that by next year hundreds of Chinese companies from banks to carmakers could be clinching various trade deals at the business centre near Senec, the Hospodrske Noviny daily wrote. The centre will be the biggest in Europe and will create space for companies so that they can extend their contacts into the European market, said Vladislav Khabliev, the legal representative of UMC Slovakia, a TV producer, which is behind the project, as quoted by the daily. Khabliev said he had signed an agreement with Anhui Publishing Group, a Chinese financial company, in late June which could begin to draw companies to Slovakia, noting that the Bank of China, various manufacturers, warehouses and Chinese carmakers could be among them. Hospodrske Noviny wrote that the projects budget is 100 million and that the Chinese chose Senec in Slovakia because of its location, near to the borders of Hungary, Austria and the Czech Republic as well as to Vienna Airport. The centre is projected to cover 17 hectares and may consist of 300,000 square metres of office and exhibition space. The project will be developed by Ipec Group and construction may begin next year, the daily wrote. Slovak Economy Minister Mikov said last September that it is a pity that there are currently only a few Chinese investors in Slovakia at this time, with Lenovo being the best known. The ministry, as well as the Slovak Investment and Trade Development Agency (SARIO), noted that there is some interest from Chinese investors but Rbert imoni, SARIOs director, told the SITA newswire that attracting Chinese investments is not an easy task. SARIO spokesperson Richard Drer, told The Slovak Spectator that Chinese companies are currently interested in pursuing large infrastructure projects, for example highway construction, wastewater purification plants, energy projects, and the like. This is not an area in which SARIO primarily operates, Drer said. The Chinese expect that SARIO can offer them a specific project into which they can invest their money.

Next issue:
BENELUX

China: General facts

Official name: Peoples Republic of China (PRC) Political system: one-party state Capital: Beijing Total area: 9,596,961 square kilometres Population: 1.336 billion Principal language: Chinese Currency: renminbi (yuan)
Source: www.cia.gov/library

Chinese institution in Slovakia

Embassy of the Peoples Republic of China Ambassador: Gu Ziping www.cinskaambasada.sk

Taiwan: General facts

Official name: Republic of China (ROC) Political system: multi-party democracy Capital: Taipei Total area: 36,191 square kilometres Population: 23 million Languages: Mandarin (Chinese) Currency: new Taiwan dollar
Source: www.roc-taiwan.org

AU Optronics opened its plant in Trenn in June. Photo: Reuters

ary group led by tefanec helped in the process of forming the chamber. The main goals of the chamber are to represent Taiwanese businesses with investments in Slovakia, to help develop conditions for the arrival of new investors, and to interconnect small and medium-sized businesses in both countries so that Slovak companies can better establish themselves in the Asian market. There have been four large Taiwanese investments in Slovakia to date. As David NanYang Lee told the TA3 TV news channel on July 13, three of these firms are members of the Top 30 companies in Taiwan in 2010: Foxconn in Nitra is the biggest, followed by AU Optronics in Trenn and Delta Electronics in Dubnica nad Vhom. As large international companies with capital, technologies and know-how, NanYang Lee believes that if Slovakia offers a good investment environment these companies will extend their investments and draw other subcontractors to Slovakia. The Slovakia-Taiwan Friendship Group has operated within Slovakias parliament for three election terms and tefanec is serving a fifth year as chairman of the group. He explained to TA3 that he has actually been substituting for the executive branch in joint contacts as Slovakia and Taiwan do not have any official diplomatic contacts. We are trying with our laws to create a favourable environment for new investors in Slovakia as well as for our companies so that they can make investments in Taiwan, tefanec told TA3. tefanec stressed that Taiwanese companies have picked Slovakia, in many cases, as their first European destination for investment. AU Optronics Slovakia in Trenn is the most recent Taiwanese firm to invest in

Slovakia, with its production facility being ceremonially opened on June 28. AU Optronics, the thirdbiggest producer of liquid crystal display monitors in the world, expects to create 1,300 direct and 2,000 indirect jobs in Trenn, with around 1,500 employees to be recruited by the end of 2011. Around 2.4 million LCD modules and LCD TV sets are to be produced at the assembly plant every year, including all the associated metal and plastic parts. AU Optronics will invest more than 191.3 million over three years, the TASR newswire reported. As AU Optronicss major European production base, AU Optronics Slovakia is responsible for the manufacturing of large-sized LCD modules and assembly of TV sets, Lenka Wangov Klianov from the companys corporate communications division told The Slovak Spectator. Mass production started in May 2011, when the first shipment was delivered as well. Delta Electronics (Slovakia) announced an expansion of its production plant in Dubnica nad Vhom at the beginning of this year. We see expansion opportunities for the factory in Slovakia, Daniel E. Heri, managing director of Delta Electronics (Slovakia), told The Slovak Spectator in explaining the reason for expanding the plant. But we can only realise these new projects if we have more space and new equipment available. Delta Electronics plans to start construction within this quarter, with production in the new building planned for second quarter of 2012.
China coming to Senec

