Montenegro's Government: Arbitration proceedings against Montenegro initiated by CEAC unfounded

Podgorica, Montenegro (11 March 2014) – Montenegro’s Government rejects the allegations made by the Central European Aluminum Company (CEAC) saying the  Government unlawfully interfered in the CEAC’s investment in the aluminum industry in Montenegro, including the investment in the Aluminum Plant Podgorica (KAP), as well as the allegations implying the Government violated the Agreement on the Reciprocal Promotion and Protection of Investments, which had been signed with Cyprus, the press release issued by the Ministry of Economy reads.

Government of Montenegro, the press release continues, emphasises that the CEAC’s demands against Montenegro regarding this case are unfounded, which will be hopefully determined in the arbitration proceedings.

The Ministry of Economy reiterates that the bankruptcy in the KAP was launched at the creditors’ request due to overload debts and outstanding claims to creditors, which occurred during the CEAC's management of the Aluminum Plant. Due to poor corporate management, the KAP’s debt to creditors exceeded EUR 350 million.

Furthermore, the state of Montenegro has provided EUR 135 million of guarantees on the basis of which the KAP took loans from banks in order to overcome the crisis which began in late 2008. Due to inadequate management of the company, the guarantees were activated and fell at the expense of Montenegro’s taxpayers. It is therefore clear that the Government of Montenegro gave guarantees believing that the restructuring programme will lead to the recovery of the company, but as the KAP, managed by the CEAC, failed to implement the programme, the banks activated those guarantees and they matured, Montenegro's Economy Ministry concludes.