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September 22, 2019
POLITICS

Parliament adopts bill setting up Sovereign Fund for Development and Investments with registered capital of RON 9 bln . Opposition to challenge bill at Constitutional Court. FinMin Teodorovici: Only profitable companies enter Sovereign Fund, it’s not true that someone steals the money

On Wednesday, Parliament adopted – with 174 votes in favour, 98 against and 3 abstentions – a bill on the setting up of the Sovereign Fund for Development and Investments (SFDI), which will handle the development, financing – from own funds and attracted funds –, and management of own financial assets to obtain profit. According to the bill, several companies will be part of the SFDI, and its registered capital will total RON 9 billion.

The goal of the Sovereign Fund for Development and Investments is to develop and finance – from own funds and attracted funds – profitable and sustainable investment projects in various economic sectors, through direct participation or via other investment funds or investment companies, alone or alongside other institutional or private investors, including through participation in public-private partnerships, and to manage its own financial assets in order to obtain profit.

According to a PSD amendment adopted by the Economic Policy Committee, the SFDI’s investment strategy is approved by the Government and is correlated with a set of short-, medium- and long-term performance indicators that seek, among other things: a) the development of infrastructure in Romania; b) job creation; c) stimulating innovation and new technologies; d)  the long-term growth of human capital; e) boosting the Romanian economy’s competitiveness.

Likewise, 33 state-owned companies will be part of the SFDI, including: Engie Romania S.A., Electrica S.A., E.ON Energie Romania S.A., OMV Petrom S.A., Telekom Romania Communication S.A., Compania Nationala Aeroporturi Bucuresti S.A., Romgaz S.A., Chimcomplex S.A., Antibiotice S.A., Compania Nationala pentru Controlul Cazanelor, Instalatiilor de Ridicat si Recipientelor sub Presiune S.A., Compania Nationala Loteria Romana S.A., IAR S.A. and Compania Nationala Unifarm S.A.

According to Eurostat, the companies that are to become part of the Sovereign Fund should not be insolvent. Compared to the form adopted by the Senate, the House Economic Policy Committee introduced on the list another ten companies that register no profit: S.C. Complexul Energetic Oltenia S.A., Compania Nationala Cai Ferate C.F.R. S.A., Societatea de Radiocomunicatii S.A., Romanian Post, ‘Traian Vuia’ Airport Timisoara, Uzina Termoelectrica Midia S.A., Compania Nationala Administratia Canalelor Navigabile S.A. and Administrarea Porturilor Dunarii Fluviale S.A.

Another article states that “the share packages used to increase the SFDI’s registered capital are to be transferred, in line with the present law, from the Romanian state’s private property to the private property of the SFDI, the latter being able to freely use the said shares as its own assets.”

At the same time, according to the bill, the Fund is administered in a dual system, by a Board of Directors made up of seven members, under the oversight of a Supervisory Council made up of nine members.

In the form adopted by the Senate, the SFDI’s registered capital totalled RON 1.85 billion, but the Economic Policy Committee decided to hike it to RON 9 billion.

Two articles have been removed from the version adopted by the Senate, specifically: the medium and long-term performance indicators shall be drafted by the Ministry of Public Finance as representative of the state as sole FSDI shareholder, in consultation with an advisory committee and are approved by the Government, along with the investment strategy. The advisory committee was supposed to include three representatives of the Government, and one representative of each the National Bank of Romania, the Financial Supervisory Authority, the academic milieu, the financial-banking industry, Parliament and civil society.

According to another amendment, the activity and the accomplishment of FSDI goals are assessed annually by the Ministry of Public Finance and presented to the Government.

 

PNL, USR, PMP and independent MPs will challenge the bill at Constitutional Court

 

Liberal deputy Raluca Turcan requested that the bill be sent back to the committee on grounds that it is unconstitutional, but the plenum rejected the proposal. Turcan announced that the National liberal Party will challenge the law at the Constitutional Court of Romania.

“The PNL will notify the Constitutional Court of Romania about the law through which PSD-ALDE have delivered today the biggest blow to the Romanian national economy, by setting up the so-called Sovereign Fund for Development and Investment. It is the biggest scam to target state assets in recent years!” PNL First Vice President Raluca Turcan said.

IN addition, House lawmaker Tinel Gheorghe (PNL) asked that the bill return to the Committee for a period of three or four hours, but his request was rejected by vote. The Liberal claimed that the amendments tabled by PNL were not discussed within the Committee. “Even if you don’t want them, reject them within the Committee,” Tinel said.

The representative of the Save Romania Union Claudiu Nasui said that his party, the People’s Movement Party and independent deputies will also challenge the bill at the CCR.

