THE WAR ISN'T BEING WAGED IN THE COURTS ALONE "Aversa Manufacturing" and the AAAS bring out the big guns

The conflict between "Aversa Manufacturing", which acquired pump maker "Aversa", and the Authority for the Management of Assets of the State (AAAS) is being waged on several fronts.

The AAAS has challenged the call for tenders which led to the privatization of the industrial platform in autumn last year, and the Court of Bucharest is going to issue a ruling on the matter on February 20th, after the court rejected the challenge on the grounds of late submission of the complaint invoked by "Aversa".

Three days before the lawsuit "Aversa Manufacturing" strikes back, with its officials claiming that the authorities of the state and the AAAS are attempting to intimidate them. Also yesterday, Gheorghe Matei, appointed by the AAAS as special administrator at "Aversa", on January 29th, drew up a report in which he claims that the new owners of the plant are producing false reports to make it look like they are complying with the terms of the call for bids and that they are tolerating massive thefts from the plant.

Like most of the privatizations in Romania, after numerous failed calls for tenders, the one that finally seemed like it would end successfully, is turning into a huge scandal. This time, it seems that what is at stake is the plot of land of 10 hectares in the heart of Bucharest (the Obor area) which the pump factory is located on.

• "Aversa Manufacturing" claims it is being pressured by the AAAS

"Two weeks after we won the call for tenders, we have been contacted by an official of the AAAS who forced us to accept a private partner recommended by the authority. We have refused to let ourselves be intimidated, which led to the continuation of the intimidation process", said Michael Topolinski, the chairman of "Aversa Manufacturing".

He declined to disclose the name of the representative of the AAAS he was referring to.

The former president of the Authority, Adrian Volintiru, told us that the statement of the representatives of "Aversa Manufacturing" has no logic and is nonsensical. "I don't know who could have contacted them on the day they claim they were contacted, especially since the challenge had already been filed", he said. "Why didn't they say anything then? The AAAS was always intent on disputing the call for tenders".

• Topolinski: "I have high confidence in the High Court, we do not trust the lower ranking courts"

The legal representatives of "Aversa Manufacturing" have claimed in court, that the AAAS has filed the challenge three days after the expiration of the three-day delay required by the law, but the judge ruled that the trial should continue.

Michael Topolinski told us: "The issue discussed in court was whether the AAAS complied with the deadline to file a challenge or it was late in doing so. The law is very simple and clear. The law is not subject to judicial interpretation.

The AVAS was supposed to file a challenge in three days. We won the call for tenders on September 11th, 2013. The document from the liquidator ended up in court on September 12th. The AAAS should have filed a dispute within three days. It didn't. We were expecting the Court to decide that their challenge would be rejected.

When we received the argumentation from the Court, which went against the law, we asked for the opinion of four of the best, recognized and prestigious law firms in the country, namely professor Ion Turcu, in Cluj, who wrote a book about insolvency, "Stoica şi Asociaţii", "Ţuca Zbârcea şi Asociaţii" and Biriş Goran. All four of them said that the decision of the Court went against the law and was wrong. As a result, people can draw their own conclusions on how a judge can issue such a ruling under these circumstances.

Upon the first hearings, the procedure was put up for discussion. Then we will have the first hearing on the merits of the case, followed by the Court of Appeal and the High Court.

I have high confidence in the High Court, that there will be three judges that will follow the law. We don't have faith in the lower courts.

We are sure that we are going to win before the High Court, because the law is clear, and simple".

Together with "Aversa", the representatives of the employees have intervened in the lawsuit against the AAAS, and they are asking the court to rule in favor of the challenge filed by the Authority.

According to the employees, admitting the contestation would have unfavorable effects on the employees, meaning that the cancellation of the call for tenders amounts to them losing their work. They say that prior to September 11th, 2013, the liquidator, supported by the majority creditor, intended to resort to a collective layoff.

• 11 audits in four months

"Aversa Manufacturing" also mentions two forms of intimidation which it considers it was subjected to: namely, the fact that it was audited 11 times in four months and that Stan Popa, the president of the AAAS appointed Matei Gheorghe, the former CEO of Aversa, as the special administrator of the company.

Michael Topolinski told us: "In just four months, < Aversa Manufacturing > was audited 11 times. That is strange. Everyone I've told about it was shocked".

• Matei Gheorghe and "Aversa Manufacturing" lobbing accusations at each other

Michael Topolinski also said: "Another way is the intimidation of our workers. Matei Gheorghe was the general manager of Aversa, between 1999 and 2005.

During that time, the company's debts rose to 95 million lei and it had losses of 65 million in 2004 alone, which led to a drop in the number of employees. Matei was fired at the time, following the scandal of the < pumps >.

