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Poland dismisses state road agency chief

A construction site of part of a ring road is seen in Warsaw city, September 20, 2013. REUTERS/Kacper Pempel
A construction site of part of a ring road is seen in Warsaw city, September 20, 2013. REUTERS/Kacper Pempel

By Christian Lowe

WARSAW (Reuters) - The Polish government on Thursday dismissed the head of the state road agency, who had been at the centre of disputes with international engineering firms over a European-backed program to build new roads.

Many contractors allege that Lech Witecki's agency, known by its Polish acronym GDDKiA, had forced them to take heavy losses on contracts to build Polish motorways, and even drove some into bankruptcy. Witecki has denied the allegations.

The Polish government named a GDDKiA executive, Ewa Tomala-Borucka, as caretaker head on Thursday.

In her previous role, she was involved in a problem-plagued bridge in southern Poland that came to symbolize the tensions between the agency and contractors. GDDKiA did not immediately respond to questions from Reuters about her role in the dispute about the bridge.

Firms that have been in dispute with the agency over payments include Austria's Strabag and Alpine Bau, Ireland's SIAC, SISK and Roadbridge, as well as a unit of Spain's Ferrovial, and a unit of Germany's Bilfinger.

"We are optimistic this will lead to real improvement in practice," Ulrich Paetzold, Director General of the European Construction Industry Federation, said of Witecki's departure. He said he hoped Poland would take immediate steps to keep firms which were hit by disputes with the agency out of bankruptcy.

Witecki had headed the agency since 2008, and oversaw a massive injection of cash. Roads were part of a 37.56 billion euro ($51 billion), seven-year EU infrastructure program for Poland - the bloc's biggest ever development program in a single member state.

Elzbieta Bienkowska, Poland's deputy prime minister, announced Witecki's dismissal. "Many things have certainly succeeded and everyone feels a qualitative leap that has been made in this time," she said in a statement.

"Unfortunately we were unable to avoid mistakes. The most severe were many delays in the schedules of work and the bad atmosphere in relations with contractors and the entire construction sector."

Witecki has said he delivered thousands of kilometers of good quality highways, provided good value for taxpayers and approved modifications to contracts when justified.

He said independent audits had not found any evidence of his agency breaking Polish or EU rules, and that in many cases contractors were to blame for the problems.

BREAKDOWN IN TRUST

A Reuters Special Report last year contained allegations from construction industry executives that GDDKiA had, in many cases, refused to extend the deadline on road projects, or to increase the budget, even when there were legitimate engineering reasons for doing so.

The executives said that, as a result, they went over-budget or behind schedule, allowing GDDKiA to impose financial penalties or withhold payments.

Several construction executives had said their firms would hesitate to bid on any new Polish road-building contracts as long as Witecki remained in charge of the agency.

Six EU governments, including Germany and France, complained to Poland about the way their companies were treated by GDDKiA, while the European Commission said it was looking into the issue.

Finn Lyden, former chief executive of Ireland's SIAC, which had to seek creditor protection after it became entangled in a dispute with GDDKiA over payments, said Witecki's style of managing the contracts had caused significant damage to contractors, and to the Polish economy.

"In simple terms, Poland and the EU could have got many more kilometers of motorway for the money spent, with far less delays, if he (Witecki) had been willing to learn from international experience," Lyden told Reuters.

One of the most bitter disputes between Witecki and contractors was over a motorway bridge at Mszana, near Poland's border with the Czech Republic. After years of wrangling between GDDKiA and the original contractor, Alpine Bau, it is still not completed.

The caretaker GDDKiA chief, Tomala-Borucka, was previously agency chief in the region where the bridge is located and was involved in the contract.

Jaroslaw Duszewski, a former Alpine Bau executive, said that given her previous role, it was still not clear whether the changes were positive for the construction sector. The government gave no deadline for choosing a permanent chief.

"We must see who is going to be in this position full time," said Duszewski.

(Additional reporting by Marcin Goclowski and Lukasz Wieglos; Editing by Ruth Pitchford)

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