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Out of the blue, a Minister accuses a leading construction company of bad quality work and not fulfilling contractual guarantees.
Holmes Report 08 Jul 2012 // 11:00PM GMT
Imagine the impossible: out of the blue, with zero pre-notification, a Minister of Transportation begins to accuse one of the world’s largest construction companies of bad quality work and not fulfilling contractual guarantees on the nation’s most watched LIVE news program. This is exactly what happened to Skanska on Sunday March 13, 2011.
Minister Barta announced that parts of the highway that Skanska built are of poor quality, the corporation was not fulfilling their contractual obligations of repairing damage and not cooperating with the Highway Office (administrator of Czech highways, under the auspices of Transportation Ministry). As a result, Minister Barta announced that the next day he will put up signs on some of the Czech Republic’s most frequented highways stating, “Skanska built this” and “We have to repair this” in order to notify drivers who was responsible for the problems on the roads. Further the speed limit was lowered, citing “damaged roads” which only irritated drivers and delayed traffic.
Minister Barta’s announcement came as a surprise to Skanska; they had in two previous occasions been the subject of his bullying, but it never resulted in publicity, and certainly not such accusations on live TV. For the record: there were no outstanding claims or meetings between Skanska and the Highway Office nor had there been any incorrect or conflict filled meetings about the highways in question. This sucker punch truly came out of the blue. It also appeared that the Highway Office was taken by surprise as they had no specifics on this issue (which repairs were in question, when did they last speak to Skanska about it etc.) – it seemed that Minister Barta was working alone.
This was not only an unprecedented attack on Skanska’s reputation and future commercial success, but an insult on the work of thousands of Czech workers who built the highway. Within hours this was the number 1 news item on the internet portals, and by the next day, it was the number 1 issue in the mainstream/national business press.
To paint the full picture, it’s important to explain the background of Minister Barta; he was the owner of a very successful private investigation company. He joined the new VV political party in 2009 and became the Transportation Minister when VV became a junior member in the newly formed coalition in 2010. It is important to note that VV won votes on the anti-corruption ticket.
Skanska appointed Ewing Public Relations to oversee this major issue that could have irreparably damaged Skanska’s reputation.
1. Skeletons – the first initiatives were to discover if there was any truth in these claims, what the status was between Skanska and the Highway Office and if there could be an ounce of truth to the allegations. Nothing could be left to chance or misinterpretation. Further, we needed to know if there was any bad blood from a previous non-Ministry engagement that could have motivated the Minister to so aggressively and in such an unprecedented manner focus on one company,
2. Forget He’s the Minister – after it was determined that there is no truth in the claims, the recommended strategy was to not allow the Minister to get away with this incorrect, unprofessional, damaging and false line of communications, even if he was the minister. In fact, Skanska would have to FORGET he was the Minister, and FORGET that his ministry deploys many of the largest state contracts where 40% of Skanska’s revenue comes from. The reasoning was that if Skanska did not set the record straight NOW, eventually it would come back to haunt them commercially and it was recommended to take a short term commercial loss over a long term reputational catastrophe with a major client,
3. Top Down - Dan Tok, CEO of Skanska in the Czech Republic and Slovakia saw this as a personal attack and it was recommended that he personally be the one voice in communications,
4. Transparency – even before Minister Barta’s surprise announcement, Dan Tok had become vocal in the call for transparency and improved public procurement legislation; it was suggested that he greatly accelerate his activities in this arena,
5. Scare tactic – The Czech Republic has been on the losing end of litigation and international arbitration for years, and when the time was right, it was recommended that Skanska pull out the international arbitration and legal action card.
Skanska’s response for the next 48 hours was that the corporation was surprised, that it doesn’t know of any of these claims and it will reserve cool judgment and investigate internally before making any further statements.
The Next 5 Days…
1. On Tuesday afternoon, 2 days after the TV show, CEO Tok sent Minister Barta an open letter responding that he has no idea what the Minister was talking about, demanding the signs be removed and requesting a meeting to discuss the issue in a constructive manner; but in the name of public transparency, he requested that the meeting be in front of the media. This letter was sent to Minister Barta and the journalists.
