CRISTINA CHIRIAC, VICE-PRESIDENT OF THE AVAS:  The AVAS can absorb the arrears of the economy

The Authority for State Assets Recovery (AVAS) is currently being funded using the earnings from the post-privatization earnings and from debt collection. The vice-president of the AVAS, Mrs. Cristina Chiriac, said: "When it comes to the portfolio of the companies which have yet to be privatized, in which the state still holds stakes, my opinion is that they should be sold on a regulated market (especially the ones in which the state is a minority shareholder), at a quick pace, in order to create a positive cashflow to the institution. Going back to the post-privatization, I can tell you that this year we expect to earn about 37.5 million Euros, by charging penalties to companies that failed to honor their contractual obligations. This amount is divided as follows: 56,775,662 lei, 27,915,741 dollars and 3,214,923 Euros".

The post-privatization department of the AVAS currently manages 3,026 contracts. Mrs. Cristina Chiriac said: "We do this with 18 employees and a manager. The volume of work per expert is very large. It is true though that not all the companies that are still left in the post-privatization period have the same degree of complexity. We are predominantly watching the companies operating in agriculture, the former "Agromec"s. Nevertheless, on average an expert has to monitor approximately 189 companies. What needs to be understood, starting from these numbers is the fact that they reflect a very high volume of work, and these people are doing a good job, and they are working hard".

The post-privatization work first of all involves the monitoring of the compliance with all the contractual clauses by the buyers, as agreed upon by both parties. If it is found that these clauses aren't complied with, quick intervention is required, by any means, legal of course, in order to recoup as much as possible of those debts and to minimize losses.

The vice-president of the AVAS said: "Under these circumstances, post-privatization experts succeed in carefully monitoring the contracts, together with their colleagues in the other departments of the institution, and they carefully and in due time take the actions which are absolutely needed to recoup the amounts owed to the government. I am talking about the situations where amicable agreements are no longer possible, meaning that, after all of the procedures available to the AVAS, according to the legislation in effect, have been exhausted, we are forced to resort to the legal avenues of action available in the sector. Thus, we resort to suing our debtors, looking to recoup the debts from those who do not comply with the contractual clauses.

Therefore, the government, through the AVAS, succeeds, through shared efforts, in recouping a significant part of the amounts which the buyers owe through the privatization contracts, as proven by the concrete results expressed in the earnings brought to the state budget. For example, in the year 2011, through its post-privatization activity, the AVAS contributed 12,307,310 RON to the state budget".

Over time, the institution underwent numerous changes, as did its wage levels. Between 2009 - 2010, the wages were cut two times, by 85% on average, after the AVAS went through a very harsh restructuring program in multiple stages, going from about 500 employees in 2008-2009, to currently having 275 people. The vice-president of the AVAS said: "There have been numerous and quite frequent discussions, concerning the wages of the AVAS, and the very usefulness and existence of this institution was discussed many times, and I think it is time to be clear on this subject as well. There should be no more confusion on the wages that the employees had during the great privatization period and the wages that they get paid now.

In this context, it needs to be said that our institution was created precisely because of the initiative and of the request of the Romanian World Bank and the IMF, because of Romania's need to have such an institution, just like any other countries do.

At the time, it was considered that such a structure was needed, because of the large number of companies that the state was a shareholder in and of their strategic importance in the national economy, but also because of many sensitive and important aspects, concerning the manner in which the property of the state was going to be transferred to the private sector. And I think that these concerns are easy to understand, especially by those who are familiar with the topic and especially now, that, for the most part, the privatization process is almost complete.

Thus, in this context, it was obvious that the level of wages had to be high, given the special nature of the work performed in his institution, as the wages came from the self-funding system of the institution, which was always proportional to the amounts it contributed to the state budget. Thus, on principle, it was a compensation system that was absolutely necessary to stimulate the people and at the same time to protect them from any less desirable or pleasant aspects.

But starting with 2008 - 2009, the structure of the AVAS changed, first and foremost due to the < departure > to the Ministry of the Economy of a significant chunk of the portfolio of the AVAS, which resulted in the creation in the Ministry of the Economy of the structure called OPSPI (the Office For The State's Interests and Industrial Privatization), and on the other hand, through the staff cuts.

Following these changes, it was considered that the self-financing system was no longer justifiable, because the reduction of the portfolio automatically translated into lower earnings, and it was decided that the institution would be converted into one of a public nature, fully financed from the state budget.

Also, I must inform the public opinion that in 2011, there were serious problems in the operation of the institution due to the garnishment of its accounts by the victims of the FNI, through the court enforcement officers. Because, as it is well known, it is the government that pays the damages which the courts awarded to the FNI plaintiffs, as a result of the rulings of the court, and it does so through the AVAS. And the AVAS is the only institution that handles that. Meaning that the activity of the institution was brought to an almost complete standstill! We have faced problems tied to administrative aspects which were essential for the functioning of any organization and even when it comes to the wages of the employees, which were not paid for a certain period of time. In spite of this, many of the employees have remained loyal to the Authority.

The accounts of the AVAS are still frozen due to the damages awarded by the courts to the creditors of the National Investment Funds (FNI) and to the compensations representing the equivalent value of the properties returned by the companies privatized to their former owners. However, the situation was fixed in 2011, when we succeeded in passing a law and drafting two revenue and expense budgets. One which, according to the law, is only used for the operation of the AVAS (the payment of wages, and utilities) and one intended strictly for the privatization process".

Thus, the law stipulates that the amounts allocated to the AVAS from the state budget for paying its staff, for the operating expenses and for representing Romania in the International Court of Arbitration may not be garnished until December 31st, 2013. Also, until the end of 2013, the execution of the payment obligations of the AVAS will be ensured from the revenue and expense budget pertaining to the privatization and sale of the state's assets, regardless of their source. The priority of the payments is established according to the definitive and irrevocable rulings or by the enforceable titles, in a strictly chronological order.

• The disbanding of the AVAS was brought up several times

The disband of the Authority for State Assets Recovery was discussed several times, Mrs. Chiriac said. She said that she is not currently aware of any economic or political strategy on that matter.

The vice-president of the AVAS said: "My opinion is that the activity of the AVAS should be downsized until it becomes a simple Office. There are privatization contracts with an oversight duration of 20 years. There are research institutes that own patents and according to the Law of the National Archives they can not be sold or destroyed earlier than 20 years. One such example is < Griro >, which has such a 20 year clause.

If the disbanding of the AVAS were to be discussed, then we would need to think who would the obligations resulting from the privatization contracts would be transferred to, what we are going to do with the receivables on Bancorex, as well as with the victims of the FNI. There is no other institution in Romania that can take on all of the obligations of the AVAS, and this process would probably be conducted in stages.

The AVAS is now like a trashcan in which things found in a very bad condition have been dumped, it is an organism which can absorb the arrears of the Romanian economy and can represent a solution for a healthy economy".