(Podgorica, 15. June 2013.) – MANS calls on the Government to obtain compensation for debts, damages and penalties via arbitration with billionaire Oleg Deripaska, as a result of his violations of the privatization contract. By doing so, the government can secure a budget surplus, thus obviating the need to introduce a “KAP tax.” We expect the Assembly to insist on determining Government liability for the catastrophic situation in the state’s largest manufacturer and leading exporter.
We call on the Government of Montenegro to collect damages and penalties by means of arbitration, thus returning moneys that it already disbursed (instead of burdening the KAP with the burden). This would provide funds to cover government guarantees, as well as cover debts towards the country’s sole electricity operator, which would leave a budget surplus (thus cancelling out the need for a VAT increase).
The forcing of bankruptcy upon KAP, following its plunder and enormous electricity debts, confirms that the business policy of the privatized company was catastrophic, breaking a series of laws (including the privatization agreement itself). Because of this, the Government should initiate arbitration procedures and charge penalties, effectively covering damages caused due to the violation of the law and agreements.
KAP’s Russian owners have basically violated all of the clauses in the privatization agreement. The penalties for these violations, on their own, are worth millions of euros. Furthermore, the arbitration should include the tens of millions of debts that KAP has accrued, which were subsidies by Montenegro’s citizens through the now infamous “euro for euro” tax. Arbitration can also provide coverage for the hundreds of millions of euros needed to cover KAP debts that were illegally given government cover.
It’s now known that KAP was stealing energy, and that contrary to the Stabilization and Association Agreement it was receiving considerable public assistance to cover its electricity bills, thus endangering the status of the European integration process and significantly damaging the country’s interests. Therefore, through an arbitration request, not only would the country be able to secure compensation for its wasted electrical energy but also seek additional compensation.
It is not clear to us why the Government is hesitating in launching an arbitration process when its expenditures have been minimal in relation to its claims with Deripaska. Why is the government transferring onto citizens the debts of a Russian tycoon who, according to America’s Forbes Magazine, was worth $8.5-billion in March 2013.
The launch of arbitration and the recovery of previously paid and current debts, as well as damages, would secure a budgetary surplus. This would invalidate the need to raise the VAT and the payment of absurdly regressive taxes that do not exist in other countries. The budget surplus should be used instead to pay-out severance packages for KAP workers, but also those of other workers (particularly those from the country’s deindustrialized north).
For this reason, the Assembly should protect the interests of citizens and reject the proposed ‘KAP tax.’ It should insist on the lawful resolution of the dispute with the Russian billionaire and determine the responsibility of individuals who contributed to the KAP’s catastrophic situation.
