Wojciech Balczun: "I am Here to Change Ukraine’s Unpleasant Reality"

In an exclusive interview with the CTFS portal, Wojciech Balczun discusses when the result of his work will become apparent, the difference between real changes and reforms conducted in PowerPoint and on Facebook.
Olga Bystritska 14 November 2016 12:47

"N-O-B-O-D-Y," the Ukrzaliznytsia public railway company’s head Wojciech Balczun said in Russian when asked who was behind the most high-profile personnel decision in the transport industry in recent years, stressing every letter and laughing.

He is a charming person. Smiling, reserved, and stylishly dressed, Balczun looks out of place in an office dating from the Kirpa era. The only thing here that emphasizes the spirit of modern management is a flipchart.

Balczun has learned a little Ukrainian since becoming the director of the Ukrzaliznytsia public railway company. For Balczun, it is important to leave something behind. This is exactly what gives meaning to his work – in both business and the arts. The question is what he will leave behind at Ukrzaliznytsia.

It would be an understatement to say that he is in a hot seat. The company on which about 80% of the total cargo turnover in the country depends is in deep crisis. There are shortages of everything: diesel locomotives, fuel for diesel locomotives, tens of thousands of railcars… Most importantly, there is a shortage of a sensation of change and a feeling that there is a way out of this situation.

"My predecessors are to blame,” says Balczun. “I inherited assets that are morally and physically outdated, multi-million-dollar debts, and corruption." He is right.

"Operating inefficiency is to blame," his opponents say, and they are certainly also right. A man with the good looks of a rock star and the soft smile of an office person, the system initially perceived Balczun as an eccentric "fashion statement," saying that they have competitions for posts, Western creditors, talks of reforms – in a word, picture – over there in Kyiv. However, the reality is different, especially in a system in which, until recently, status was determined by the number of stars on a uniform. Rockers do not belong here.

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Then, Balczun surprised everyone by making it explicitly clear that the role of a bit-part player and a senior manager "for the picture" did not suit him. He demanded real authority and showed that he was ready to defend his position strongly if necessary. One gets the impression that he was ready for this from the very beginning. "I have more enemies in Ukraine than friends," he says. The tense situation between the Ukrainian Ministry of Infrastructure and Ukrzaliznytsia is visible to the naked eye. Both sides did not hesitate to goad each other publicly through Facebook posts and behind each other’s backs. However, Balczun emphasizes that he has support at the highest level – within the government and personally from Prime Minister Volodymyr Groysman.

As a political project, it can be said that Wojciech Balczun has already been a success in Ukraine. His appointment is a plus for the authorities because Balczun represents a new type of state manager – one who is professional, focused on results, and not associated with any clans. It is another matter whether he has been a success as a professional and whether he will actually be able to change a system that has long been considered almost synonymous with corruption in Ukraine.

In any case, what is at stake is more than the success or failure of a top manager at one of the largest companies in the country. With the level of attention and public resonance that have accompanied Balczun since his appointment, the results of his work at Ukrzaliznytsia will be perceived by society as an indicator of the very idea of inviting expatriates to mange state monopolies and their viability in the Ukrainian reality.

In an exclusive interview with the CTFS portal, Balczun discusses when the result of his work will become apparent, the difference between real changes and reforms conducted in PowerPoint and on Facebook, "the convenience of a foreigner," plans to shut down Ukrzaliznytsia’s operations, fatigue, and whether the Balczun that earns half a million dollars exists.

…Everybody wants me to be a part of such an unpleasant and unacceptable Ukrainian reality, but it seems to me that I am here in order to change it

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On traffic jams and dark PR

In my opinion, the job of a manager is similar throughout the world, and it is incredibly intense. My working day is 12-15 hours. The difference is that many things happen unplanned in Ukraine. The fact that a manager’s time is expensive is sometimes not appreciated. I am often the victim of meetings at which the presence of the head of the railway is not compulsory. This breaks my schedule and I am forced to cancel meetings on company strategy, for example. I spend 40 minutes in traffic jams on the way to such a meeting despite the fact that a head or deputy head of department could have gone to such a meeting. The mission is probably more extreme and difficult psychologically in Ukraine.