Taiwanese offices and organisations in Slovakia

Taipei Representative Office The Slovakia-based representation of the Government of the Republic of China (Taiwan) Representative: David Nan-yang Lee www.roc-taiwan.org/sk Slovak-Taiwanese Chamber of Commerce (established in July 2011)

Taiwanese companies in Slovakia

- AU Optronics (Slovakia), Trenn, www.auo.com - Delta Electronics (Slovakia), Dubnica nad Vhom, www.deltaelectronics.sk - Foxconn Slovakia, Nitra, www.foxconn.com Foxconn purchased its Nitra factory from the Japanese firm Sony in 2010
Compiled by Spectator staff

Trade with China is growing fast

SLOVAKIA regards China as a promising destination for Slovak exports. During the first four months of 2011 Slovakia exported goods worth almost 390 million to China, accounting for 2.2 percent of Slovakias total exports. Even though this share is growing each year, Slovakias exports to China lag behind imports, Eva Sadovsk, an analyst with Potov Banka, told The Slovak Spectator. Between January and April Slovakia imported goods from China worth 1.06 billion, making up 6 percent of Slovakias total imports. According to Sadovsk, expansion of Slovakia's exports to China will continue in the future.
Compiled by Spectator staff

Delta Electronics (Slovakia), s.r.o.

Priemyseln 4600/1 018 41 Dubnica nad Vhom Tel: +421 (0)42 4661-111 Email: dubnica.slovakia@delta-es.com www.deltaelectronics.sk
To provide innovative, clean and energy-ecient solutions for a better tomorrow
SP90595/1

The Chinese economy is expanding rapidly and Slovakia may become this countrys gateway to the rest of Europe. Slovak media reported in early July that plans to build

BUSINESS / NEWS

July 25 August 7, 2011

CON: 'Red flags' fail to ring alarm bells

Continued from pg 3

IVO: Confrontation seen

first half of 2011, mainly due to the improving effectiveness of the most important Among the positives he institutions in the political also mentioned the new Human Rights Council estab- system, reasons for concern remain, according to the lished on the initiative of surveys authors. Deputy Prime Minister for Human Rights and National Minorities Rudolf Chmel, but Institutional conflict said the cabinets refusal to establish a committee for the At the end of the monrights of non-heterosexual itored period symptoms of people as one of the advisory widespread institutional bodies to the council represconfrontation appeared in ented a negative developthe political arena in ment. Slovakia, the barometer reBut Roma problems that port states. This happened have accumulated over the for the first time since 1998 years are still not being and was connected with the solved in the way that we situation around the election would like to see, of the candidate for the post Mesenikov commented. of general prosecutor. Discrimination is not a Mesenikov noted that phenomenon of this halfsome symptoms of confrontyear, its a long-term ation between institutions phenomenon, Mesenikov were noticeable as early as in said, listing segregated late 2010, when a conflict schools and discriminatory arose between the Supreme practices in the labour marCourt and two ministries, ket as examples. What was the Justice Ministry and the new, and what Mesenikov Finance Ministry, after Susaid the barometer authors preme Court president found particularly disturbtefan Harabin refused to let ing, was the appearance of auditors from the Finance the use of the term Roma Ministry perform a financial criminality, which the auaudit at the court. That, thors consider to be a term however, touched only selecthat violates the principle of ted institutions and wasnt equal treatment. considered a widespread None of us doubts that problem. the law should be enforced In contrast, the current and that all citizens should problems surrounding the be required to obey the law, appointment of Jozef ent, Mesenikov said. But its who was elected by parliaimpossible not to consider ment to the post of general the fact that the problem of prosecutor, do represent a so-called Roma criminality problem which is affecting even appears in some docuthe whole political system, ments that serve as a basis the authors opined. for the creation of state We can see institutional policies. This is unacceptconfrontation between the able: it doesnt belong in the cabinet and the parliament vocabulary of a liberal on one side, and the presiddemocracy. ent and the Constitutional The term was used by Court on the other side, Milan Krajniak, an adviser to Mesenikov said, adding that Interior Minister Daniel the Constitutional Court and Lipic (both from the ChrisPresident Ivan Gaparovi tian Democratic Movement, have pulled in the opposite or KDH), who earlier this direction instead of mainyear presented a map of taining the principle of cocriminality which divides operation among the highest Roma communities around constitutional institutions Slovakia into categories: during the process of selectnon-problematic, occasioning the general prosecutor. ally problematic, and probI think this case relematic. vealed a lot about the activitAccording to the authors ies of political functionaries of the IVO Barometer, one of and the activities of the inthe problems is also that the stitutions within the consticabinet is divided over Roma tutional system, stated issues. They cited as an exMesenikov. ample the approach of In the ruling coalition Deputy Prime Minister there was a very unfortunate Chmel, which they said is development in its attempts different from the approach to nominate a candidate for of the Labour Ministry, the post. That could be seen which in turn is different as a failure of the ruling cofrom the Interior Ministrys alition, Mesenikov said. attitude. But the failure of the We consider the cabinet political parties in parliaan institution that should be ment can by no means serve using a unified approach, as an excuse for the inapproMesenikov said. Unfortupriate behaviour of some nately, we see that they are constitutional split significantly. And as functionaries, Mesenikov long as the differences persaid, referring to the fact that sist, our evaluation will rePresident Gaparovi is conmain critical. tinuing to refuse to appoint Despite the fact that in ent to his post. the area of democratic instiThe attitude of the prestutions and the rule of law ident is extraordinarily the grade improved in the inappropriate, he said.
Continued from pg 2

