The Constitutional Court of Romania (CCR) admitted, on Wednesday, the constitutionality challenges formulated by President Klaus Iohannis, the National Liberal Party (PNL), the Save Romania Union (USR) and the People’s Movement Party regarding the establishment of the Sovereign Fund for Development and Investments (FSDI).
The Court ruled that the Law on the establishment of the Sovereign Development and Investment Fund (FSDI) was adopted by breaching the principle of the separation of powers and the role of Parliament, because the FSDI should have been established through a Government decision and not through a law.
CCR Chairman Valer Dorneanu announced that the law establishing the FSDI was declared unconstitutional, because this fund was not supposed to be created through a law but through a Government decision.
The CCR analysed and debated three objections of unconstitutionality against the law establishing the Sovereign Fund for Development and Investments S.A., lodged separately by 51 Save Romania Union, People’s Movement Party (PMP) and non-affiliated House lawmakers, the constitutionality challenge lodged by 66 PNL House lawmakers, as well as the challenge lodged by President Klaus Iohannis.
Establishing the identity of the subject to these three notifications, the CCR ordered their joinder.
Following deliberations, the CCR, by a majority of votes, passed the unconstitutionality objections and established that the Law regarding the establishment of the Sovereign Development and Investment Fund SA (FSDI) and the amendment of some normative acts are unconstitutional in their entirety.
Both the Head of State and the Opposition parties claimed in their challenges that establishing the Fund was among the prerogatives of central public authorities, not of Parliament, the separation of powers being thus infringed.
On July 4, President Iohannis notified the Constitutional Court about the law establishing the Sovereign Fund for Development and Investments S.A., pointing out that such a decision should have been included in a central administration act, not in a law adopted by Parliament.
“The fact that the state has the capacity of sole shareholder during the entire existence of the FSDI, and the purpose of setting up the FSDI is to develop and finance – from own funds and attracted funds – profitable and sustainable investment projects, shows that the FSDI is a company that will engage in commercial activity, a legal person of public law in the sense of Article 191, Section (2), of the Civil Code. Consequently, the setting up of a joint stock company must be done through an act of the central public administration authorities, not through a law,” President Klaus Iohannis points out in the challenge lodged with the CCR.
The Head of State also states that the law is unclear, with there being no mentions regarding any other authorities’ oversight of the Sovereign Fund for Development and Investments, not even Eurostat, during the period of its existence, and in outlining the FSDI’s juridical regime there are no references to incidental and mandatory European norms regarding the activity of such a fund.
The law establishing the Sovereign Fund for Development and Investments – tabled by PSD-ALDE – was adopted by Parliament on June 6. According to it, the Sovereign Fund will consist of 33 state-owned companies, including Engie Romania S.A., Societatea de Distributie şi Furnizare a Energiei Electrice – Electrica S.A., E.ON Energie Romania S.A., OMV Petrom S.A, Telekom Romania Communication S.A., Compania Nationala Aeroporturi Bucuresti S.A., Societatea Nationala de Gaze Naturale Romgaz S.A., Chimcomplex S.A., Antibiotice S.A., Compania Naţională pentru Controlul Cazanelor, Instalaţiilor de Ridicat şi Recipientelor sub Presiune S.A., Compania Nationala Loteria Romana S.A., IAR S.A. and Compania Nationala Unifarm S.A. The Romanian state will be the shareholder of the fund, which will have a registered capital of 9 billion lei.
The law’s objective is “the development and financing, from own funds and attracted funds, of profitable and sustainable investment projects, in various economic sectors, through direct participation or through other investment funds or other investment companies, alone or along with other institutional or private investors, including through participation in public-private partnerships.” Another objective of the FSDI is “the management of own financial assets, in view of obtaining profit.”
According to a PSD amendment adopted by the Economic Policy Committee, the FSDI’s investment strategy is adopted by the Government and correlated with a set of short-, medium-, and long-term performance indicators that focus on but are not limited to: a) development of Romanian infrastructure; b) job creation; c) stimulating innovation and new technologies; d) long-term growth of human capital; e) boosting the competitiveness of the Romanian economy.
Another article says that “the packages of shares brought as contribution to the FSDI’s registered capital in the conditions of the present law are transferred from the Romanian state’s private ownership to the private ownership of the FSDI, the latter being able to freely use the said shares as its own assets.”
At the same time, according to the bill establishing the Fund, the Fund is managed in a dual system, by a Board of Directors made up of seven members, under the supervision of a Supervisory Council made up of nine members.
Ponta: CCR has stopped the biggest looting of Romanian wealth since 1989. Dragnea promised this huge thievery to his protectors abroad: Russia, Israel and U.S.
