“CEZ” scandal, Minister of Energy and General State Advocate in Albania indicted

“CEZ”  scandal, Minister of Energy and General State Advocate in Albania indicted

It seems that there’s more trouble on store for state authorities. HSA warns: “We stress that in these two audits, HSA has only audited the process of the holding of negotiations, the activity of the Work Group and the government’s orientation to settle the dispute amicably and not send it to the Parliament of Albania for approval”, implying that the “storm” will continue.

Gjiknuri’s indictment comes a few days after the minister pressed charges against the minister and vice minister of Economy in Berisha’s governing cabinet, Florion Mima and Enno Bozdo.

Tirana, 14 October 2015/Independent Balkan News Agency

By Edison Kurani

High State Audit in Albania indicts the Minister of Energy and Industry and the General State Advocate, accusing them of damage to the state amounting to a value of 479 million euros.

This is the first time that a state institution in Albania presses criminal charges against a minister.

The CEZ affair had never been admitted by the government and the agreement with the Czechs was considered as a very good solution, but the opposition and experts claimed that this as an abusive and unacceptable agreement.

HSA spokesman, Bedri Çoku told IBNA that “the financial damage caused to the State Budget from the Amicable Settlement Agreement between the Republic of Albania and CEZ a.s amounts to a value of 479 million euros”.

This financial damage also includes an amount of 95 million euros: the payment agreed in the Settlement; 352 million euros: financial arrears as a result of poor management from 2009 until 2012 and the value of 32 million euros: depreciation to a value of zero of the 24% of shares held by the state.

Today’s criminal indictment followed HSA audit at the Ministry of Energy and Industry (MEI) and State Advocacy (SA).

The main issue in these two audits involved the procedures followed and the negotiations that led to the drafting of the signed agreement by the Work Group set up by Rama government for an amicable settlement of the dispute between the Albanian State and CEZ a.s on 23.06.2014 and the submission of this agreement to the Council of Ministers and the Parliament of Albania for approval.

This audit concluded that the financial damage caused to the company OSHEE sh.a which is now entirely state owned, is 479 million euros.

HSA says that this damage doesn’t include the extra costs that will be paid by the Albanian State for the revitalization of the energy system and for a comeback of this public enterprise to normal parameters.

Based on the violations that have been identified, which caused a damage of 479 million euros, HSA has submitted to the Prosecution criminal charges for the Minister of Energy and Industry, Damian Gjiknuri and General State Advocate, Alma Hicka, on the count of abuse in the line of duty. According to the law, this charge receives a prison sentence of up to seven years and 7 thousand euros in fines.

HSA declared that when CEZ was abandoned by the Czechs, it was on the verge of bankruptcy. “Had it declared bankruptcy, no amount from the invested sum would be recovered by CEZ a.s, while with the settlement agreement, the risk of bankruptcy was entirely passed on to the Albanian State, which paid to assume the risk. Thus, not only did we inherit a bankrupted company, but we also paid money to assume losses and arrears”, HSA underlines.

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On 11 March 2009, an agreement was signed for the sale of 76% of shares between the Ministry of Economy, Trade and Energy as holder of the shares and CEZ a.s as buyer and strategic investor. Following numerous problems throughout the years, ERE (Power Regulatory Authority) announced on 11 April 2012 the start of a process of audit for the financial state of CEZ Distribution sh.a.

According to ERE, the critical situation was caused by making excess expenses and mismanagement, a number of unsuccessful negotiations for possible solutions of the situation and in circumstances when CEZ Distribution announced that “the company may not be able to prevent the deterioration of the level of services that it offers in the weeks to come, including the supply with electric power”, thus declaring that it had failed in meeting its objectives.

Based on these circumstances, ERE concluded that CEZ Distribution sh.a was in violation of the RPS and DSO licenses and that this was the reason why it lifted the license to the Czechs and decided to the transfer CEZ Distribution sh.a into temporary administration.

On 15 May 2013, CEZ a.s based in Prague decided to start a lawsuit against the Albanian State at the United Nations Commission on International Trade Law, with a number of legal and financial claims, once its license was lifted and after it was transferred for temporary administration.

On 4 September 2013, the Ministry of Energy selected BDO LLP as a financial expert to make the financial evaluation of the claims relating to CEZ a.s and entered a contract with this company at a value of 300 thousand euros. As far as technical losses are concerned, a Germany company was contracted at a value of around 200 thousand euros.

The strategy that was built to handle the lawsuit launched by CEZ a.s against the Albanian state and the actions of state institutions, took another turn, as the Council of Ministers decided on 25 October 2013 to start negotiations for the settlement of the dispute, with the involvement of Gjiknuri and Hicka and several other ministers and officials.

The pact was signed by Gjiknuri on 23 June 2014. This pact was then approved by the Parliament of Albania.

This is where other problems for state authorities will emerge.

HSA warns: “We stress that in these two audits, HSA has only audited the process of the holding of negotiations, the activity of the Work Group and the government’s orientation to settle the dispute amicably and not send it to the Parliament of Albania for approval”, implying that the “storm” will continue.

Gjiknuri’s indictment comes a few days after the minister pressed charges against the minister and vice minister of Economy in Berisha’s governing cabinet, Florion Mima and Enno Bozdo. /ibna/