The latter is the most crucial component in most frauds, KPMG stated, saying that about 80 percent of the population are in the so-called grey zone, i.e. they would commit a fraud only when the above three preconditions are fulfilled and that at both ends of the population spectrum are small percentages of people who would never commit a fraud or would commit a fraud every time they have the opportunity. Rationalisation means that the person must be able to justify in his or her own mind the fraudulent behaviour, for example labelling theft as borrowing, or by intending to pay stolen money back at some point, or using job dissatisfaction to justify the belief that something more is owed to them. With regards to motive, it is not restricted to the desire for personal financial gain, but can also be prompted by an effort to improve the image of the company in the eyes of a parent company or shareholders. This is often done to conceal losses or poor performance. Here Kaeriak pointed out one case of parallel bookkeeping that the KPMG team investigated in the CEE region. An investigation revealed that the local management had falsified their financial records for more than five years. They had parallel bookkeeping, i.e. one with real documents and another one, completely fabricated and reported to the parent company.
Warnings ignored

The typical fraudster has a finance-related job.

Photo: AP/TASR

Martauzov pointed out that the KPMG findings suggest that fraud is a growing problem in society, but, paradoxically, defence mechanisms appear to be getting weaker. One of the most significant findings of the KPMG survey is the very large increase in cases involving the exploitation of weak internal controls by fraudsters up from 49 percent in 2007 to 74 percent in 2011. The difficult economic climate may be partially to blame, according to the KPMG survey. Tighter
CLASSIFIEDS

budgets are forcing some companies to cut costs in their control environments. Less robust controls, and fewer resources to monitor controls, allow for greater exploitation by fraudsters. The survey also found that red flag warnings, such as an employee who rarely takes holidays or whose lifestyle appears excessive for their income, are commonly being ignored by companies. Just 6 percent of fraud cases in the 2011 survey had initial red flags that were followed up, compared with 24 percent in 2007 a substantial drop. In eastern Europe the position is a little more positive, with some 11 percent of red flags being acted upon. However, 43 percent of red flags were not acted upon in eastern Europe: lower than the global average of 56 percent, and comparable with the 2007 average of 45 percent. It is surprising that companies continue to ignore warning signs, particularly in light of the recession, said Martauzov. While cost-cutting initiatives associated with the downturn may have played their part in the observed shift, such cuts may prove to be a false economy. While defences are down, the fraudster sees an opportunity to capitalise. The need for companies to be vigilant has never seemed more important. In 46 percent of the cases investigated in eastern Europe, there were no red flags. This is consistent with the global average of 44 percent.

78 percent of the cases polled in eastern Europe show that weak controls were exploited in commission of the fraud, said Kaeriak. This, coupled with the finding that more than half of the frauds investigated in eastern Europe ran for more than three years before detection, indicates that controls are either inadequate or have not been revised and updated to deal with new threats. This highlights the need for regular fraud risk assessments as part of an overall operational risk assessment strategy. Martauzov also said that the statistics suggesting one in seven causes of fraud or fraudulent behaviour is uncovered completely by chance is alarming. Such statistics indicate that a company will never uncover many frauds at all, said Martauzov. She believes that this is also because employees or affected parties are often not willing to highlight abnormal behaviour because they have had a negative experience from doing so, for instance finding that the company fails to take any follow-up steps.
Reporting fraud

The global average indicates that only 23 percent of the frauds detected were publicly reported, and 46 percent were communicated internally. In eastern Europe, less than 30 percent of fraud incidents were reported internally and only 11 percent were reported extern-

