The reality is that Germany is actually taking control of the Polish rail transport market, step by step. But it was the team of Morawiecki and Woś who served them this market on a silver platter in the years 2015-2023. What a loser.
A group of PiS managers
October 2013. PKP Cargo, a powerful subsidiary of the PKP Group, debuts on the Warsaw Stock Exchange. PKP Group earns almost PLN 1.4 billion from the sale of a minority stake, meaning the stock market values the entire company at PLN 3.6 billion. PKP Group uses the proceeds from the sale to pay off debt.
On the day of the launch, the price of one share was PLN 80.5. Then it temporarily approached PLN 90, and when PiS won the elections and came to power in the fall of 2015, the exchange rate was PLN 71.
Immediately after the 2015 elections, Dariusz Libiszewski became president of Cargo. He is a former assistant to Lech Kaczyński, then head of the Srebrna company created by the Centre Agreement, and a PiS candidate for the European Parliament. The railway market remembered his term for two reasons.
After coming to power, PiS sought evidence or at least indications of fraud by its predecessors in state-owned companies. The prosecutor’s office and the services spectacularly arrested and immediately released the presidents of the Orlen police, Lotos and Zakłady Azotowe. Libiszewski informed the services about the alleged fraud at PKP Cargo. On December 30, 2014, the state-owned carrier acquired the largest Czech freight forwarder, AWT, for 103 million euros. According to Libiszewski, Cargo overpaid for this company, which, according to the prosecutor’s office, led to the accusation of mismanagement and the arrest of the Cargo managers who initiated the transaction. As in similar cases of this kind, they were released immediately afterwards and the charges in this case were never brought to court. Today, AWT is one of PKP Cargo’s healthiest assets.
The second significant development during Libiszewski’s tenure was the farewell letter he left when he stepped down in the fall of 2017. In it, he railed against the party deals and factional infighting that had forced him out.
The head of Cargo was Czesław Warsewicz, a railway manager operating in the PiS orbit (during the first PiS government he was president of the Intercity company), who governed PKP Cargo for five years.
In 2022, he was succeeded by Dariusz Seliga and at least several important decisions fall under his management account. This includes the start of the renewal of coal wagons, most of which are not used after the renewal. Or leasing of locomotives.
Since the announcement of the restructuring plans, the share price of PKP Cargo has increased from PLN 12 to approximately PLN 18
In the service of the party
In the fall of 2023, a few weeks before the elections, Cargo sold a large part of its locomotives to leasing companies and then leased the same locomotives, i.e. a kind of leaseback. Leaseback is a fairly popular way of releasing capital frozen in fixed assets, most often used by companies with liquidity problems. It is good if the funds thus obtained are used for investments. In the case of Cargo, a large part of the funds obtained from the sale of locomotives was used to finance staff increases. Cargo employs 14,000 people. Together with their families, they constitute a solid part of the electorate. The fact that 40-50 percent of the company’s costs are employee costs, which are steadily growing, although the company performs less and less transport work, was not important in the PiS economy.
Seliga lost his position at the end of April. Not only as part of the post-election broom ceremony cultivated by all political options. In the last quarter of 2023, PKP Cargo generated a loss of PLN 20 million. In the first quarter of 2024 – already PLN 120 million. The share price fell to about PLN 12, and the company’s market capitalization decreased to PLN 600 million. The preponderance of rising costs over revenues was so great that the company began to face the specter of bankruptcy.
PKP Cargo is one of the few large state-owned companies operating in a highly competitive market, which is also declining – by more than 6% last year. State-owned energy companies are creating an oligopoly, Orlen has consolidated its dominant market position, PSE and PKP PLK are critical infrastructure managers. Meanwhile, Cargo competes with private carriers such as CTL or PCC Rail, but also with state-owned carriers such as Deutsche Bahn Cargo. This is a fundamental difference.
Cargo’s only advantage in Poland was its potential: it was the second largest freight carrier in Europe, with thousands of wagons and real estate at its disposal. It also had contracts with state-owned companies, mainly in the energy sector, for which PKP Cargo wagons delivered tens of millions of tons of coal every year.
A dozen years ago, it was a commercial advantage. Now, when the share of coal in the energy balance is increasing, PKP Cargo’s wagons are facing difficulties. All the more so because the company has focused on all the pathologies that state-owned enterprises face.
Our own people
During the PiS era, Grzegorz Postek, one of the co-founders of the CBA and someone Mariusz Kamiński trusted, became the director of security. Postek, along with Kamiński and Maciej Wąsik, was convicted in a high-profile land scandal. Piotr Święczkowski, Bogdan’s brother, one of Zbigniew Ziobro’s closest and most devoted people, became an employee of the office – he was a national prosecutor, today he is a judge at the Constitutional Court of Julia Przyłębska. Antoni Duda, the president’s uncle, also served on the supervisory board of Cargo (with a salary of PLN 56,000 per year).
