IN ORDER TO COMPENSATE THE FORMER ASSET OWNERS Mircea Ursache proposes the creation of a bond fund

• Former president of the Proprietatea Fund: The money will run out soon

Reporter: What are you working on, as head of the department for the administration of the economic interests of the state of the Social Democrat Party, what are you currently working on?

Mircea Ursache: I am working on a new draft law concerning the compensation of those whose property was abusively seized by the Romanian state in 1948. As you can see, the money of the Proprietatea Fund will run out soon. It is obvious that the purpose that the Fund was created for has not been met and therefore another solution has to be found. The German model, used when Helmut Kohl was the chancellor of Germany, after the union of the two German states, namely the creation of a bond fund, the issuing of bonds, with a grace period of 3 years, and with scheduled payments, in order to avoid putting pressure on the budget, is the solution that Romania should use, after the failure of the Proprietatea Fund.

Reporter: Why do you consider the Proprietatea Fund as a failure?

Mircea Ursache: Because it can"t carry out its purpose anymore. There are very little shares left to allocate, and the number of shares requested are about ten times greater. First and foremost, let"s not forget that ownership can"t be prescribed. So, the suggestions that some of the people were throwing around - such as setting a deadline for those applying for compensation - are out the window. Any right of ownership is exempt from prescription, it can be claimed at any time. So no, the European legislation doesn"t offer any solution to set a deadline for claiming the restitution of the properties. This means that such requests for compensation can keep coming up.

I think that right now, nobody knows how many of those requests for compensation there are. Another solution needs to be found. I hope that Romanian lawmakers will review my proposal more seriously than they did with my many other bills.

Reporter: You were the president of the Proprietatea Fund twice and the last time you were the one who appointed Franklin Templeton. Do you think they are doing a good job?

Mircea Ursache: I can give you a very simple answer. It"s not their fault that they got a better deal than they asked for.

Reporter: What are you talking about?

Mircea Ursache: For me, what mattered the most during my tenure was for the Romanian state to still own 33% by the time the last compensation was paid, and not to lose control of the Fund.

I asked and I negotiated with Franklin Templeton to have a dual management at the Proprietatea Fund. I want to tell you that Franklin Templeton agreed to this request, but it was the Ministry of Finance that didn"t accept it.

Keeping a way for the state to have someone on the Supervisory Board of the Fund was necessary and reassuring.

Even today, the management contract signed with FT still includes an article which states that, if a subsequent law were to change the way the Fund is managed, and if it implement another system, they would accept it unquestioningly. So all it would take for a change in the management system would be to publish the amendment in the Official Gazette.

Reporter: Why didn"t the Ministry accept that?

Mircea Ursache: I don"t know, they didn"t justify that decision to me.

Reporter: Are you happy with Franklin Templeton?

Mircea Ursache: They are undeniably doing a good job. I am referring to their stance on the money from Romgaz (ed. note: the Fund contested the donation of 400 million lei which "Romgaz" made to the Romanian state, but the court irrevocably and definitively tossed out the lawsuit filed by the Proprietatea Fund), a case where if they hadn"t challenged the decision it would have been a big mistake on their part.

I think they need to receive the credit for getting very seriously involved in the Boards of Directors of the companies which are part of the Portfolio of the Proprietatea Fund. At least this is what it looks like, judging by the decisions they made and how they voted on certain matters. I am referring here strictly to the investment programs of the companies, to the revenue and expense budgets. They are making observations on the General Shareholder Meetings, which is something that never happened when the state was in charge. At the time, it was very difficult for the Fund to say no to the decisions of the Ministry of the Economy at the companies in which the latter was a shareholder.