I am a foreign manager hired by the government, but people are always trying to squeeze me into such a system of working as if I am a Ukrainian. Everybody wants me to be part of such an unpleasant and unacceptable Ukrainian reality, but it seems to me that I am here in order to change it.

I am often a victim of dark PR, which is aimed in our direction absolutely unfairly. Here, for example, is the title of one of today's articles... (Two presentations, one of which is entitled "Media Monitoring," lie before Balczun. He opens it and begins to read in Russian, stammering a little on the long words, “The SBU uncovers a multimillion-dollar corruption scheme under Balczun..."). This is manipulation... I am combating corruption. The article refers to events that took place before I arrived at Ukrzaliznytsia. Unfortunately, the people that control certain schemes in this company resort to this kind of actions. However, I keep repeating one thing: the more the dark PR, the more it becomes obvious that I have really begun working well.

Rumors that my days were numbered in months began surfacing just one month after I arrived at Ukrzaliznytsia. I am then asking myself why a contract was signed with me

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On Facebook and enemies

I can confidently say with that I have more enemies in Ukraine than friends. However, I receive good support from Prime Minister Volodymyr Groysman, who says, "Wojciech, you are here to change this company, to implement reform. There is no reason for you to fear transformation, and you will have full support in the fight against corruption and the creation of a good, modern company.” Judging by my Facebook posts, there are very many ordinary people who believe that it is possible to change Ukrzaliznytsia and that I can do it. We have huge support and assistance from the government and the parliament’s transport committee at this difficult moment. Well, we are also counting on understanding on the part of the Ministry of Infrastructure.

However, in addition to official statements, there is also another thing... When the minister tells reporters off-the-record that he is very unhappy with my work and I later find out about this, then it means that the information was intended to be leaked. The same text is provided at meetings with investors and American business representatives… I am a man of compromise and I will make every effort to establish dialogue with the Ministry of Infrastructure… However, I feel uncomfortable when reports that the Ministry of Infrastructure is unhappy with my work are being circulated behind my back. Rumors that my days were numbered in months began surfacing just one month after I arrived at Ukrzaliznytsia. I am then asking myself why a contract was signed with me.

The fact that we have one person serving as the first deputy minister of infrastructure (Yevhen Kravtsov) and the head of Ukrzaliznytsia’s supervisory board does not meet the generally accepted international standards, especially considering the fact that this person most recently headed Ukrzaliznytsia and made managerial and personnel decisions. In this case, I absolutely agree with Groysman, who has said that the supervisory board should be independent, public, and professional and that it should have an objective view of what is happening at the company.

...The Balczun that earns USD 1.5 million does not exist

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On "mission impossible" and salary

I am an absolutely independent person. I was seduced by the opportunity to take up a challenge and pit my strengths against those of the ones against whom I have been pitting my strengths all my life. It is a challenge similar to "Mission Impossible." This was my main motivation. Of course, the financial side of the contract that was offered also attracted me. Regarding my salary, which is constantly mentioned in the media through "temniki" (political orders on what news to cover and how), it is very different from reality. I will tell you right away that the Balczun that earns USD 1.5 million does not exist. I earn slightly more than UAH 400,000 per month. Subtract the costs of accommodation and flights.

Of course, by Ukrainian standards, that is a very large salary, simply gigantic. However if you compare it with my salary in Poland, I earn the same amount with much greater risks and responsibility… I am working in a different country, within a different legal system, and I bear personal responsibility for the entire Ukrzaliznytsia. Moreover, I alone bear all the responsibility, but decisions are made by many people whose responsibilities are much diluted. That is the way Ukrzaliznytsia’s statutes are written and the way competencies are shared between the board and the supervisory board. I have experience of working in international – and not only Polish – firms, but I have never seen anything like this.

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On the Polish invasion and Slawomir Nowak

If we are speaking of the Polish team in Ukraine, then there are only a few Poles to 300,000 employees at Ukrzaliznytsia, Slawomir Nowak, who has appeared at Ukravtodor, and three presidential advisers… I have not heard of any others at the governmental level. However, if we are speaking of an invasion, then I think it is proof that the reforms that have been implemented in Poland in recent years are justifiably appreciated. We started in 1989-90s and our position was even lower than Ukraine’s current position. The reforms in Poland have shown that it is possible to change a country and move closer to Western civilization. After being here for five months, I can say that Ukraine has a huge economic potential that only needs to be realized.

