RADU CRĂCIUN, APAPR, ABOUT THE INVESTMENT OF PRIVATE PENSION FUNDS IN DIGI, A COMPANY WHICH HAS CRIMINAL ISSUES: "The fact that Digi has a reputation risk does not mean its shares are worthless"

Mandatory private pension funds which have invested in Digi Communications, the parent company of RCS&RDS, which was indicted on money laundering and offering bribes, have taken this operating risk into account, by offering a lower price in the IPO, Radu Crăciun, member on the Board of Directors of the Romanian Association of Privately Managed Pensions (APAPR).

Mandatory private pension funds (2nd pillar) had, on June 30, holdings of 163.1 million lei in Digi shares, according to report by Prime Transaction.

Radu Crăciun explained: "I would have liked to clarify the issue of RCS&RDS. The mentioned risk is one of the risks that any listed company can be faced with -reputation risk - and that is not a surprise. But, in the end, we are making the investments based on several criteria, not just that one. Moreover, any risk that we perceive within an issuer or a future issuer, we discount it through the price that we are willing to pay.

The fact that a firm has a reputation risk does not make its price zero. That makes its listing price smaller than it would have been if it didn't have that risk. Besides, some of us know that the price at which the RCS&RDS IPO has been adjudicated was not as good as it could have been. Precisely because of all these reputation problems. That's how the system works. When you have doubts over an issuer, you pay less, that doesn't mean that you don't pay at all".

The investment mandate of the private pension fund managers is as safe as possible, Iulius Postolache, the president of the APAPR said yesterday, pointing out the transparency of Pillar II. According to him, the pension funds place an emphasis on issuers' corporate governance.

When asked, in this context, to explain the investment in Digi Communications, Mr. Postolache said: "Each of the managers has its own investment policy. At the APAPR, we try to keep a common area and to get involved as little as possible in what is the investment activity of every manager, or in the commission policy.

Each of the fund managers analyzed very carefully the company risks and profiles, especially for the one you are referring to (ed. note: DIGI), as well as the entire structure of the portfolios, the diversification needs that each of the portfolios has and I am convinced that this has been taken into account. Similarly, these things have been taken into consideration by other international institutional investors who have invested in the same company".

Unlike all the other investors, private pension funds manage the money that taxpayers will get part of their pensions from.