Ex-Premier Victor Ponta claims that, by declaring unconstitutional the law establishing the Sovereign Investment Fund, the Constitutional Court has stopped “the biggest looting of Romanian wealth since 1989.” He states that “the thievery” was promised by PSD leader Liviu Dragnea to “his protectors” in Russia, Israel, and the United States of America, and claims that “the parliamentarians who voted for this theft should not turn a blind eye and should know that they are accomplices to this crime against Romania.”
“The Constitutional Court has stopped (for the time being, at least), the biggest looting of Romanian wealth since 1989. This huge thievery was promised by Liviu Dragnea to his protectors abroad (Russia, Israel, U.S.). It was a price of over 10 billion euro from what the Romanian State and people still have, a price that Dragnea was willing to pay for his political protection and for several photos alongside international leaders!”, Ponta wrote on Facebook.
He states that, nevertheless, the CCR cannot do more.
“If we don’t want Dragnea to sell Romania, we too must do more, and the parliamentarians who voted for this theft should not turn a blind eye and should know that they are accomplices to this crime against Romania!”, Victor Ponta wrote.
USR: CCR blocks Dragnea’s plan to bankrupt Romania. Through the Sovereign Fund, PSD wanted to hide both the public debt and the budget deficit and to attract the money of profitable state-owned companies
The Save Romania Union (USR) points out that the Constitutional Court’s decision to declare unconstitutional the bill setting up of the Sovereign Fund for Development and Investments represents the blocking of Liviu Dragnea’s plan to bankrupt Romania, the party claiming that the Fund’s purpose was political, not economic, and that PSD wanted to use this project to hide both the public debt and the budget deficit.
“CCR blocks Dragnea’s plan to bankrupt Romania! The Constitutional Court has admitted today the challenges against the Sovereign Fund for Development and Investments, a project with which Liviu Dragnea was planning the covert looting of state-owned companies,” the USR points out in a press release.
The party claims that the Fund’s purpose was political, not economic, and PSD wanted to hide both the public debt and the budget deficit and to attract the money of profitable state-owned companies.
“From the start, the purpose of the Sovereign Fund for Development and Investments was political, not at all economic. Through the Fund, the PSD wanted to hide both the public debt and the budget deficit, and to attract the money of profitable state-owned companies. The current ruling coalition has an immediate need of money to pay the electoral alms,” the USR adds.
The Union reiterates that the Sovereign Investment Fund must be established through a Government Decision, not through a bill of Parliament, but Dragnea rushed because neither Sorin Grindeanu nor Mihai Tudose, nor Viorica Dancila wanted to take responsibility for this project.
“The CCR decision confirms that the law establishing the Fund did not observe any economic logic. This fund cannot be set up through a decision of the Parliament controlled by Liviu Dragnea, but through a Government Decision. However, the PSD leader rushed to pass the Sovereign Fund through Parliament because none of the three PSD Premiers wanted to take responsibility and approve this bankrupt project,” the party adds.
PNL says will attack in administrative court any legislative act tabled by Gov’t to set up Sovereign Fund for Development and Investments
The National Liberal Party (PNL) considers that the Constitutional Court’s decision to declare unconstitutional the bill establishing the Sovereign Fund for Development and Investments is a hard blow received by PSD leader Liviu Dragnea, PNL Spokesperson Ioan Danca pointed out. He also claimed that Liviu Dragnea will turn to the Executive to set up the Sovereign Fund through a Government Decision, and warned him to give up or PNL will attack in administrative court any legislative act tabled in this sense.
“The Constitutional Court has admitted today one of the unconstitutionality objections invoked by the National Liberal Party in what regards the law establishing the Sovereign Fund for Development and Investments. It’s a hard blow to Liviu Dragnea’s plan to get a hold of the 10 billion euro assets of the most important state-owned companies and to transform them into PSD’s piggybank,” Ionel Danca points out in a press release.
Danca added that Liviu Dragnea will use the Government to set up the Sovereign Fund, and publicly warned him to give up this plan.
“We are convinced that, following the CCR decision to admit the National Liberal Party’s challenge, Liviu Dragnea will use his Government of puppets to establish the Sovereign Fund for Development and Investments through a Government Decision. We publicly warn PSD leader Liviu Dragnea to give up any overture meant to implement this fraudulent initiative to abusively take over state-owned companies through a politically-controlled sovereign fund placed at his disposal and at the disposal of the party clientele,” the PNL Spokesperson says.
The PNL says it will continue the fight and will attack in administrative court any legislative act tabled by the Government to set up Liviu Dragnea’s Sovereign Fund.
The Liberals warn the Government that any decision that may cause damage to the public patrimony of the state can trigger individual ministerial accountability.
“We ask the Romanian Government to observe Law 111/2016 and GEO 109/2011 concerning the principles of corporate governance in the management of state-owned companies, and to put a stop to the politicisation of these companies. We warn the members of the Romanian Government that any Government decision that may cause damage to the public patrimony of the state can trigger individual ministerial accountability, and such a decision will be attacked in court by the National Liberal Party,” Ionel Danca adds.