ally - only in India were less cases reported. Full disclosure to the authorities only occurred in 2 percent of the cases in eastern Europe, compared to the global average of 13 percent. Disciplinary action was the most common response to fraud in eastern Europe. Such action was taken in 33 percent of cases and resignation or voluntary retirement occurred in 24 percent. However, enforcement action was taken in just 17 percent of cases and civil recovery in 2 percent. These findings suggest that companies are not taking the opportunity to leverage learning points or to instil a corporate culture of zero tolerance towards fraud, Helm commented, as quoted in a KPMG press release. Effective communication of a fraud incident provides the opportunity to send the organisation and its business partners a clear message from management that fraud will not be tolerated. A further consequence of the failure to take strong action against the perpetrator is that the fraudster is able to move on to another unsuspecting company with their reputation intact. Here Kaeriak provided an example of a security boss who was ousted from a company because of fraud. To our big surprise, we found him working as security boss in another company two weeks later, said Kaeriak. According to Martauzov, the importance for companies in Slovakia of having a strong control environment has never been greater. By adopting measures to prevent fraud or detect it early, businesses can limit the opportunities they present to a would-be fraudster, she said. While fraudsters are using more sophisticated techniques to commit their crimes and cover their tracks, often the underlying fraud remains quite simple. The challenge is to see through the ordinary disguise of the fraudster; enhance fraud prevention and detection, and respond more often and more rapidly to red flags.

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10 July 25 August 7, 2011

CULTURE / BUSINESS FOCUS

Western SLOVAKIA
Bratislava l CLASSICAL MUSIC: The sev-

The Mantks of Medzev

THE TOWN of Nin Medzev lies in eastern Slovakia, not far from Koice. It was founded by Germans who were invited there in 1241 by King Belo IV after the Tatar invasions. The town was built in the Bodva River valley and its establishment has been linked to the development of mining in the lower Spi region. After the mines in the region were exhausted the residents of Medzev re-oriented themselves to ironworking and smithery. Until the 19th century, Nin Medzev was controlled by the Premonstratesians or Norbertines (known as White Canons in Britain and Ire-

land), based in the monastery in Jasov. However, relations between the town and the monastery were not always

HISTORY TALKS
good. And during the antiHabsburg revolts, the local ironworks on the Bodva River produced arms for the rebels. The German community in Medzev was called Mantks (Mantci). One of the explanations for the name comes from local dialect: the German verb meinter (to mean) is pronounced 'manta' here. Another explanation is that Medzevans who worked in

the river ironworks in a very noisy environment had impaired hearing. So they were often forced to ask: Bs manta? (What did you say?) And in this way, the term Mantk arose. The Mantks of Nin Medzev came to be viewed as a distinct group of Carpathian Germans because of their tradition of ironworking crafts. Until the mid 20th century, Medzev was mostly a German settlement and today Mantks remain a distinct ethnic group. This postcard shows the centre of Nin Medzev shortly after World War II.

enth year of the Viva Musica! Festival offers, as always, topnotch classical, jazz, and world music. This time it brings Russian opera star Dmitri Hvorostovsky, Russian pianist Boris Berezovsky, Slovakias very own Oskar Rzsa Partnership Unlimited and 15-year-old opera singer Patrcia Janekov, Czech musician and composer Dan Brta, and Tunisian artist Dhafer Youssef. Starts: July 23 to July 30; various venues including Star Trnica (Old Market Hall), Hlavn Nmestie (Main Square), and Eurovea. Admission: some events are free; for others tickets cost between 10 and 150. More information: www.vivamusica.sk, www.eventim.sk. Bratislava-inline Friday evenings full of inline skaters in the Slovak capital are repeated for an eighth year. The event is meant for both beginners and advanced athletes and uses roads closed to motorists to allow safe skating. Starts: Friday, July 29, 21:00; Aupark. Admission: free. More info: www. bratislava-inline.sk.
Bratislava l BALLET: Bratislava l INLINE SKATING:

EVENTS COUNTRYWIDE

THE JAPANESE Embassy is organising a week of activities in Bratislava to promote Japanese culture and lifestyle, starting on July 25-26 with a sushi workshop at the ambassadors residence led by embassy cook Shoichi Sato (participation should be confirmed in advance by e-mailing the embassy); ice carving, origami (Japanese paper folding), and shogi (Japanese chess) workshops led by Slovaks J. Jaro and A. Skaln follow in the Main Square on July 27. A tea ceremony will be performed by certified master Somei Fuehrmann in the Main Square on July 30, followed in the evening by a concert by Japanese taiko-drumming group Kiyo Kito Taiko (resident in Hungary) and a classical music concert by Motoki Hirai in the Clarissen Church concert hall on July 31. An exhibition of photos entitled Kyoto will run from July 18 till August 1. Admission to most events is free. For more information, visit www.sk.emb- japan.go.jp/ event_japan_days2011; or call 02/5980-0100. Photo: Courtesy of Japanese Embassy

By Branislav Chovan

MULTI: Roma culture too

Continued from pg 6

Indian musicians from the Abhijit Banerjee Trio let Slovaks sample the flavour of a unique combination of ancient tradition and modern jazz also mixed with Roma folk music at their concert during the One Day Jazz Festival on March 22 in Bratislava. Their visit to Slovakia included, apart from this biggest gig, a concert in Pieany, two public discussions with musicians in Bratislava and Pieany and a screening of a documentary about Indian classical music, its masters and its instruments like the sarode, ghatam, tabla and others. The evident mutual interest and fascination in each others culture, lifestyles and traditions is reflected as well in the Slovak-Indian Friendship Society (Spolonos slovensko-indickho priatestva) that has organised, among other events, the Multi-Kulti Festival, supported by the Indian Embassy. Multi-Kulti, as its name might imply, offered various kinds of discussions about culture, exploring issues like religious diversity, funeral traditions, lifestyle heritage, ecology, ancient civilisations and their influ-

