Romanian CCR says sovereign fund law is unconstitutional

Romanian CCR says sovereign fund law is unconstitutional

The Constitutional Court (CCR) of Romania ruled on Wednesday, July 18, that the law for setting up the Sovereign Development and Investment Fund (FSDI), which the Parliament passed a month ago, is unconstitutional. Reportedly, according to the CCR president Valer Dorneanu, it should be set up by a government decision.

The adopted law provided that the state’s stakes in 33 important companies would be transferred to this fund, with an initial capital of around 1.93 billion euros. Both the Romanian President Klaus Iohannis and opposition parties challenged it at the CCR.

Former prime minister and former leaded of the PSD, Victor Ponta, according to Mediafax, said that “the Constitutional Court’s decision stopped the biggest theft from Romania’s wealth after 1989” saving it from a 10-billion-euro loss.

The FSDI

The fund would be managed by a Directorate with seven members that in turn would be supervised by a Supervisory Board made of nine members. It would get 33 stakes in state-owned companies, and through managing them the FSDI would make profit that would help it “achieve several goals, such as developing Romania’s infrastructure, creating jobs, stimulating innovation and new technologies, and increasing the competitiveness of the Romanian economy”, romania-insider.com had informed in a relevant past article.

To mention a few state-owned companies these are the energy distributor Electrica, gas producer Romgaz, the Bucharest Airports Company and the Romanian Lottery, and minority stakes in private businesses such as OMV Petrom, Telekom Romania Communications, E.On Energie Romania and Engie Romania.

The FSDI was one of the main initiatives announced by the Social Democratic Party (PSD) leader Liviu Dragnea during his pre-election campaign for the 2016 parliamentary polls.

Like many issues in the country it was dealt with in a rather bodged way; its realisation was long delayed whereas it was adopted out of the blue with little public debate, as so many other serious issues in Romania. “The economic committee within the Chamber of Deputies brought some important changes to this law only one day before the vote in the Chamber of Deputies”, romania-insider.com has reported.

Form the very beginning, one of the basic opponents of the idea to set up this fund that had openly slammed the ruling party and its present leader for planning to pass it was -as mentioned above- the ex-premier and PSD chief, Victor Ponta…. / IBNA