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Bucharest
November 29, 2021
BUSINESS

U.S. Charge d’affaires: Working against corruption and for the rule of law, essential for the investment climate in Romania

U.S. Charge d’affaires to Romania, Dean Thompson draws attention, as Assistant Secretary Nuland has noted in her trips to Bucharest, that working against corruption and for the rule of law, while increasing transparency, predictability and stability, are all essential for improving the business and investment climate in Romania.

Present on Wednesday at the celebration of the fourth anniversary  of Fondul Proprietatea’s (FP) listing on the Bucharest Stock Exchange (BVB) Thompson said that it is critical for the government and the parliament to be reliable investment partners.  “They must have transparent, across the board, consultations with all stakeholders on each piece of legislation.  Stakeholders must be given the time necessary to provide meaningful input, and need assurances from the government that their input will be considered.  Furthermore, the government must ensure stability in the investment climate, by avoiding rushed short-minded decisions.  Last year, the Romanian government endorsed an Action Plan to improve economic governance.  We look forward to the Romanian government working closely with the Coalition for the Development of Romania to implement and build on the Action Plan”.

 

FP has attracted more than 1.2 billion euros to Romania in portfolio investment

 

“Over the last four years, Fondul has posted an annualized return of almost ten percent.  In spite of setbacks encountered by some of the fund’s underlining underlying assets, Franklin Templeton’s management has increased FP’s net asset value per share.  Notably, Fondul is the world’s largest closed end fund,’ showed Dean Thompson in his speech held at the ceremony.

He praised Franklin Templeton’s work in showcasing Romania and said it has paid off.  For example, said Mr. Thompson, FP is now covered by approximately 20 analysts/researchers and the fund enjoys a five star Morningstar rating.  FP has attracted more than 1.2 billion euros to Romania in portfolio investment; much from international institutional investors.  “Additionally, FP’s promotion of the sale of minority stakes in state controlled enterprises has deepened Romania’s capital markets, allowing both Romanian and international  investors to recognize and invest in the opportunities that Romania has to offer”.

 

“These are impressive achievements and I praise Fondul’s managers for their accomplishments.  I also applaud Fondul’s coordination and cooperation with the EBRD and like-minded government allies who are working towards improving corporate governance in all state-controlled entities,” stressed the American diplomat.

 

The Romanian government must ensure that state controlled entities are run by professional, private managers, free from any political influence

 

He said that the corporate governance involves balancing the interests of all stakeholders in an entity – whether they are shareholders, management or the government.  “It can be a difficult task, requiring a system of rules, practices and processes by which an entity is directed and controlled.  To put it simply, good corporate governance is the right people, managing the right way, and achieving the best possible outcome for the company and the shareholders,” Mr. Thompson told the audience.

“The first step towards good corporate governance is having the right people, competent, experienced and professional, people on the boards.  The Romanian government must ensure that state controlled entities are run by professional, private managers, selected via a transparent and competitive process, free from any political influence.  Secondly, the Romanian government should empower those managers to make sound business decisions, without the fear of interference by governmental officials in the entity’s internal affairs.  In turn, the government should reward, appropriately, private managers based on their results.  For example, as Hidroelectrica has proven, competent private management leads to efficiency and profitably, which also benefits all shareholders, including the state and, ultimately, all Romanian citizens,” Dean Thompson also added.

He said that Fondul’s managers and the EBRD are key allies for the government as it seeks to improve and implement across the board the corporate governance code across the board.  “Franklin Templeton and the EBRD both have a wealth of experience in this area, giving the Romanian government a unique opportunity to leverage this knowledge.  I urge the government to take on board their recommendations and move forward with improving the corporate governance legislation, expanding its own capacity to rely on private management and private shareholders’ expertise,” the US Charge d’affaires added.

 

Basic causes of corruption are the existence of a clear opportunity, lack of accountability and transparency, and weak enforcement

 

Mr. Thompson also showed that sound decision making as part of the corporate governance approach has an additional, often unspoken benefit – it shores up a company against the threat of corruption.  “We all know that corruption breeds failure.  But, what breeds corruption?   Basic causes of corruption are the existence of a clear opportunity, lack of accountability and transparency, and weak enforcement,” said Dean Thompson.

“Good corporate governance practices set clear ‘rules of the game’ and establish ‘checks and balances’.  Corrupt acts are then more difficult to conceal and accountability is more easily accomplished.  Properly managed state controlled entities are the underlying basis for supporting government efforts to combat economic corruption.  By reducing the opportunities for corruption, state controlled entities will no longer be a drag on the state’s limited resources,” he also told the audience gathered at the event to mark the fourth anniversary of Fondul Proprietatea listing to the BVB.

Most importantly, he emphasized, good corporate governance and the elimination of opportunities for corruption will benefit the ultimate shareholders of state controlled companies, the people of Romania.

 

I urge the Romanian government to align its anti-corruption efforts with its promotion of good corporate governance efforts

 

“Romanians bear the brunt of poor services and the costs associated with subsidizing poorly managed companies.  By doing so, Romanians forego other much needed public services.

Absent these costs, state budgetary pressure would be alleviated and the Romanian government could dedicate the freed-up resources to improved public services, benefiting all Romanians.  I urge the Romanian government to align its anti-corruption efforts with its promotion of good corporate governance efforts,” Dean Thompson also added.

 

The United States wants the strongest possible, cleanest possible, democratic Romania to continue to be our great ally here in Europe and around the world

 

In the end of his speech, he said that the US Embassy looks forward to their continued work with the Romanian government, Franklin Templeton and the EBRD on moving forward with the implementation of corporate governance practices.  “We will do it because, as Assistant Secretary Nuland said, “the United States wants the strongest possible, cleanest possible, democratic Romania to continue to be our great ally here in Europe and around the world,” Mr. Thompson concluded.