Krli slnka / Kings of the Sun The Russian company TVEL has organised a ballet performance choreographed by Russias Nikita Dmitrevsky focusing on the reign and life of Frances Louis XIV. It will be danced by artists from renowned Russian, German, Spanish, Dutch and French ballet ensembles, combining classical ballet art with modern trends. Starts: Sunday, July 31, 20:00; Nov Scna Theatre. Admission: 50-80. Tel: 02/ 5293-3321; www. ticketportal.sk.
CINEMA:

screens the movie classic The Pink Panther. Starts: Friday, July 29, 20:30; Lesn kino Nostalgia. Admission: 2. Tel: 0903/443 -196; www.nostalgia.sk.
Zelen Voda l JAZZ FESTIVAL:

Open Jazz Fest The only open-air jazz festival in Slovakia presents artists from eight countries, including Tereza Rajnincov (Slovakia), Benni Chawes (Denmark), Oskar Rzsa Partnership Unlimited (Slovakia) and Maceo Parker (USA). Starts: July 29-30; Zelen Voda pri Novom Meste nad Vhom. Admission: 15.90 (one day) to 24.90. Tel: 0905/ 271-935; www.openjazzfest.sk.

Cultural Summer in Brezno series, local zumba instructors offer visitors the chance to try this trendy combination of aerobics and dance, in the open and for free. Starts: July 29, 17:00 (zumba), 18:00 (zumba toning); M. R. tefnik Square. Admission: free. More info: www.kamdomesta.sk.
Liptovsk Mikul l EXHIBITION: Karol

Dancers from Odissi performing in Bratislava.

Photo: Sme

The Nostalgia cinema club has moved into the open air for summer and on July 29

Bratislava l OPEN-AIR

Central SLOVAKIA
Brezno l ZUMBA PARTY:

Feve Dielo / Artwork To mark the anniversary of this Liptovsk Hrdok native, his drawings and paintings are exhibited, curated by Petra Feriancov Baldoviov. Open: Tue-Sat 10:00-17:00 until September 10; P. M. Boh gallery, Tranovskho 3. Admission: 1-3.50. Tel: 044/ 5522-758; www.galerialm.sk.

Zumba & Zumba Toning Within the

Eastern SLOVAKIA
Mikovsk Festival The 20th year of the Mikov Festival of Ruthenian culture will be dedicated to Andy Warhol and will bring performers like Boney M, Modern Talking, Eln, Sabrosa, Lobo Ismail & Salsa Club, and folklore ensembles Makovica and Makovika. Starts: July 30-31; former recreation complex. Admission: 5 (one day) - 10. More info: www.festivalmikova.sk.
Koice l EXHIBITION: Sochy z piesku Mikov l MINORITY FESTIVAL:

ences, as well as about Roma living in Slovakia and their coexistence with the majority society. It toured Slovakias major cities like Preov as well as smaller towns such as Snina (where it took place in a Roma community centre), Hol, Skalica, trovo, Detva, Sere, Star ubova, and Pieany. In addition to the discussions, participants could listen to lectures, watch movies both feature films and documentaries see a staged version of the Ramajana legend, go to dance performances and fashion shows, listen to concerts and presentations about books, try yoga and meditation, and taste traditional Indian cuisine with the aim of opening all ones senses to another culture. R. K. Puri, counsellor of the Indian Embassy told The

Slovak Spectator that Slovak spa and wellness traditions have many similarities with the traditional Indian Ayurvedic system of treatment and the two offer a potential for business synergies. In addition to these events focused on Indian culture, several Indian performers took part in other events such as actor Sanal, who participated in the ERROR 2010 festival of theatres of the homeless, and dancer Bhakti Dvi, at a meeting on spiritual development. An inextricable part of Indian tradition and daily life is its cuisine, much valued and enjoyed in Slovakia, as the country has quite a large number of Indian restaurants for its small size. To read the whole article, please go to www.spectator.sk

IN BANSK Bystrica, the weekend of July 29 to 31 will be dedicated to African drums, dance and rhythms. Percussionist Drissa Kon comes from Mali in West Africa; he is an artist and teacher deeply rooted in the tradition of his homeland. On Friday the Tasuma concert takes place; on Saturday evening there is a cultural presentation and discussion; and on Saturday and Sunday percussion and dance workshops (with Oumou Mariko) will take place. For more information, go to www.djembdeweb.eu; Photo: Courtesy of Djembeweb or call 0903/818-375.

