The government based the sale of „Dr Simo Milosevic“ Institute on a value estimation made twenty years ago, which is irrelevant as such. This shows how frivolous the privatization process of this large enterprise is. The government literally intends to give away the Institute to the British „International Wellness Group Limited“, shows the analysis made by MANS Investigation Center.
Actually, the real market value estimation of a company should be one of the main parameters used by the Privatization Council when preparing the bid for sale of state-owned shares in companies which are majority-owned by the government.
However, the example of the Institute in Igalo shows that the government continues with the disastrous privatization policy and the bargain sale of valuable state companies, without estimating the true market value and lowering the bidding criteria to a preposterous level.
Back in March last year, MANS Investigation Center asked the Privatization Council to deliver a report on the assessment of the value of the Institute in Igalo, in order to determine on the basis of which data the sale of the state shares was being preparing. The Council forwarded the request to the Ministry of Economy, which provided us with the report on the assessment of capital made in July 1995.
This clearly indicates that the privatization of the Institute “Dr Simo Milosevic” was prepared on the basis of obsolete data. Company’s financial statements, to which auditors have been giving opinion with a grain of salt in the past years, as they find it hard to express any attitude towards the value of the property, facilities and equipment, as their evaluation was made in 1995, particularly show that the market value is disputable.
Moreover, the financial statement at the end of 2012 shows that the value of the Institute’s land is €24 million, while the value of facilities is €40 million, making it €64 million in total. Auditor’s report for 2013 is not available to the public, and the Securities Commission, after the official request by MANS Investigation Center, announced that the Institute never submitted such a report.
Given that the Institute “Dr Simo Milosevic” has around 200 thousand square meters of land and 86 thousand square meters of buildings, the question is whether the said sum of 64 million is their real market value. If this is the case, it would mean that one square meter of land is worth €120 and a square meter of a building €465.
Beyond any doubt, prices are below the current market value of real estate on Montenegrin coast, especially if having in mind that the Institute owns a famous residential villa “Galeb“, which used to be a holiday retreat of a Yugoslav president Tito. Villa has over five thousand square meters, as well as 82 thousand square meters of land, which is under threat of being covered with apartments by a future owner.
The Privatization Council announced last week that the potential investor, i.e. consortium “International Wellness Group Limited“, registered in Great Britain, met the tender conditions for selling 56.4 percent of the state-owned capital and offered €10 million for shares, which is far too low.
MANS believes that due to a series of setbacks in the privatization of the valuable state-owned company, and the fact that the general public is not familiar with the key elements of the British consortium’s tender, it is extremely urgent to stop the sale of the state-owned shares so as this privatization would not be turned into one in a series of privatizations detrimental to the national interest.
The Privatization Council has been keeping secret the complete documents related to the tender procedure for the sale of the state-owned shares in the Institute “Dr Simo Milosevic”. Namely, the Council has declared secret all the information MANS required with regard to the said privatization. In the reply it has been stated that the required information concerns “security, defense, foreign, monetary and economic policy of Montenegro.”
Up to now, it has been officially announced that the investor has offered a price of 10 million for the shares and the minimum investment of €50 million, including medical equipment and reconstruction of facilities and villa “Galeb”, while further investments depend on the feasibility study and adoption of plans.
However, precise information and key issues, such as the investment program guarantee, social program and the references of the British consortium, remain unrevealed.
The government of Montenegro has 56.4 percent of the shares in the Institute, the government of Serbia has 25.9 percent, while the rest of 17.5 percent belongs to other legal entities and individuals.
Since 2008, the Privatization Council has announced four calls for bids for the sale of state-owned shares in the Institute, while significantly lowering the criteria for the most favorable bidder.
Thus, in 2008 it was required from a bidder to have a positive balance in the previous three years and a €100 million turnover, or a positive balance and a €100 million capital. In 2014, however, the bidder was required to have only the €100 million turnover.
This text is created with the support of the European Union within the project “Zero Tolerance to Corruption”. Network for Affirmation of Non-Governmental Sector – MANS is solely responsible for the contents of this article, and the views taken herein shall not in any case be considered as those of the European Union.