!!! This was an unprecedented move and helped Skanska (especially in the eyes of the media) for many reasons. First of all, it sent a signal internally: your leader is ready to fight the Minister publically, that’s how much he believes in the quality of your work. Secondly, never before had a corporation invited the media to witness the negotiations in such a high profile conflict. This sent the media a message that Skanska was so sure of its position that they were ready to take on Minister Barta publically.
2. On Wednesday afternoon, Minister Barta called for a press conference the next day but never officially responded to Skanska’s letter; again he was communicating to Skanska only through the media!
NOTE: the signs were still up on the highways and this was still big/national news.
At the press conference, Minister Barta gave a very short introduction and then handed the communications over to Jiri Svorc, CEO of the Highway Authority, before quickly exiting the auditorium. Mr. Svorc was clearly very nervous, was unable to answer any concrete questions and was very weak in convincing the public of the legitimacy of the claims.
This was the moment of change when the media began to wonder what was going on as it was obvious that this sub-standard and quite frankly, unethical behavior; something was not right…
3. At this point Skanska, with questions and speculations about Minister Barta’s motivations, announced that they are seeking an immediate court injunction to remove the signs.
The media began to publically speculate about the odd actions taken by the minister, and started to criticize his form of communications. Skanska and Ewing PR moved forward:
• answering questions, providing interviews, preparing info/stats etc
• fully cooperating with the Highway Authority
• not letting up on the legal action path (the Czech courts eventually ruled in favor of Skanska and the signs were removed)
• increasingly concentrating on CEO Tok’s initiatives in business transparency, anti-corruption and public procurement;
Outside of the above, a parallel set of events started to unfold.
As quickly as Minister Barta started this public war, it quickly, at least from his end, died down. It was clear that he was taken by surprise both with Skanska’s prompt, strong and confident response and with the increasing media criticism and public questioning his actions; Minister Barta surprisingly found himself was on the losing end of public perception (which he was relatively enjoying before he started his Skanska war).
With this negative tone hanging over his head, Krystina Koci, a VV party member and parliamentarian came forward and announced that Minister Barta paid her 500 000 CZK for her loyalty to VV. She proceeded to inform the press that Minister Barta is a party dictator and will use any tactic available in order to grow his own personal sphere of influence. A few days later, Jaroslav Skarka came forward with similar claims that he was paid for loyalty and toeing the party line; in both instances, Minister Barta explained that these were loans, not payment for any services. The last nail in the coffin came when a „secret document“ was published which explained in great details that he and his colleagues joined VV for the sole purpose of increasing their commercial power and influence after VV exits the coalition.
Although he tried to fight the personal allegations, the „secret report“ was so damaging that on April 8th, 2011 he resigned. Mr. Anti-Corruption was apparently not so anti-corrupt after all.
Many journalists asked if Skanska was behind the Koci and Skarka affaires, or if they were responsible for the publication of the secret report; the answer is NO. It was a parallel incident, but the general belief was that Skanska’s response to the Minister set up the perfect mood and tone for Ms. Koci and Mr. Skarka to come forward.
In the meantime, Skanska has officially ended all conflicts with the Highway Authority in relation to this conflict; no legal action will be taken in exchange for no longer pursing Minister Barta’s complaints. Today, Skanska and the Highway Authority are enjoying correct and professional mutual relationship.
The former Transport Minister has been charged with corruption charges. The new Transport Minister has not continued with this initiative.
Dan Tok’s profile has increased, both as a Transparency and Business Ethics Ambassador, but the guy who „stood up to Barta.“
In August 2011, Ewing PR polled the local media about many issues, one of them was their reflection of the Minister Barta crisis; the media had no opinion about the allegations but thought that his actions were incorrect and viewed Skanska’s reaction as positive, citing that Skanska acted reasonably and adequately considering the situation. Only one journalist thought that Skanska over-reacted.
In November 2011, Dan Tok was awarded the AmCham Wings award for encouraging parliamentarians to make public tenders more transparent. At the awards ceremony, the president of AmCham said that „Dan Tok of Skanska has inspired all of us with his commitment to clean public tenders and his work chairing the platform for transparent public procurement.“
Today, Minister Barta now faces corruption charges.
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