/ Sand statues In cooperation with Art-centre Dagi, the Galria shopping centre has organised a unique exhibition of sculptures and statues made from sand. Open: 9:00-21:00 until August 31; OC Galria. Admission: free. More info: www. kamdomesta.sk. By Zuzana Vilikovsk

N A M E
Monday Tuesday Anna Hana July 26

D A Y

J U L Y

2 0 1 1
Friday Marta July 29 Saturday Libua July 30 Sunday Ignc July 31

Wednesday Boena July 27

Thursday Kritof July 28

Weather updates and forecasts from across Slovakia can be found at www.spectator.sk/weather.

Jakub July 25

A Slovaks name day (meniny) is as important as his or her birthday. It is traditional to present friends or co-workers with a small gift, such as chocolates or flowers, and to wish them Vetko najlepie k meninm (Happy name day)

BUSINESS FOCUS

July 25 August 7, 2011

11

RM: Outsourcing will move up to a higher level of skills

Continued from pg 6

TSS: There have been many stereotypes about outsourcing to India but, regardless, India is a strong power in outsourcing and the question is how sustainable this is and what the next steps will be? RM: I think outsourcing has got a lot of attention not because of its intrinsically important role in the economy, but because it represented a new business model and thats why it excited people. If you look at the Indian IT sector, the total contribution of that sector is just about $65 billion to $70 billion in an economy of $1.5 trillion. Even within this, outsourcing creates only part of that sector. But nevertheless, it is exciting. It enables businesses all over the world to enhance efficiency and lower costs, and thus there is no way that the model will fail. It is a model which emerged after technology erased distances and brought more flexibility into working relations while allowing people to access resources at the lowest cost and highest efficiency in whatever part of the world. Of course, the way this model will change is that countries will want to move higher up the value chain. Also, at first sight, it may look like outsourcing is actually taking jobs away, but if you look at a longer timeframe, at a totality of a corporations operation, outsourcing is not taking jobs away, because you may take jobs from here, but you create jobs there and expand purchasing power and export markets for your products and services. Yet there are arguments that outsourcing is taking jobs from advanced countries and its therefore bad, but this is a simplistic approach. The model itself will gradually get modified, because costs are going up in India as well. Now other countries provide services similar to what we have been providing, so naturally the logic of business will tend to drive this model to a higher level from back-office operations we would provide, for example, architectural services or you would provide legal services. I think outsourcing will move up to a higher level of spe-

Ambassador Misra wants more Indians to visit Slovakia.

Photo: J. Liptkov

cialisation and skills, while countries power stations as well as in nuclear will move up, and go up or down the energy. Why are these sectors interesting for India? value chain. RM: We appreciate very much TSS: The 2011 census has produced the initiative that Minister [Juraj] some interesting numbers for In- Mikov took in taking a group of dia: its population has grown by businessmen and policymakers to 181 million people over the past India, since a number of useful condecade. What are the challenges tacts have been established. The enthat such population growth ergy sector figured prominently in their discussions since India has been brings? RM: We are the second most pop- facing a serious energy deficiency ulous country in the world, while and thus the energy issue is a big based on projections at a certain stage challenge for us. If we are going to we will overtake China, which brings grow at an 8-percent rate, our energy along a number of challenges. We needs will expand by 7 percent. The first of all need to address literacy and positive thing is that Indias growth the situation of women so that they is energy-efficient: for one unit of exhave a decisive say in reproductive tra output we need less than one unit decisions in the family. Empowering of extra energy. Nevertheless, our enwomen through education is the way ergy requirements are expanding and to bring population growth down. It thus we want to expand our nuclear is already showing results, since fer- energy programme, as well as our tility rates are coming down precisely solar and wind-energy programmes. We are aware of Slovakias interin those parts of India where higher literacy rates have been achieved. Its esting and diverse energy mix as well not something that delivers results as the role that nuclear energy plays immediately, but I dont think we in this mix. We look upon Slovakia as have other options for doing this in a an interesting partner in the area of generation of nuclear energy, while democracy. the country also has interesting hyTSS: During an April road show or- dro-electric projects, especially smalganised by the Slovak Ministry of ler ones, which in a sense are more Economy, India showed interest in interesting since larger hydrocooperation in the energy sector, projects in India have in the past including construction of hydro- raised some concerns regarding dis-

