The Proprietatea Fund could lose the revenues from the claims over Romania"s foreign debtors

The Ministry of Finance wants to take away from the Proprietatea Fund its future earnings from the claims that it has on Romania"s foreign creditors.

The Ministry of Finance now wants to have the proceeds from the Romania"s foreign claims enter the state budget, after it assigned those claims to the Proprietatea Fund five years ago. This plan is already included in a draft ordinance.

Even though the plans of the state have already angered some of the minority shareholders of the Fund, Ionuţ Popescu, the general manager of the Proprietatea Fund, claims that in fact, those claims were never the property of the Fund, but rather have remained the property of the Romanian state. The statement of Ionuţ Popescu comes less than a month after the Fund earned approximately 20 million lei from foreign claims.

"The foreign claims are the property of the Romanian state, not of the Proprietatea Fund. The state initially decided that it would gradually pay the receipts from these claims to the Fund, as they were recovered. The claims were not included in the initial share capital of the fund because it was impossible to know how many of them would be recovered", said Ionuţ Popescu, for BURSA.

The logic of the current manager of the Proprietatea Fund is hard to understand, because all the assets of the Proprietatea Fund were initially the property of the Romanian state.

The claims do indeed belong to the state, but it was precisely the state that transferred their ownership to the Fund, by way of a law, just like it did with the stakes in the state-owned companies. With the only difference that the stakes in those companies have already been included into the share capital of the Fund.

Until now, the Romanian state was using the money from the its claims over foreign debtors to pay some of the 500 million shares that it had subscribed but it had not paid in, to the share capital of the Proprietatea Fund.

This summer, the government decided to cancel the shares it had not subscribed, after the Parliament approved the amendments to the Ordinance no. 71/2007, which was the most important factor behind the decision to divert the money received from claims on foreign debtors to the state budget and away from the Proprietatea Fund. However neither the unsubscribed shares or the claims on foreign debtors have been appraised, so it is not known how much either of them is worth.

Ionuţ Popescu continued: "Until now, as long as the state had unsubscribed shares, things would go like this: whenever a new foreign claim was paid, the money would go into the share capital of the Fund, which basically amounted to a share capital increase in which only the majority shareholder participated. If this practice had continued after the listing as well, we ran the risk that every two months, when such amounts would be paid in, we would have been forced to stop the trading of the Fund"s shares every time, and to summon a General Shareholder Meeting to approve the increase of the share capital. The minority shareholders would have been required to participate in those share capital increases as well, by subscribing new shares at their face value, or else risk seeing their stakes diluted".

It has to be said that the additional statement made by Ionuţ Popescu is just as inexplicable, since abandoning future sources of income, even income slowly comes trickling in, makes no sense from an economic point of view anywhere in the world.

The listing of the Proprietatea Fund on the Bucharest Stock Exchange is expected to take place in the beginning of 2011.