Entrepreneurs Step Into the Breach
While news reports from Eastern Europe focus on obsolete industries and filthy air, local businessmen are barging ahead, sparking a grass-roots economic revolution. EASTERN EUROPE'S DARING LEAP
WHEN Janusz Lekszton founded a private company producing gas boilers in 1985, communist regulations limited him to hiring 15 employees. That wasn't all. The authorities forbade him from selling to state-owned enterprises and slapped him with special high taxes.Then Poland cut loose from communism. Restrictions against private enterprise fell, and Mr. Lekszton jumped to plug yawning gaps in the Polish marketplace. From its modest beginnings, his El Gaz Corporation has exploded into a small conglomerate with 1,750 employees. It has opened a modern plant fabricating windows for a building boom, begun distributing Nissan cars, started a new commercial television station, and just launched Poland's first private airline. All this has made the bearish, 29-year-old Lekszton one of the richest men in Poland. On a list of the 100 wealthiest Poles published earlier this year by the weekly "Wprost," Lekszton ranked ninth, with a monthly income of at least $100,000. But his goals go beyond making money. "I'm trying to show that here in Poland one is able to do really big business without help from outside," Lekszton asserts. "Foreigners don't understand our situation and are unable to make as big money as us Polish." While news reports from Eastern Europe focus on obsolete industries and filthy air, local businessmen are barging ahead, sparking grass-roots economic revolution. In 1990, an estimated 300,000 new private businesses sprang up in Czechoslovakia and 250,000 in Hungary. Poland, the first country to overthrow communism, has made the most remarkable transformation. In the past year, Poles have started more than 500,000 new private businesses, from giant supermarkets to computer software houses. The private sector, marginal under communism except for agriculture, today accounts for up to 35 percent of gross national product. Most of the entrepreneurs are brave souls filling holes left in the market by inefficient state enterprises. They provide Western-style services, such as restaurants, copy shops, and photo development labs. They build satellite dishes, auto parts, and construction machinery in makeshift factories. The startups are financed with cash loaned from relatives abroad, earned by working in the West, or simply accumulated over the decades of communist rule and hidden under mattresses. "Create more or less stable conditions, do away with a lot of regulation, and people respond," says Janusz Lewandowski, Poland's privatization minister. But the boom in private enterprise is not without its problems. East-bloc startups benefit from a kind of Wild West, anything-goes climate. Thousands of unregistered vendors who have set up burgeoning street markets are tolerated even though they pay no taxes. Large-scale corruption has become a worrisome reality. In the most notorious case uncovered so far, Polish police arrested six bankers in August, accusing their private company, Art B, of defrauding the state treasury of millions of dollars. "The situation is not a proper one," complains Miroslaw Mironowicz, head of the Solidarity Economic Foundation in Gdansk. "This is such a period in the economy when really energetic, entrepreneurial people can use the legal gaps." Lekszton and El Gaz have not escaped the critical scrutiny. Many of Poland's best-known business buccaneers have close ties to the old Communist Party, and reportedly got their start either by cheating customs regulations or state companies. Lekszton never was a party member; but in private, residents here hint that he had communist connections. "Politically speaking, I'm as neutral as Switzerland," Lekszton retorts. "People resent the new capitalist class." Why? "Envy," he answers sharply. Envy or not, rising resentment against the nouveaux riches is shaping up as a major issue in Polish parliamentary elections Oct. 27. The danger is that a full-scale crackdown on corruption, or a widely publicized trial against the directors of Art B, could turn into a trial against capitalism - just at a moment private business is needed to soak up thousands of workers turned loose by bankrupt state companies. So despite the criticism, politicians of all stripes continue to support the new business mogul s, despite their shady reputations. "This Lekszton is a famous name in Poland, one of the successful examples of a whole new entrepreneurial class growing in this country," Mr. Lewandowski says. "He's young, he's taken risky decisions, and so far he's succeeded." Within El Gaz, Lekszton commands a mixture of fear, respect, and admiration. Employees call him "The Boss." They like working at El Gaz, where salaries are twice as high as at a state factory. ve worked at a state-run factory for 17 and a half years and there we were always waiting for orders," recalls Jerzy Zagac, a worker in the El Gaz window factory. "Here at the private factory, everybody who comes to work in the morning knows what he is expected to do," he says. The admiration extends to the nearby Gdansk Shipyards, which more than anywhere else, symbolize Eastern Europe's long struggle to overthrow communism. Solidarity was born there; Polish President Lech Walesa worked there. But now, the former Lenin Shipyard faces a different struggle - just to survive. It hasn't won an order for a new boat in more than two years. "We definitely need such people as Lekszton to take over," says Eugieniusz Grzegorz, a welder. "They build new modernized companies, so people will be able to earn enough money to live." Lekszton certainly thinks big. He has mapped out El Gaz's activities through the year 2005, when he aims to have 3,500 employees. To achieve his goals, he admits that he must overcome some big hurdles - foremost among them, obtaining credit. Poland's banking system remains primitive and Lekszton complains that Western financiers don't take him seriously: "None of the banks, either the foreign or Polish banks, are ready to give me ... credits," he complains. "They won't even give me $20,000 and that isn't sufficient even for a business trip." The tone, angry and defiant, is typical tycoon. After visiting El Gaz, it is hard to avoid wondering whether the Lekszton empire is built on little more than tough words. His much-publicized airline, for example, consists of only one small jet. Local residents report that he hasn't paid his workers regularly in recent weeks. Lekszton bristles at such criticism. "One doesn't have to steal, kill, or do anything else to become a millionaire," Lekszton insists. "One just has to work properly, and have a good idea."