placement of population and ecolo- tourism menu could be interesting gical impact and thus smaller hydro- for Indians? projects would be more manageable. RM: A good number of Slovaks have been attracted to India for its TSS: Earlier this year, some Indian tourist destinations, Yoga, or for companies showed interest in dir- Indias traditions. However, we now ecting their investments towards also see highly qualified professionals Slovakia. Is there any update in in Slovakia who go to deliver business these developments? What areas of services to Indian companies in difthe Slovak market are potentially ferent sectors. interesting for Indian investors? But what I would also like to see is RM: I fear not in very precise more Indian tourists in Slovakia. This terms. But one of the projects that number has, though, been growing: was discussed and which has not yet when I take walks in the downtown progressed but for which there is po- area, I can see more Indians around. tential is an Indian investment pro- But my suspicion is that much of this posal to manufacture electric cars in is one-day tourism originating in ViSlovakia. I think Slovakias resource enna. I think the population of Indiof young, educated people would be ans in Bratislava goes up during dayof interest to Indian companies in light, and as evening progresses that information technology when they traffic goes back to Vienna. We need to bring them to Slovmight plan to expand into European markets. It will make sense for them akia and take them beyond Bratisto look at Slovakia as a base to lava, showing them the old castles or provide IT services, using both Slov- the High Tatras. If Slovakias fantastak and Indian resources. I recently ic natural beauty became known visited Koice and there are some widely to Indian tourists, the country Slovak IT companies which already could become a popular tourist deshave contacts with teams in India. tination. There are Indians who have These contacts within the IT sector already seen the traditional tourist destinations and are now searching have a lot of potential. The pharmaceuticals industry is for new ones. another area where I see huge potential, or more broadly the health sec- TSS: India has been providing sevtor. India has a lot of experience in eral grants to Slovak students to generic medicines. Now, when the help them better access a culture public finance belts are tightening that is rather distant to their own. and there are efforts to bring down What has been the interest so far? RM: We have a programme of public expenditure on health, it might be in Slovakias interest to ex- technical-economic cooperation unplore the possibility of procurement der which we invite not only students but even working professionals of generic medicines from India. In recent years, we have also wit- and public servants to come and do nessed the growth of medical tour- academic courses at Indian instituism, when people from western soci- tions. We would be happier with an eties travel to India to access high- even better response than we have quality medical services at a lower been getting in Slovakia, but its uncost. Then there is also the traditional derstandable. India is not somewhere system of medicine, Ayurveda, which across the border. Nevertheless, we I think already has recognition and will continue to try to reach out to familiarity here and more broadly those professionals who are interlinks up with the traditional systems ested in the benefits of such cultural of therapy which are strong in Slov- exchange. There are already Slovak akia, for example your wellness sec- students who have been studying Hindi and there are also chances to be tor, your spas. trained in classical Indian dance. TSS: Do you think Slovaks have discovered India as a tourism destinaTo read the whole interview, tion? What items on Slovakias please go to www.spectator.sk

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July 25 August 7, 2011

FEATURE

AROUND SLOVAKIA
compiled by Zuzana Vilikovsk from press reports

Slovak wins photo contest

Castle work starts

THE CULTURE Ministry and the Central Office of Labour, Social Affairs and Family (PSVaR) have come up with a plan that will put some unemployed people back to work and at the same time help preserve some of Slovakias rich cultural history. Since June, twenty unemployed people from the Bnovce nad Bebravou district have been at work helping in the reconstruction of Uhrovec Castle in central Slovakia. This work is attractive and interesting and we expect young people and those receiving unemployment assistance to get involved, Slvka Slovsk, the head of PSVaR in nearby Partiznske, told the TASR newswire. When selecting the workers, PSVaR in Partiznske worked handin-hand with local municipalities. We looked for enthusiastic workers who had volunteered earlier for this project in their own free time, as well as the longterm unemployed, Slovsk explained. Uhrovec Castle lies in the vicinity of Uhrovsk Podhradie, a village with

only 37 residents, yet we received six job applicants from there, Slovsk said. At the end of March, the Bnovce nad Bebravou district counted 2,009 residents as unemployed, representing an unemployment rate of 9.35 percent. The Culture Ministry is supervising the reconstruction of the castle in cooperation with conservationists, according to Slovsk. The project, which will last for six months, is financed by two grants. The first, from the Culture Ministry, amounts to 47,000 and is meant for construction activities while the second grant, for 61,000, comes from PSVaR and is used to pay salaries, which according to Slovsk, are more than the minimum wage. The ruins of Uhrovec Castle stand at 591 metres above sea level, on a ridge in the Nitrick Vrchy hills, close to the municipality of Uhrovsk Podhradie. The late-Romanesque castle was probably built between 1251 and 1293 and has fallen into extreme disrepair through the years. ari Castle in eastern Slovakia is also being reconstructed under the same programme, and 10-15 more castles should be added next year.

A brown bear on a return trip to the forest, distant from human dwellings.

