US ambassador criticizes the decision of the management of Romgaz to donate 400 million lei to the state budget

• The former managing director of the Proprietatea Fund: the decision of the government to force state companies to donate money to the state budget represents theft

The US ambassador in Bucharest, Mark Gitenstein, criticized the decision of the Ministry of the Economy, to force Romgaz to donate 400 million lei to the state budget, and said that this measure will spook investors. "We share the deep concerns of the managers of the Proprietatea Fund over this decision by the representatives of the Romanian state to vote in favor of Romgaz donating 400 million lei to the state budget", the US ambassador in Bucharest said in press statement.

The ambassador considers that "according to the globally accepted corporate management standards, the representatives of the state should have abstained from the vote on such an issue due to the inherent conflict of interest - even though the action was in compliance with the Romanian legislation".

"We regret that as a majority shareholder of Romgaz, the Romanian government did not give more thought to the manner in which this action will affect the interests of the private shareholders, including those of the Proprietatea Fund, to say nothing of the company"s ability to finance its investments", Gitenstein said.

He said that, in the context where the Romanian authorities are looking to attract new investments in the energy sector, such a decision undermines investor confidence in the fact that the authorities can made transparent, fair and predictable decisions.

Gitenstein said that this decision will only discourage further investments in a sector which is critical for the growth of the Romanian economy.

• Ionuţ Popescu: Such a measure represents discrimination from the other companies in the market

Ionuţ Popescu, the former managing director of the Proprietatea Fund says that the government"s decision to force state companies Romgaz, Electrica and the Romanian Lottery to make donations to the state budget represents nothing less than theft, which could have serious consequences on the Romanian business environment.

Ionuţ Popescu said: "How can you ask that people buy shares in your company, which you are going to sell on the stock market, when you are actually raiding that company"s accounts. This basically takes away any confidence in a state, in a government that takes this kind of decisions. This measure will do a huge disservice to Romania. It means that businesses can expect the state to always take away their money, in what basically amounts to theft, because I can"t even call it a technicality, when you"re taking away money that isn"t just yours", the former minister of Finance said, quoted by Mediafax.

He said that such a measure creates discrimination against the other companies in the market, and if it were to become generalized, then other companies would have the option of donating money to their majority shareholders, without paying out dividends and without paying taxes to the state.

"One doesn"t have to be an economist to realize that you can"t just take something which isn"t yours alone. And even if it did belong to you alone, you can"t afford not to realize that once you do it, you"re giving other players in the market the option of doing the same thing. And once that happens, we can no longer speak of dividends, dividend taxes, we are talking about donations of the companies to the majority shareholders or to the sole shareholder of a company", Popescu added.

He said that, as Romgaz is supposed to be listed on the stock exchange, these donations could discourage trading of its stock. Also, such an action could cause foreign investors to stop investing in Romania.

"I think it is difficult to gauge the negative effects that such a decision would have, it"s unimaginable for the business environment. They are introducing a major distortion factor in the business environment, because if the state can do something like that in a company in which it holds 100%, then naturally any owner of a LLC should be allowed to do the same. You can"t just turn companies in some sort of NGOs, that make donations and help those in need", Popescu continued.

In August, at the first revision of the budget for this year, the Government decided that energy distributor Electrica and Romgaz will be required to donate each 400 million lei to the state budget each, whereas the lottery will be required to donate 74 million lei from the profit of the previous years and from the sale of assets.

The general distributor of energy maker Electrica, Ioan Folescu, said at the end of November that it would donate 150-200 million to the state budget, or half of what the government had requested, since the company "can"t afford" to donate the entire amount. The shareholders of the Romanian Lottery have not yet approved the donation to the state budget.