It was, and still is, standard practice at PKP Cargo to employ people assigned to fictitious and duplicate positions. As Onet recently described, the most striking example of such a wage drifter was an office worker from Tarnowskie Góry who, in addition to her salary from her job duties, also received the remuneration of a driver, auditor and mechanic, although she did not perform any of these three functions. All this under the supervision of trade unionists.
At PKP Cargo, up to 80 percent of employees belong to various trade unions, among which Solidarity and the train drivers’ union are the leading ones. The company is operationally divided into 12 regional factories. Of the 12 directors of these factories, Solidarity belonged until recently… 12 to be precise.
The crew has one representative on the board of directors. Since 2016, it has been Zenon Kozendra. In 2023, when it was already known which way the company was headed, it raised PLN 785,000. zloty. Only Chairman Selig had more at Cargo. Due to numerous, sometimes turbulent, changes in management, it happened that Kozendra was the only member of the board of directors.
The trade unions have 3 to 4 representatives on the supervisory board who have been accepting all the management’s measures for years. However, this does not prevent the trade unionists from protesting today against the dismissals resulting from decisions they made as managers at various levels. Or they did not, although they should have. The same can be said of Mateusz Morawiecki, who is politically responsible for the chaos at PKP Cargo. His team was not only unable to prevent the disaster, but also put the nail in the company’s coffin. Two nails, to be more precise.
Grain inertia and coal order
April 2022, a few weeks after the Russian invasion of Ukraine. Mateusz Morawiecki and Ukrainian Prime Minister Denys Szmyhal sign a letter of intent to establish a Polish-Ukrainian railway company. In view of the Russian blockade of the Black Sea ports, PKP Cargo, a company of Ukrzaliznytsia, i.e. Ukrainian Railways, was supposed to transport millions of tons of Ukrainian grain to the Baltic ports. For Cargo, which was losing the coal market for purely market reasons, it was a good opportunity to acquire a new long-term customer as part of a joint venture. – After signing the letter of intent, not much happened. The company was finally established in September 2022, but it never started operating. The Polish side was not interested in this cooperation, says Jakub Karnowski, former chairman of the PKP group, who has been a member of the supervisory board of Ukrainian Railways for several years.
No decision is a decision either. The cargo did not bring in any money and uncontrolled grain began to spread throughout Poland, eventually leading to radical protests by farmers.
The Prime Minister’s so-called coal decision also had disastrous consequences. The Warsaw District Prosecutor’s Office has just opened an investigation into the failure to comply with its duties and abuse of power by the former board of directors of PKP Cargo. The request was made by the company’s current acting president, Marcin Wojewódka. This is the situation in 2022, when PKP Cargo had already contracted transport work for its customers, and by decision of the Morawiecki government, it had to make its wagons available to transport 4.5 million tons of coal urgently imported from abroad from the Baltic ports. After the introduction of the EU embargo on coal imports from Russia, Poland faced a serious risk of a shortage of coal, which is used for domestic heating.
Cargo’s board of directors accepted this political decision, knowing that breaching or violating contracts would mean losses, loss of customers and, consequently, loss of market share. The company’s current management will likely raise the issue of compensation for the company’s Morawiecki decision in court. Cargo’s potential compensation for the coal decision could have a huge impact on the company’s finances and market position.
However, this is a question of the future. For now, the results of the PiS government’s oversight of the company are depressing. When PiS came to power in 2015, the company controlled 53 percent of the freight transport market and its value was approximately PLN 3.2 billion. At the end of April, when CEO Dariusz Seliga was dismissed, the market share was approximately 27 percent and the company’s value was less than PLN 600 million.
The crew will pay
For now, with the consent of the court, PKP Cargo has been placed under restructuring. This is a procedure similar to the American Chapter 13, which means protection from creditors. Currently, Cargo is not obliged to pay obligations to market contractors, but only taxes to the state and salaries to employees. Much more importantly, the company’s entry into the restructuring process means the suspension of the collective agreement. This dramatically increases the scope of action of the new board of directors and the court-appointed administrator. The collective agreement, on the one hand, guaranteed social security for employees, but on the other hand, it paralyzed the possibilities of reducing labor costs, even if the company’s management took steps in this direction. The notice period for the collective agreement was two years. The suspension of the collective agreement opens up the possibility of adapting employment to the current needs of the company. It is not clear whether the announcement of the dismissal of 4 of the 14 thousand employees of PKP Cargo will be implemented; perhaps the reductions will be smaller, but the bill for the company’s reprehensible management and lack of supervision will be paid mainly by the crew.
