The promises of Deputy PM Daniela Bobeva to eradicate partisan appointments in the boards of state and municipal companies and put an order in their management finally gained legislative form. Days ago a public consultation was launched the long-awaited bill on public enterprises, which has the ambitious goal to overcome the cyclical deleveraging of public companies and to create conditions for their sustainable and competitive development in terms of public confidence and control.
„Over the past 15 years, large-scale privatization processes were the focus of the public interest. Now that Bulgaria’s economy is working in a market way, and opportunities for privatization are significantly reduced, it is time to see how state-owned companies work and if they are managed well. The goal is to make them not only a supporting tool for increasing revenues, but a source of economic growth,“ said Bobeva ago.
The big problem is that in the country both state and municipal enterprises should be subject to market principles of government, but at the same time have
overtly political functions
The practice in Bulgaria is on the boards of the biggest companies to be appointed (ex-) deputy ministers and people who failed to enter parliament or local councils who are actually the party candidates not disappointed after the vote. Thus automatically eliminates the possibility of professional management of its companies, but provides benefirts to someone personally.
Bill on public enterprises, developed by the team of Bobeva rules that MPs, ministers, deputy ministers, governors, deputy governors, councilors, mayors, vice-mayors, deputy mayors, heads of state agencies, members of state committees executive directors of executive agencies, heads of state institutions cannot be managers or enter the management, control or supervisory boards of state companies. Actually there is a
loophole for appointment
of purely partisan appointments that still remains open, but the good thing is that this will not be done entirely indiscriminately, as far as a person with diploma in ecology will find it difficult to enter the management of NPP Kozloduy. The draft text explicitly states that the board will appoint only persons with appropriate professional training and qualification in the subject of the enterprise, as well as management experience, not less than three years.
Management of companies with state or municipal participation will be assigned mandatory after a competition. Dismissal of a manager will be able to become a political whim as before, but only in the event of a ground provided for in this management contract. It will be a clause that obliges the members of the management team to prepare business programme for the entire period and for each year of the duration of the contract. It must include specific indicators – objectives of the company, sales volume, profit or loss mitigation, debt servicing, investment volume, maintaining a certain number of jobs, etc. Failure of implementing this programme will be grounds for dismissal
and the
salaries of bosses
will be determined depending on the size of the average salary of employees in the enterprise, the evaluation of the economic importance of the company and most importantly – on indicators such as profitability, financial result, service commitments specific duties and responsibilities in contracts.
Bonuses, or so-called bonus payments will only increase in accounting to profit achievements and at certain results in business plan and provided that the company has no accumulated losses from previous years and arrears. Additional incentives will be at the expense of the profit after taxation with tax allocation reserve and deduction of dividends to the Treasury.
A lot of attention in draft bill is paid to
publicity and access to information
The text stipulates that each state or municipal company must have its own website. Along with the Commercial Register they will publish annual financial statements (including consolidated results) and will keep them for a period of not less than five years. In addition, each state and municipal company will be monitored by an electronic system developed by the Ministry of Finance, which will analyze and evaluate how effective their activities are.
„We add a regime of transparency for public enterprises, partly inspired by the requirements for companies listed on the Bulgarian Stock Exchange. The publicly owned enterprises are subject to special monitoring and control on their financial discipline and fiscal risk. Control bodies have expanded significantly and employ current techniques and trends to protect the public interest,“ the authors of the bill say.
Indeed, the efforts of Daniela Bobeva are worthy of respect, but now we can bet that in the way it is now the project will not exist. Even if the current configuration of power was maintained. Still the public has a fresh memory of the original texts as stipulated in the Public Procurement Act, developed again by Bobeva and comparing that to the crippled version that was eventually passed after lobbying amendments in parliament.
In any case, it will be interesting to see what the next government will make of this quite meaningful draft project.
The BANKER