Slawomir Nowak and I know each other. He was the minister of infrastructure in Poland when I was the head of PKP Cargo. We did not work very closely together because it was during his term that I decided to leave PKP Cargo. Regarding his appointment, in the same way that I am pitting my strengths against those of Ukrzaliznytsia as one of the largest – if not the largest – firms in Ukraine, he needs to pit his strengths against those of an institution that is associated primarily with lack of efficiency and gigantic corruption.

…It was very convenient to hire a foreigner and say that he was the one that ruined everything

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On shutdown of Ukrzaliznytsia and the "convenience of hiring a foreigner"

According to some people’s plans, Ukrzaliznytsia should have ceased operation already. This has not happened because of my actions. (Infrastructure Minister Volodymyr Omelian said at a meeting that he feared becoming the first minister under whom Ukrzaliznytsia would cease operation. We asked Balczun if he was afraid of becoming the first head of Ukrzaliznytsia under whom everything would stop).

Such questions should be put to whoever prepared this cessation plan… Well, it is obvious that there was plan to shut down the operations of the railways... If you are not repairing rolling stock, not inviting tenders for supply of locomotives and railcars, not buying tires, using up the entire fuel reserve without inviting tenders for supply of new fuel, and halving the budget for repair of rolling stock when you know that a large proportion of railcars will be written off this year… How else can you describe that? Then they can say, "the international board has not justified itself, so let us return to the old schemes, with everything operating as it should."

The only problem is that all this will happen at the expense of the railway, which will become worse and worse. That is one side. Another side is the pure incompetence of the people that had influence on this company.

I know that my words sound quite harsh, but I do not intend to take responsibility for information that is published based on "temniki," which claims that railcars and locomotives have suddenly disappeared since Balczun took office. Repair volumes were incredibly reduced in the first six months of this year. Why? That is not a question to me… I did not prepare the plan for 2016. Virtually all these quotas were exhausted in the first half of the year. For the second half of the year, we have allocated almost UAH 2 billion for resumption of production of new railcars and repair of railcars and locomotives.

Parliamentary Deputy Oleksandr Vilkul (a deputy prime minister of Ukraine from 2012 to 2014) has criticized me, saying everything was good and wonderful until Balczun arrived and ruined Ukrzaliznytsia, leaving metallurgists with nothing with which to transport their products. In 2012, it was necessary to replace more than 7,500 tires but 4,100 were replaced. In 2013, the requirement was for 6,700 to be replaced, but 5,200 were replaced.

Ukrzaliznytsia’s entire reserve was used up before I arrived: tires from some locomotives were switched to others; more than 100,000 tons of the reserve fuel that protected us against collusion during tenders was used… Everything was simply pumped out of Ukrzaliznytsia in recent years, and it was very convenient to hire a foreigner and say that he was the one that ruined everything. Maybe that was the plan.

Even if we make the most beautiful presentation in the world, we will have to throw it into the trashcan if we have a shortage of 10,000 railcars

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On PowerPoint reforms and worries

If we are speaking of reforms, then I am not the kind of person that will implement reforms on paper, in PowerPoint presentations, or on Facebook... We will implement real reform because even if we make the most beautiful presentation in the world, we will have to throw it into the trashcan if we have a shortage of 10,000 railcars. (That notwithstanding, it is said in the ministry that Balczun is a person who only creates beautiful presentations, but even the presentations are late... According to Balczun’s assistants from the same offices, he is always being asked to submit action plans. Balczun feels insulted by this characterization, and his tone becomes harsher).

I can spend a long time listing what we have actually done... Should I continue listing them? We are completely changing the system for servicing and maintenance of passenger railcars, we have developed a new system that involves services and cleanliness, we have invested in installation of special equipment for heating railcars during the winter and cooling them during the summer, we are modernizing the line to Mariupol to increase its throughput to 27 pairs of trains per day, we have practically obtained EUR 300 million for financing electrification of the Dolynska-Mykolaiv line, and Kovel-Izov line is on the list of priorities… We plan to increase our fleet by 6,600 railcars next year. In addition, we are thinking about grain wagons because Ukrzaliznytsia last purchased a grain wagon in 1993.

