When the art of management is replaced with the art of spam flooding

If you want to survive as a manager, after you've made a big management mistake, you have to urgently create a straw man issue and straw man enemies to fight with outraged ardor. In other words, if you've bungled the art of management, you must switch to the art of spam flooding.

Three years after all the SIFs, with the exception of SIF5, have sold their stakes in BCR, it becomes clear how SIF5 has frozen almost one third of its portfolio in an unlisted and illiquid asset. Even though the management had the obligation of presenting the prospects of selling the stake in BCR, up until now no negotiations have been reported and it is unknown what the prospects of that happening are.

In the context of the banking scandal in Austria and of the earnings of BCR, it is highly unlikely that 30% of the portfolio of SIF5 would become liquid again.

That is all the more so since the "manager" of SIF5 was the one who fought against the idea of taking BCR public (initiating the signing of the appropriate papers) and even increased the company's holding in BCR by participating in one of the subsequent capital increases.

The press published the calculation which shows that if (by some miracle!) SIF5 sold its stake in BCR today, it would take a loss of approximately 70 million Euros, compared to the actual profits of the other SIFs from the sales of their respective stakes.

That calculation is not subject to interpretation! It is public and has not been contradicted in any way by the management of SIF5.

Are there are any penalties or provisions that tie the compensation of the management (approximately 400,000 euros a year for the CEO - according to the mass media) to remedy these losses?

Over time, "BURSA" has written that "the dissensions between Tudor Ciurezu and businessman Florin Pogonaru became public in the beginning of 2014. At the time, the disagreements concerned the 6% stake in 6% BCR, that SIF Oltenia owned".

It is true, as a shareholder in SIF5 I am concerned and I await explanations.

What did I get for it?! Ad hominem attacks (BURSA, 19.08.2014 "The nuclear bombs of the Pogonaru family") and accusations of planned embezzlement at PPLI (Prodplast Imobiliare).

In the latter case, here is what BURSA wrote on February 25th, 2015: "Most of the requests of SIF Oltenia have been rejected; the court validates the financing of the Veranda mall through Prodplast Imobiliare".

For ad hominem attacks, the option of going to court is available, just as it is for using the resources of the SIF for personal vendettas, meant to conceal the failure in management.

I have avoided and will continue to avoid responding to respond to Mr. Ciurezu's attacks, precisely to prevent him from dodging his responsibility for the flawed management of the company.

It is an undeniable fact that Mr. Ciurezu has antecedents. For about four years, during the period of the greatest thefts from the patrimony of SIF5, when the "crown jewels" were transferred to Dinel Staicu, the executive management of the SIF consisted of two people: Dinel Staicu and Tudor Ciurezu. We understand that criminal investigations are under way.

In the same vein, you can't afford not to be surprised by the failure to understand the meaning of the conflict of interest by Mr. Ciurezu. He made the following statement for BURSA:

"I couldn't sell the SIF stake and keep my own shares, or the other way around" or "the volume is insignificant compared to the stake that SIF5 has"(ed. note: the stock acquisitions by Ciurezu on his own behalf amounted to several thousand euros).

This is not an issue of reporting in the market the insiders' actions after the fact, but rather, of a lack of rules to prevent them from profiting from the simultaneous acquisitions and sales of the SIF.

We also understand that there are ongoing criminal investigations that the shareholders of SIF5 should at least be informed about.

A few to the point answers to the statements made by Mr. Ciurezu in the article published by "BURSA" on March 12th:

As for the "controlled growth" that he seeks, his accomplishments are the following: SIF5 is the only SIF whose stock saw a significant drop in the last year (from 1.94 to 1.71 lei), meaning that the goal stated in the 2014 General Shareholder Meeting to reduce the discount is not met; not even the one of increasing the NAV, which is down itself compared to last year.

As for the "outstanding investments" that he made, in the March 12th issue of BURSA he puts Biofarm at the top of the list.

Through an amusing coincidence, several articles down, on the page of the very same newspaper, Mr. Iordache (who can under no circumstances be accused of being a critic to Mr. Ciurezu) writes: "When the administrators (representatives of the SIFs) decided ...to invest more than 44 million lei in stocks listed on the BSE - at the historic high - Biofarm lost 34.5 million lei, after the stock market dropped, and it took two-three years for the loss to be recouped."

Do you know which SIF Biofarm was forced to buy the most shares in?

SIF5 of course, sacrificing the shareholders' interest in order to "shape the vote in favor of the management of SIF5", represented on the Board of Directors of Biofarm.

The other companies mentioned by Mr. Ciurezu as investment successes (Transgaz, Transelectrica, BRD etc.) are blue chips listed on the Romanian stock exchange. Question: why should an investor buy Transelectrica through a SIF instead of making the investment directly?

Don't forget that, what's more, the investment in the SIF would be penalized by the company's NAV discount.

Mr. Ciurezu mentions in the March 12th article of BURSA that he will not sell companies in the SIF's portfolio for one Euro and says that "we are concerned with valuing the holdings with low liquidity or in closed-ended companies ...". I want to use this article to ask him to explain to BURSA readers, what is the role of "Voltalim", nicknamed "the small SIF"?

Is it true that, in order to "save face", it gathers every company in the patrimony of SIF5, which could not have even been sold even for one Euro, and which were plundered while Mr. Ciurezu stood idly by and watched, as member of the executive management?

I recently launched the debate on the possible model to follow that the behavior of the Proprietatea Fund in its relationship with shareholders represents, considering the special law concerning the SIFs and the Proprietatea Fund which the Financial Oversight Authority has announced.

I want to ask the readers of the BURSA newspaper to discuss the future of the SIFs when it comes to the NAV discount, corporate governance and decisional transparency. As for the elimination of the holding caps in the SIFs, I will continue to support them, but only if, at the time they are eliminated, all those who "cheated" are forced to sell their excess holdings, or else be liable, including criminally.

I also think that the regulation which allows SIFs to by shares in each other, has complicated things even further.

I want to mention from the very start that, just like I think there is no danger of the Proprietatea Fund being dismantled in the short and medium term, I do not plead for a dismantling of the SIFs in a different manner.

In this context, I think that the dividend proposed by SIF5 is normal and it is one first victory in the discussion which I launched concerning the role of the SIFs. Sure, it seems big compared to the dividends proposed by the other SIFs and the expectations they created.