 

Dragnea on accusations regarding Sovereign Fund: It’s nonsense. We can’t govern minding some people’s lies

 

PSD President Liviu Dragnea stated on Wednesday that all the accusations regarding the Sovereign Fund are nonsense and a country cannot be governed while minding what “some rats” are saying.

“These aren’t accusations, they’re nonsense, there’s no basis and no truth. Some colleagues who are today saying these enormities, probably inspired by those who were talking about secret deals with the Jews, claimed that they know this is an important bill. This investment fund – because the Opposition criticises it too – functions in many countries of the world,” Liviu Dragnea stated on Wednesday.

The statement came against the backdrop in which ex-Premier Victor Ponta wrote on Facebook that the adoption of the bill on the Sovereign Fund is the biggest theft of Romanian state assets in history, surpassing EUR 10 billion.

“I won’t comment on what the rats are saying. Mihai Tudose couldn’t have opposed it because he had this idea regarding this fund, and I know Teodorovici supported it. If we are to mind a rat, mind what others are saying… we can’t govern the country minding the lies of some pathological liars,” Dragnea added.

He also said: “Any company introduced in this fund will be favoured, all these companies, to develop well and healthily because there will be professional management, professionals will be selected and appointed, who would make these companies profitable.”

 

Teodorovici: Only profitable companies enter Sovereign Fund, it’s not true that someone steals the money

 

Finance Minister Eugen Teodorovici stated on Wednesday that he too has heard all kinds of “completely baseless” accusations according to which somebody will steal the Sovereign Fund’s money, accusations that he rejects. “These are profitable companies, this was one of the conditions,” the minister said.

“Concerning the companies and the way this Fund operates, I heard even in Parliament today all kinds of completely baseless accusations according to which someone is stealing the money. No. These are profitable companies, this was one of the conditions for these companies to be part of the Fund. No later than yesterday we brought an amendment to make extra sure that these companies will enter this Fund based on a very clear analysis, so that the Fund would not be classified [as being] within the Budget, as financial instrument,” Eugen Teodorovici stated.

“A working capital of 2 billion lei and a registered capital of 9 billion have been approved, the payments are to be made in instalments, and the first instalment is 200 million, and the rest of the instalments will be made when the investments also exist, money is not automatically transferred to this Fund,” the minister pointed out.

Eugen Teodorovici added that the important part that follows the publishing of the law in the Official Journal will be the way the Supervisory Council’s members are selected.

“The state cannot appoint more than two persons within this board of 9 supervisors of the Sovereign Fund, and the two persons will be appointed based on the same criteria as in Ordinance 109, the one on corporate governance, so the same principles; the criteria are very important because those people must have experience on the market and with the way such instruments work. The board analyses the strategies, approves the strategies for the strategic companies, so there is nothing new, nothing fantastic,” Eugen Teodorovici said.

The Finance Minister also mentioned the amendment that the Economic Committee tabled on Tuesday and the House plenum approved on Wednesday, according to which the transfer of shares to the Sovereign Fund is done following an analysis that should show that “the Fund, overall, will not be considered part of the budget,” adding that Eurostat agrees with the form approved by Parliament.

“The main topic of discussion with Eurostat was the way the floating of a company can be decided, and that discussed amendment has been included and is today in the law, precisely the way Eurostat recommended it should be,” the minister added.

 

PSD MPs: Establishment of Sovereign Investment Fund, necessary economic stimulus measure

 

PSD’s House lawmakers claim that the establishment of the Sovereign Fund for Development and Investments is a necessary economic stimulus measure allowing the setting up of sources of financing for profitable and sustainable investment projects that will generate a multiplying effect in the economy.

“PSD’s parliamentary group considers that the establishment of this Fund is a necessary economic stimulus measure that would allow, following the attraction of capital from the domestic and international capital markets, the setting up of sources of financing for profitable and sustainable investment projects that will generate a multiplying effect in the economy. The SFDI’s investment strategy will be approved by Government and will be correlated with a set of short-, medium- and long-term indicators that seek – without being limited to – the following: development of infrastructure in Romania; creation of jobs; stimulating innovation and new technologies; the long-term boosting of human capital; raising the competitiveness of the Romanian economy. The SFDI will be fully owned by the Romanian state throughout the period in which it functions. The rights and obligations stemming from the capacity of sole shareholder of the SFDI will be exercised, on behalf of the Romanian state, by the Finance Ministry, which will annually assess the Fund’s activity and the way it attains its objectives, and will present the assessment to the Government,” reads the press release of PSD’s parliamentary group within the House.

 

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