Abris Capital Partners, a central and eastern Europe-focused private equity firm, is suing the Polish government for PLN 2 billion (€478 million; 597 million) alleging it will incur losses after the state forced the fund to sell its stake in Polish lender FM Bank.
The suit, lodged with the Arbitration Institute of the Stockholm Chamber of Commerce, comes after Poland's financial watchdog, KNF, ruled that the fund failed to meet its commitments as an investor, and stripped the fund of its voting rights in the bank and ordered it to sell the business by April.
The trouble started for Abris when it created FM Bank last year by merging of two of its portfolio companies. KNF argued that the fund did not consult with the regulator on the choice of the chief executive for the new bank, which it is required to do.
The fund disputes this claim and says it followed Polish law and applied for the approval of Slawomir Lachowski, and he was eventually approved by KNF as the bank's CEO. Abris also claims that the punishment is disproportionate to the alleged misbehaviour.
“It’s like punishing somebody with life in prison for spitting in the streets,” Abris partner Pawel Boksa told pfm. “This is the most severe punishment you can have in Polish banking law, and it has never been imposed in Poland before.”
“It’s for not consulting on a CEO position, even though we did everything by the law, and asked for approval which we got from KNF. So for allegedly not consulting we are punished by disenfranchisement and an order to sell. That’s hardly proportionate”
However, KNF said the action it took was in line with Polish and European Union legislation and that the lawsuit is merely pressure on the KNF as an attempt to find an explanation for the fund's investors.
“In administrative proceedings it was stated that Abris failed to meet its investor commitments made to KNF,” KNF spokesman Lukasz Dajnowicz told Reuters.
“This is not an expropriation, so the information about the planned arbitration can be mainly seen as part of the pressure on the KNF, and as an attempt to find an explanation for the Abris fund's investors,” Dajnowicz said.