A new legal draft, currently discussed in the committees of the Chamber of Deputies, proposes the exemption of 100 major state-owned companies (SOEs) from the enforcement of corporate governance legislation currently in force, Franklin Templeton, the manager of local Fondul Proprietatea warns, quoted by Romania-Insider.com.The amendments are largely the same as those declared unconstitutional by the Constitutional Court in February 2018. Some of the most valuable Romanian SOEs, operating in vital sectors, are targeted, including: Hidroelectrica, Nuclearelectrica, Bucharest Airports, Romgaz, Salrom, Constanta Maritime Ports SA, Transelectrica and CE Oltenia, where Fondul Proprietatea also holds minority stakes.
The plenum of the Chamber of Deputies may vote on the issue this week.
If adopted in its current form, the exemption of 100 state-owned companies from corporate governance would represent a major step back in terms of economic credibility, according to Franklin Templeton. The measure would have an extremely costly impact on Romanian SOEs, risking to transform them in mere black holes, due to the total lack of transparency and lack of accountability of their management; arbitrariness, incompetence and derision in appointing management, and their complete political subordination; and lack of control and public scrutiny over expenditures of SOEs, making them soft targets of corrupt politicians, the fund manager warns.
“We will most likely enter an era of total darkness in which we will no longer know anything about the performance of the SOEs, apart from learning a year or two down the road that some of the most successful Romanian companies, will then be on the verge of insolvency and we would be left wondering what happened in the meantime,” said Johan Meyer, CEO of Franklin Templeton Investments Limited and Portfolio Manager of Fondul Proprietatea.
“This would be similar to letting Ali Baba’s 40 thieves into a bank vault, switching off the lights and the alarm system and then pretending to be surprised at the outcome. I am amazed that such a detrimental action would even be considered in view of Romania’s objective of becoming an Emerging Market country,” he added.
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Photo: Rador.ro
