Public Property Agency Officials Cash in Thousands of Euros From State-Owned Companies
Officials within the Public Property Agency (PPA) receive annually, additionally to salary income, allowances of thousands of euros by shares with full or majority state capital.
ZdG analyzed the declarations of wealth for 2019 of some officials within Public Property Agency and found that employees with management positions were also members in important state-owned enterprises and share companies.
ZdG analyzed the declarations of assets of two decision-makers within the Real Estate and Privatization Departments of the Agency. Natalia Chilaru and Alina Boțoc are also state representatives in several companies.
In Natalia Chilaru’s financial disclosure for 2019 ZdG found out that she cashed a salary of over 7000 euros from the Public Property Agency. Besides, Chilaru benefited of over 16,600 euros as a state representative in companies, such as enterprise Manta V Silvo-Hunting, a tobacco state company, Metalferos company, an internet and telephone provider company Moldtelecom, Mileștii Mici Winery. ZdG tried to contact Natalia Chilaru repeatedly, but no one answered the calls.
Alina Boțoc is another official from the Public Property Agency and she is deputy head of the Privatization Department. ZdG found in her 2019 declaration of wealth that she had a salary of 7,800 euros from PPA. Also, she received over 11,000 euros from various state institutions, such as wine and cognac factory Barza Albă, National Theater Mihai Eminescu, the Chișinău Printing House, or Moldova-Film.
Public Property Agency official, Alina Boțoc, about payments: “I have nothing to hide. Everything is transparent and legal”
ZdG asked Alina Boțoc about the activities that brought such revenue. The state representative told us that she participated in the meetings of the Board of Directors of enterprises and companies, and managed the enterprises, according to her competencies.
“We have an activity regulation guide according to which we work in the Board of Directors of enterprises and companies. According to my competencies, I participated in the meetings of the Board of Directors and managed the companies (…). I have nothing to hide. Everything is transparent and legal. I didn’t take anything from anyone. Nothing was given to me for free. I can’t show you sleepless nights sitting and analyzing financial statements, coming up with ideas, or going out of office hours to board meetings. It’s complicated to present what is the work constituted of. The management analyzed some indicators, who and how worked. In case of a fraud, I wouldn’t speak here or stay open-hearted… I’m calm because I’ve done everything all right”, said Boțoc for ZdG.
ZdG contacted the Public Property Agency to find out why members of this institution take part in boards of directors of the most important state-owned enterprises and share companies, what activities they carry out and what are membership selection criteria. We were told to send a request for access to information, however ZdG has not received any response to requests.
ZdG tried to contact the directors of several companies in whose boards are present members of PPA, to find out data about the efficiency of their activity.
We contacted the Director of the Mileștii Mici Winery, Viorel Garaz, as PPA representative Natalia Chilaru cashed 900 euros from this company in 2019. The director informed us that Natalia Chilaru is no longer a member of the company’s board, but two other members of PPA are currently part of the Mileștii Mici Winery management.
“We have Mihai Soțchi, the deputy director of the Public Property Agency, and Viorica Goncear. I can’t tell you which department they belong to. They supervise the enterprise’s activity. There is a so-called superior management body of the company. They draft right now the company’s development plan for the current year. The board is also presented with half-yearly reports. In addition to being familiar with the company’s results and plan, they appreciate the company’s development as well as the manager’s skills (…). First, they check how well the state patrimony is managed. It is a control body that quarterly monitors the company’s evolution and reports it”, said Garaz for ZdG.
We tried to discuss with Ion Dobrea, Director of the Manta V Silvo-Hunting Enterprise about the impact of the PPA members within the company. Dobrea said he was busy and would return to the ZdG’s call, however with no answers.
Experts’ comments about the excessive remuneration of PPA officials
The economic expert Sergiu Gaibu told ZdG that significant topics require Government and Public Property Agency reviews.
“1. Improving the regulatory framework to ensure clear mechanisms for the management of state-owned enterprises, with the required transparency. It is necessary to implement a governance model of state-owned enterprises, aligned with good international practices. 2. A coherent motivation system that correlates the managers’ individual performance with the enterprise’s performance and the level of motivation. It is not about the remuneration value. This value must be correlated with increasing the company’s performance. 3. In the case of state-owned enterprises, the public interest should be protected (public, not the Government, as some might consider). It is important that the public interest is well defined for each enterprise, and that delegates in the councils ensure the monitoring of the measures implementation to serve the public interest,” Gaibu declared for ZdG.
Economic expert Viorel Gîrbu claims that the Sandu government planned to cap these payments, however it was not done.
“This is a very tricky issue, payments need to be linked to the enterprises’ performance (…). But as enterprises are state-owned, the state and those who receive these bonuses assess the performance. There is a hidden bribe in this system. Unfortunately, we do not have a strategy to define in the medium / long term what the state wants to do with these enterprises and what are the pursued public benefits. No one in the Government intends to do it”, said Gîrbu for ZdG.
The IDIS Viitorul economic expert, Veaceslav Ioniță claims that currently, the PPA officials remuneration is not as excessive as it used to be a few years ago. According to the expert, the public property management system is poorly managed in Moldova.
“Generally, the public property management system is poor and corrupt to the core. In our country, public property is worth about 2 billion euros. State enterprises lack the help of professional management companies and are not managed clearly, knowing what each of them has to do, according to a management contract. Various civil servants manage the state-owned companies not having any background knowledge, nor businesses or companies. The situation was even worse before (…). State-owned enterprises are seen as the party wallet. Civil servants should not have the right to manage public enterprises (…). For the most part, the state has none of the dividends of these enterprises, and most of these enterprises are in financial losses”, Ioniță declared for ZdG.
The setting and reviewing the minimum wage Law provides monthly benefits of up to three minimum wages for the members of the management bodies within state-owned enterprises and share companies (board of directors, company council), At the same time, according to the Government Decision of 2014 regarding the establishment of the amount of the minimum wage per country, the minimum wage was set in the amount of 47 euros per month.
Thus, the maximum annual allowance of a member of a management body of a state-owned enterprise cannot exceed 1,700 euros.
On January 26, 2021, Transparency International-Moldova (TI-Moldova) presented the results of the study on the transparency of the state-run enterprises’ activity.
Ensuring access to information. According to the study, although TI-Moldova requested public information from the monitored companies, some companies avoided responding, categorizing some of the information as personal data or trade secrets. Some companies requested from TI-Moldova copies of the incorporation documents of the need to present the information, others warned about the personal nature of the requested data, while on their web pages was already placed some of the requested data. Representatives of some companies expressed fear that they could be punished for providing information.
Boards of Directors. Although all monitored entities indicated the names of the Board members and the authority they represent, every fifth enterprise did not indicate the individual remuneration value of the Board members (Mărculești International Airport state company, Security Service enterprise, telecommunication enterprise Moldtelecom, RED Nord company, Energocom and Moldovagaz companies).
According to the study, there are no specialists in the enterprise’ field of activity, in law or economics, that are members of the boards of directors.
The results of the study also show that the members of the Board’s promotion and appointment is not transparent and motivated, a fact explained also by the lack of a government approved regulation, but also by the disinterest of the founders to change things. And the founders’ control over the Board’s activity seems more formal.
The study also shows that the practice of cumulating membership in a fairly large number of Boards within state-owned enterprises and share companies persist. This could affect the quality of people’s work at their basic job place and control over enterprises’ activity. Members of the Boards make errors when completing the declaration of wealth and vested interests: receiving of donations from state-owned enterprises and share companies; failure to indicate the enterprise of which the Board officials belong; value differences between the declared amounts and the data submitted by enterprises.