THE Government and the ruling National Movement Simeon II (NMSII) were stunned this week when the Supreme Administrative Court (SAC) suspended the Bulgartabac Holding deal until a lawsuit filed by bidders Metatabak, RosBulgartabak and Tobacco Holding is completed.
The court's decision, announced on Tuesday, could not be appealed. It suspended the preliminary execution of a decision of August 23, 2002, of the Privatisation Agency's executive director Apostol Apostolov to name a bidder who won the publicly announced competition for the sale of an 80 per cent stake in Bulgartabac.
The court found that the administrative file sent by the Privatisation Agency was incomplete, and set it a deadline to submit additional proof. The court turned down the requests by Metatabak and Tobacco Holding to have the entire legal due diligence report attached and an economic expert examination allowed.
On August 23, Apostolov announced that Tobacco Capital Partners had won the two-stage competition for an 80 per cent stake in Bulgartabac Holding. The Privatisa-tion Agency is opening negotiations on a shareholder agreement and a draft privatisation agreement with the consortium backed by Deutsche Bank, Apostolov said at the time.
The privatisation agreement was to be signed within 45 days of approval of the parameters of the deal by the Agency's Supervisory Board. The term will have to be extended now, as the court's final decision is not expected before the beginning of October.
The Privatisation Agency said it would issue an opinion on the SAC decision after it had officially studied the court's ruling. The decision suspends the preliminary execution of the decision on the selection of a buyer, not the deal itself, the Agency's lawyers said.
The three bidders for Bulgartabac Holding Group challenged the Agency's decision by which a consortium between Tobacco Capital Partners and Clar Innis was named winner of the competition for the tobacco holding group.
A possible delay in the privatisation deal will have unfavourable consequences since it will mean that Bulgaria does not provide a reliable environment for foreign investment, said Valeri Dimitrov, chairman of the parliamentary economic committee (NMSII).
In the circumstances, there is no negative signal. If SAC had not pronounced on the case for months, it would have sent a negative signal, Dimitrov said. Legally speaking, the SAC decision means that the deal cannot be closed before the court has pronounced on the substance of the dispute - the legality of the Privatisation Agency's administrative act on the selection of a buyer, he said. This is a normal power of the court and nothing exceptional has happened, according to Dimitrov.
"Obviously, SAC will pronounce very soon and I believe that the dispute will be settled quickly," Dimitrov said. This is a good time for the Bulgarian judiciary to prove that it acts competently, expeditiously and in good faith, and renders the justice, which is necessary, he said.
Ivan Iskrov (NMSII), chairman of the budget and finance committee, said Bulgartabac's privatisation would obviously take time. The Government had met its commitments, including those to the international financial institutions, with unprecedented transparency.
All budget expenditures may be cut; the proceeds from Bulgartabac's sale must enter the public purse because before they do, part of the executive budget expenses should not be made, Iskrov said. These are pensions, social expenses, salaries for magistrates, and repair of judiciary buildings, he said. Budget implementation is going on well, according to him.
Lyubka Kachakova, the former deputy economy minister, said she had absolutely no concern about the Bulgartabac deal. The best candidate won in a fully transparent procedure, she said.
Yunal Tassim (Movement for Rights and Freedoms) predicted the company would be privatised by the year's end. The procedure has been halted but it does not mean that privatisation has been stopped altogether, he said. Given that some of the bidders filed petitions, the SAC decision is logical, Tassim said.
Nikola Nikolov (United Democratic Forces) said the SAC decision again proved that the deal involved omissions and scandals, and that the majority and its economic team failed to carry out reform without causing jolts. This is a cause for grave concern. Moreover, Bulgartabac is obviously unable to purchase the tobacco crop, which would leave many people in the mixed population regions doomed to hunger, he said. Any delay in the deal may be fatal to Bulgartabac, according to Nikolov.
Lyuben Kornezov (Bulgarian Socialist Party) called the SAC decision "a severe lesson to the Government". After SAC stops privatisation with serious motives, namely, that the finalisation of the deal could have many damaging consequences, the Government should draw the conclusion that covert or semi-covert privatisation is not good either for the cabinet or for the state, Kornezov said.