 

 

 

 

draws attention, as Assistant Secretary Nuland has noted in her trips to Bucharest, that working against corruption and for the rule of law, while increasing transparency, predictability and stability, are all essential for improving the business and investment climate in Romania.

Present on Wednesday at the celebration of the fourth anniversary  of Fondul

Proprietatea’s (FP) listing on the Bucharest Stock Exchange (BVB) Thompson said that it is critical for the government and the parliament to be reliable investment partners.  “They must have transparent, across the board, consultations with all stakeholders on each piece of legislation.  Stakeholders must be given the time necessary to provide meaningful input, and need assurances from the government that their input will be considered.  Furthermore, the government must ensure stability in the investment climate, by avoiding rushed short-minded decisions.  Last year, the Romanian government endorsed an Action Plan to improve economic governance.  We look forward to the Romanian government working closely with the Coalition for the Development of Romania to implement and build on the Action Plan”.

 

FP has attracted more than 1.2 billion euros to Romania in portfolio investment

 

“Over the last four years, Fondul has posted an annualized return of almost ten percent.  In spite of setbacks encountered by some of the fund’s underlining underlying assets, Franklin Templeton’s management has increased FP’s net asset value per share.  Notably, Fondul is the world’s largest closed end fund,’ showed Dean Thompson in his speech held at the ceremony.

 

He praised Franklin Templeton’s work in showcasing Romania and said it has paid off.  For example, said Mr. Thompson, FP is now covered by approximately 20 analysts/researchers and the fund enjoys a five star Morningstar rating.  FP has attracted more than 1.2 billion euros to Romania in portfolio investment; much from international institutional investors.  “Additionally, FP’s promotion of the sale of minority stakes in state controlled enterprises has deepened Romania’s capital markets, allowing both Romanian and international  investors to recognize and invest in the opportunities that Romania has to offer”.

“These are impressive achievements and I praise Fondul’s managers for their accomplishments.  I also applaud Fondul’s coordination and cooperation with the EBRD and like-minded government allies who are working towards improving corporate governance in all state-controlled entities,” stressed the American diplomat.

 

The Romanian government must ensure that state controlled entities are run by professional, private managers, free from any political influence

 

He said that the corporate governance involves balancing the interests of all stakeholders in an entity – whether they are shareholders, management or the government.  “It can be a difficult task, requiring a system of rules, practices and processes by which an entity is directed and controlled.  To put it simply, good corporate governance is the right people, managing the right way, and achieving the best possible outcome for the company and the shareholders,” Mr. Thompson told the audience.

“The first step towards good corporate governance is having the right people, competent, experienced and professional, people on the boards.  The Romanian government must ensure that state controlled entities are run by professional, private managers, selected via a transparent and competitive process, free from any political influence.  Secondly, the Romanian government should empower those managers to make sound business decisions, without the fear of interference by governmental officials in the entity’s internal affairs.  In turn, the government should reward, appropriately, private managers based on their results.  For example, as Hidroelectrica has proven, competent private management leads to efficiency and profitably, which also benefits all shareholders, including the state and, ultimately, all Romanian citizens,” Dean Thompson also added.

He said that Fondul’s managers and the EBRD are key allies for the government as it seeks to improve and implement across the board the corporate governance code across the board.  “Franklin Templeton and the EBRD both have a wealth of experience in this area, giving the Romanian government a unique opportunity to leverage this knowledge.  I urge the government to take on board their recommendations and move forward with improving the corporate governance legislation, expanding its own capacity to rely on private management and private shareholders’ expertise,” the US Charge d’affaires added.

 

Basic causes of corruption are the existence of a clear opportunity, lack of accountability and transparency, and weak enforcement

 

He also showed that sound decision making as part of the corporate governance approach has an additional, often unspoken benefit – it shores up a company against the threat of corruption.  “We all know that corruption breeds failure.  But, what breeds corruption?   Basic causes of corruption are the existence of a clear opportunity, lack of accountability and transparency, and weak enforcement,” said Dean Thompson.

“Good corporate governance practices set clear ‘rules of the game’ and establish ‘checks and balances’.  Corrupt acts are then more difficult to conceal and accountability is more easily accomplished.  Properly managed state controlled entities are the underlying basis for supporting government efforts to combat economic corruption.  By reducing the opportunities for corruption, state controlled entities will no longer be a drag on the state’s limited resources,” he also told the audience gathered at the event to mark the fourth anniversary of Fondul Proprietatea listing to the BVB.

Most importantly, he emphasized, good corporate governance and the elimination of opportunities for corruption will benefit the ultimate shareholders of state controlled companies, the people of Romania.

 

I urge the Romanian government to align its anti-corruption efforts with its promotion of good corporate governance efforts

 

“Romanians bear the brunt of poor services and the costs associated with subsidizing poorly managed companies.  By doing so, Romanians forego other much needed public services.

Absent these costs, state budgetary pressure would be alleviated and the Romanian government could dedicate the freed-up resources to improved public services, benefiting all Romanians.  I urge the Romanian government to align its anti-corruption efforts with its promotion of good corporate governance efforts,” Dean Thompson also added.

 

The United States wants the strongest possible, cleanest possible, democratic Romania to continue to be our great ally here in Europe and around the world

 

In the end of his speech, he said that the US Embassy looks forward to their continued work with the Romanian government, Franklin Templeton and the EBRD on moving forward with the implementation of corporate governance practices.  “We will do it because, as Assistant Secretary Nuland said, “the United States wants the strongest possible, cleanest possible, democratic Romania to continue to be our great ally here in Europe and around the world,” Mr. Thompson concluded.

 

 

 

 

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