I have already stopped worrying about these things because, as it turned out, there is even nobody that can create a presentation properly and professionally in the entire Ukrzaliznytsia headquarters.

If we only want some kind of political/Facebook fireworks, then we are not taking about reforms

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On tariffs and letters from MPs

The board and I analyze our economic and business situation every day. Our main goals are improving efficiency and reducing costs. However, if we are speaking of restoring at a stroke the potential that was destroyed over several years, we need somewhere from which to borrow money for development. If we want to have good, modern trains, locomotives, and a sufficient number of railcars in Ukraine, including specialized railcars, then funds are needed for modernization and purchase of this rolling stock. We will finance this partly by raising efficiency and eradicating corruption and partly by changing the freight tariff. If we look at the inflation rate over the past few years, we will see that our prices are behind the rate of inflation. Therefore, it is most likely necessary to expect that we will propose some changes to freight tariffs.

Reform of such a huge railway company like Ukrzaliznytsia requires calmness, time, and political support. The reform of PKP Cargo is the best railway reform in Europe in the past 10 years. Its reform was successful only because the conditions that I mentioned were met. Nobody was hysterical in the first two years, so I was given a chance to achieve results.

Minister of Infrastructure Volodymyr Omelian and I recently met with the vice president of Deutsche Bahn, who said that it took the German railway 20 years to implement such fundamental reforms. If we only want some sort of political/Facebook fireworks, then we are not taking about reforms.

I do not want MP Solovei to write me a letter saying that he wants railcars for a specific purpose because the system should work objectively. Otherwise, I could be asked why I sent railcars specifically there. If I sign this letter, can that be called corruption or not?

If railcars are a scarce commodity, then someone can demand a bribe for railcars

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On locomotives and wagon plans

As foreigners in a giant firm, we have looked around for two to three months to see what is happening and then taken a number of measures involving purchase of tires, performance of repairs, purchase of railcars, repair of locomotives, and procurement of fuel. We have launched tenders, and we will manufacture 650 railcars before the end of the year, specifically at Ukrainian enterprises rather than Polish, German, or other foreign enterprises. Moreover, half of them are being manufactured at Ukrzaliznytsia’s facilities.

There is some nervousness on the market, but, unfortunately, because of the policies that were implemented in the past few years, we are simply physically unable to make up for what was lost back then. Therefore, we have prepared a plan for the year 2017, which provides for a large-scale process of restoration of Ukrzaliznytsia’s rolling stock so that Ukrzaliznytsia can give an impetus to the entire Ukrainian economy. We hope to achieve a "plus-minus zero" financial result this year, which will be a great achievement compared with last year. However, we expect to make a loss of UAH 3.5-4 billion next year, but all this money will be invested spent on restoration and repair of rolling stock.

There is only one thing I cannot go through: we have Europe’s most liberal railway market in Poland and it was possible to fight for every ton of freight with my competitors in a tender. Here, I can transport 20-30% more freight if I had something with which to transport it. That is why we are fundamentally changing the approach to the plan for 2017 to ensure that such a situation does not repeat itself, that the railways operate steadily, and that we are able to get rid of the existing schemes... If railcars are a scarce commodity, then someone can demand a bribe for railcars...

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On Poland and fatigue

I would like to dispel the myth that I often fly to Poland. If I do not have business trips during a week, then I fly out at 20:00 on Friday, arrive home late in the evening, and return to Kyiv at 08.05 on Monday. That is how much time I have for my family.

Visit my Ukrainian roots? There was no time for that when we were in the Beskyd tunnel. So many things needed to be done. However, I hope that I will have time to go back to the place where my ancestors came from when the situation stabilizes, particularly my great-grandfather, who worked on the Lviv railway.

Sometimes, yes, I feel tired... Not physically, but mentally. Because I am working in a situation in which there is a feeling that the country chose me and I was presented with a certain vision of the conditions in which I would work, but the reality is a little different... When I read in newspapers that Balczun is responsible for something that has nothing to do with me... I have not yet worked long enough for me to be assessed... It is not very nice.

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