When the employees of the firm heard that Matei Gheorghe was hired by Popa Stan as a special administrator, they were very upset. Many of them came to me and to the company's managers, angry with the fact that this man was coming back to the company, because in their opinion, he was one of the people responsible for its insolvency and bankruptcy. The fact that Popa Stan is bringing him back says a lot about the intentions of the AAAS.

Why would you bring back someone who, according to the workers, destroyed the company?"

This question received an answer, indirectly, Matei Gheorghe, dated February 17th 2014.

This also means that at "Aversa" had "so-called owners like Blue Diamond Estate SRL and Autoplast Engineering SRL", which led "to the destruction of the manufacturing installations".

Concerning these accusations, the representatives of "Aversa Manufacturing" told us: "The management and the employees say that Matei Gheorghe is a liar".

According to the report, "what is extremely serious, is the disappearance and/or the alienation of the technical documentation", a claim which was also denied by "Aversa Manufacturing".

"From analyzing the inventory lists, we can see that over 50% of the items featured are gone, and they currently only exist on paper", the document also states.

Matei Gheorghe writes that, after the acquisition of "Aversa", the volume of products manufactured and sold fell dramatically, becoming almost non-existent.

The new owners claim that "Matei Gheorghe and the AAAS have it as an obvious goal to the destroy Aversa, like the former already did between 1999 and 2005". They also say: "The employees and management are happy to increase their business. Aversa Manufacturing has produced and will deliver pumps worth 4 million lei, in the coming period".

The special administrator also claims that the new owners are drawing up false reports, "by which they claim that they are conducting an activity in line with the obligations stipulated in the tender book".

In response, the representatives of "Aversa Manufacturing" are saying that the monthly reports of the liquidator, after the call for tenders show that all the obligations have been met.

According to Matei Gheorghe, "the main concern of the consortium was making measurements and topographical survey information, needed for the design and approval of the Urban Zoning Plan, intended for the constructions which will be erected on the plot of land owned by Aversa".

On the other hand, the people of "Aversa Manufacturing" say that the company is focusing on its employees and on the development of its business.

Matei Gheorghe also says that the two winners of the call for bids have prohibited him from entering the "Aversa".

This claim is confirmed by the representatives of "Aversa Manufacturing": "Yes, I have forbidden his access, because he is not an employee, and the employees don't want him or the AAAS to be involved in the business".

• Topolinski: "We have identified a new location"

Until a ruling is issued in the lawsuits, Michael Topolinski says he will continue to develop the business. "We have many customers, we have new employees. We have hired five engineers starting today, in the design department", he told us.

The new owner of "Aversa" is saying that this year he wants to increase the wages of the employees and to complete the relocation.

One of the stakes of the "Aversa" business is the land it is currently located on, in the Obor area in Bucharest, which some people value at 70-100 million Euros. As a matter of fact, the new owners have announced that they will relocate the pump factory.

Michael Topolinski told us: "We have identified a location and we are currently negotiating for the final contract. It is in Bucharest and we already have the approval of our employees for the relocation. They are happy, they have been constantly kept informed and they can hardly wait for the relocation, because we are investing 15 million Euros in the business, which means we are here for the long term".

He added that he has not made any decision concerning the plot of land of the Obor area. "Right now, we are focused on making the pump business a success", said Mr. Topolinski, who says that he has received no offers to sell the plot of land, nor did he have any discussions on the subject.

Michael Topolinski told us he financed "Aversa" using his own funds: "I paid 1.8 million Euros for the pump company, including infrastructure and machinery. Since then, I have invested an additional 2 million Euros in operations. I have already paid 3.4 million Euros as a deposit for acquiring the land. We will invest up to 15 million Euros in relocation - plot of land, technology, testing equipment, engineering -. The total value of the investments will be 22.2 million Euros this year".

"Aversa" exports to customers in Russia, Pakistan, Brazil, Ukraine, Turkey, and the next step is expanding the business in the European Union, according to representatives of the company.

Concerning his experience of foreign investor in Romania, Mr. Topolinski said: "I think that there is room for improvement when it comes to the companies previously owned by the state".

In his opinion, Romania has an exceptional potential: "I care a lot about this country, I've been living here for a long time. I think that it has good people, hard working, clever, educated, who want their country to develop. I think that if we gave them a chance in industry or business, they would do tremendously well. Too many times in the past, good state owned companies were not managed fairly, but rather for the benefit of some people who got rich at the expense of the country. These things must stop".

In mid-September 2013, the assets of "Aversa", with the exception of its receivables and cash, were adjudicated by the consortium comprising Blue Diamond Estate (currently Aversa Manufacturing) and Autoplast Engineering for the amount of 17.30 million Euros.

The new owner has pledged to preserve the line of business of the company and 200 employees for three years.

Fourteen attempts to find a buyer had failed previously, with the rules for the sale being changed three times.