Obviously, there are serious administrative omissions, which do not speak well for the Privatisation Agency or for the investment climate in Bulgaria, said Atanas Paparizov (BSP).
The court's decision, announced on Tuesday, could not be appealed. It suspended the preliminary execution of a decision of August 23, 2002, of the Privatisation Agency's executive director Apostol Apostolov to name a bidder who won the publicly announced competition for the sale of an 80 per cent stake in Bulgartabac.
The court found that the administrative file sent by the Privatisation Agency was incomplete, and set it a deadline to submit additional proof. The court turned down the requests by Metatabak and Tobacco Holding to have the entire legal due diligence report attached and an economic expert examination allowed.
On August 23, Apostolov announced that Tobacco Capital Partners had won the two-stage competition for an 80 per cent stake in Bulgartabac Holding. The Privatisa-tion Agency is opening negotiations on a shareholder agreement and a draft privatisation agreement with the consortium backed by Deutsche Bank, Apostolov said at the time.
The privatisation agreement was to be signed within 45 days of approval of the parameters of the deal by the Agency's Supervisory Board. The term will have to be extended now, as the court's final decision is not expected before the beginning of October.
The Privatisation Agency said it would issue an opinion on the SAC decision after it had officially studied the court's ruling. The decision suspends the preliminary execution of the decision on the selection of a buyer, not the deal itself, the Agency's lawyers said.
The three bidders for Bulgartabac Holding Group challenged the Agency's decision by which a consortium between Tobacco Capital Partners and Clar Innis was named winner of the competition for the tobacco holding group.
A possible delay in the privatisation deal will have unfavourable consequences since it will mean that Bulgaria does not provide a reliable environment for foreign investment, said Valeri Dimitrov, chairman of the parliamentary economic committee (NMSII).
In the circumstances, there is no negative signal. If SAC had not pronounced on the case for months, it would have sent a negative signal, Dimitrov said. Legally speaking, the SAC decision means that the deal cannot be closed before the court has pronounced on the substance of the dispute - the legality of the Privatisation Agency's administrative act on the selection of a buyer, he said. This is a normal power of the court and nothing exceptional has happened, according to Dimitrov.
"Obviously, SAC will pronounce very soon and I believe that the dispute will be settled quickly," Dimitrov said. This is a good time for the Bulgarian judiciary to prove that it acts competently, expeditiously and in good faith, and renders the justice, which is necessary, he said.
Ivan Iskrov (NMSII), chairman of the budget and finance committee, said Bulgartabac's privatisation would obviously take time. The Government had met its commitments, including those to the international financial institutions, with unprecedented transparency.
All budget expenditures may be cut; the proceeds from Bulgartabac's sale must enter the public purse because before they do, part of the executive budget expenses should not be made, Iskrov said. These are pensions, social expenses, salaries for magistrates, and repair of judiciary buildings, he said. Budget implementation is going on well, according to him.
Lyubka Kachakova, the former deputy economy minister, said she had absolutely no concern about the Bulgartabac deal. The best candidate won in a fully transparent procedure, she said.
Yunal Tassim (Movement for Rights and Freedoms) predicted the company would be privatised by the year's end. The procedure has been halted but it does not mean that privatisation has been stopped altogether, he said. Given that some of the bidders filed petitions, the SAC decision is logical, Tassim said.
Nikola Nikolov (United Democratic Forces) said the SAC decision again proved that the deal involved omissions and scandals, and that the majority and its economic team failed to carry out reform without causing jolts. This is a cause for grave concern. Moreover, Bulgartabac is obviously unable to purchase the tobacco crop, which would leave many people in the mixed population regions doomed to hunger, he said. Any delay in the deal may be fatal to Bulgartabac, according to Nikolov.
Lyuben Kornezov (Bulgarian Socialist Party) called the SAC decision "a severe lesson to the Government". After SAC stops privatisation with serious motives, namely, that the finalisation of the deal could have many damaging consequences, the Government should draw the conclusion that covert or semi-covert privatisation is not good either for the cabinet or for the state, Kornezov said.
Obviously, there are serious administrative omissions, which do not speak well for the Privatisation Agency or for the investment climate in Bulgaria, said Atanas Paparizov (BSP).
