How the Romanian state is struggling to collect 130 million Euros from its debtors

• The Agency for State Properties (ADS) has yet to receive the money from the privatization of agricultural companies and the plots of land it sold off

The state has over 130 million Euros in outstanding debt by various associations or private companies to which it sold or concessioned companies or farming land, according to a report by the Agency for State Properties (ADS), which was requested by BURSA.

98% of the outstanding amounts originate from the contracts for the privatization of agricultural companies and for the concessioning of land between 2000 and 2004.

Several factors complicate the collection of the outstanding amounts include "the ungrounded court rulings which many times are issued in favor of the investors", the litigations involving the land, or the investors invoking natural disasters to avoid paying the royalties for the concessioned plots of farming land, ADS officials said.

Other factors that make it difficult to collect the claims are the partners in the privatization contract entering bankruptcy, the long time the courts take to award compensation and the spin-offs or mergers of the partner companies.

For instance, on December 31st, 2009, the Agency had outstanding receivables worth 524.5 million lei (more than EUR 130 million).

The collection of the claims is extremely tenuous. Last year only 78.6 million lei, or 15% of the outstanding debt was recovered, according to the ADS.

According to data provided by the ADS, the five largest debtors are SC Trei Brazi SRL (99.1 million lei), Asociaţia Agricolă Toamna Bogată (13.5 million lei), SC Corias Corabia SA (7.9 million lei), SC Protan SA (5.9 million lei) and SC Principal Construct (4.5 million lei). The five companies account for about 25% of the claims that the state has yet to collect.

The officials of the ADS said that most of the outstanding debt comes (44%) comes from unpaid royalties and concessions.

"Most of our debts come from companies that filed for bankruptcy, for which the ADS was a creditor, from uncertain debts arising from the beginning of lawsuits, as well as due to the unauthorized exploitation of the plots of land by some of these companies", the ADS officials said.

When asked about any concrete actions they would take against the debtors - such as terminating the contracts - the officials of the ADS gave no clear cut answer: "The ADS has taken all the appropriate steps to recover these debts, according to the legislation in force".

Our question came as the ADS has already terminated two concession contracts it had with Mircea Dinescu, due to unpaid royalties and the failure to provide a letter of guarantee.

In 2004, Mircea Dinescu concessioned from the ADS a plot of land of 591.99 hectares in the Dolj county and one year later, an additional 8.10 hectares. The contracts were cancelled due to outstanding debts amounting to tens of thousands of lei.

However the Parliament may help the ADS collect its claims, as it is currently drafting a law which is intended to make all contracts concluded by the ADS enforceable.