Photo: TASR

Bear warnings in Slovak forests

THE SLOVAK Environment Ministry has put up warning signs in Slovak forests where brown bears (Ursus arctos) are known to roam. The ministry informed the TK newswire that these measures are aimed at preventing clashes between bears and humans. Environmentalists have welcomed the initiative. British wildlife expert Robin Rigg said that protectionists have long advocated the need for such steps. There are an estimated 700 to 900 brown bears living in Slovakia. Each year, bear attacks on people are recorded but, unlike in Romania and Croatia, no deaths have been reported in recent years in Slovakia. Slavomr Fino of the National Forestry Centre told TK that, usually, a bear will only push, slap or at most nip a person as a warning. There have also been attacks on sheep and beehives. The signs are especially important in the High Tatras, the Mal Fatra, and other areas where there are a lot of tourists and

bears, Fino added. Bears from mountain regions are often drawn to litterbins as they rummage through the garbage for food. Special bins to discourage this behaviour are available and the ministry has set aside 70,000 to make such devices available. Those interested can apply to the Environment Ministry. Experts say that bears are most commonly driven to human settlements by hunger or being threatened. Recently there have been several incidents where bears came into close proximity with people, one of which resulted in the death of a pregnant female bear, which was shot after exhibiting aggressive behaviour. Experts later criticised this action saying the animal had been provoked. Regulated killings of bears are considered only as a last resort where the lives of humans could be in danger. The Environment Ministry is continuing to study the habits of bears and one method is marking them with telemetric collars. In May, a female bear called Galina be-

came the fourth animal to wear such a collar in the TANAP natural reserve in the Tatras, the SITA newswire wrote. Galina, 7 years old and weighing 110 kilograms, was caught in a trap near Smokovec. Pavol Majko, head of the TANAP administration, told SITA that Zita, a female and Vladimr, a male, got collars last year. Another bear, Mio, was given a collar in 2008 but later the collar came loose after Mio lost weight during hibernation and it slipped off. Majko said that some time this year a webpage showing the movements of the monitored bears will be established. The collars are expected to last until the batteries run down, which would normally be in about three to four years. To collect relevant data, the environmentalists need to place collars on at least five bears. The TANAP Administration (Sprva TANAPu), State Forests TANAP (ttne lesy TANAP) and Projekt Medve (Bear Project) are cooperating in the project.

A COMPETITION open to all amateur photographers to find the best picture depicting the beauty of the Irish countryside was won by a Slovak, Martin Mariovsk, who lives in Ireland, the Sme daily reported at the end of June. His photo, called Ice Age, provides a picturesque view of the frozen coast in the Donegal region in the northern part of Ireland, according to Gulliver Ireland, the company that organised the competition. Mariovsk won over thousands of other photographers in the contest. The winning photo by Martin Mariovsk is a fantastic example of what foreign and domestic tourists who spend their holiday in Ireland can expect, said Gulliver's Lisa Fitzpatrick. Ireland also has an annual competition open to professional and amateur photographers called the GoIreland.com Photography Awards that seeks the best photographs with the motif A View on Ireland.

Premiere of Cign draws thousands

THE SLOVAK premiere of the movie Cign (Gypsy) opened to much fanfare on July 12 in Richnava, the village where the film was shot. The largely Roma community was electrified and excited as they prepared to welcome the cast and crew of the film as well as a huge crowd of other visitors, including artists, journalists and film buffs. The movie, directed by Martin ulk, takes a look at life in a Roma village. Locals were happy to welcome the big crowd to their community and did their best to put a good face on their town. They gave the settlement a good scrubdown but they were not able to fully cover up the poverty that afflicts the community. Though the settlement has electricity, water is available only from two wells and there is no sewerage system. Of Richnavas 2,500 residents, about 1,700 are Roma. Mayor Vladimr Pokuta hopes the movie will draw more attention to Richnava and its problems.

New hands set to work at Uhrovec Castle.

Photo: TASR

This movie cannot solve all the Roma problems but I believe that it can open a dialogue between the majority and these people, ulk told the SITA newswire. In an interview with the Sme daily, ulk said: We should stop thinking only about the racial aspect of the problem. What happens in these settlements is a reflection of our whole society... There are rich Roma in Spisk tvrtok, in nice houses. And then there are Roma in Letanovsk Mlyn, just a few kilometres away, who have no electricity, who live in wooden houses. We did not think about political correctness when making the movie; we tried to depict the situations as truthfully as possible and with all the correlations and connections which were on our minds. Marek Lek, the script-writer, told Sme: Our film is bad news. About Roma and non-Roma alike. This is exactly why it is high time to start seriously addressing this problem. The premiere was a huge draw for Roma and non-Roma citizens alike. People arrived in droves, not only from

nearby localities, but also from Koice, Spisk Nov Ves and other large towns. A concert before the screening featured Chiki liki tu-a and a Roma group, Da & Negativ. The crowd, estimated at several thousand, attentively watched the film and most praised it. ulk said he was eager to see how the film would be received by people from the village, many of whom were extras in the film. He said he hoped that the making of the movie and the movie itself would have a positive effect on residents. Earlier, the film and actor Jn Miigr, playing the film's principal character, received a Special Jury Award and Special Mention at the International Film Festival in the Czech town of Karlovy Vary. Miigr, a Roma, had never acted professionally before. The film opened in Slovak cinemas on July 13 and as many as 9,000 people saw it during the first week, according to SITA. The film has been invited to Toronto, Canada and to other foreign film festivals. ulk said that the film cost about 1 million to make.