Reaction from Montenegro's Government: CEAC has no issues with Montenegro but with facts

Reaction from the Public Relations Bureau of the Government of Montenegro to the opinion piece by Andrew Petrushinin, Director of Corporative Affairs of the Central European Aluminum Company (CEAC), posted on Friday, 17 October 2014 on Financial Times

Podgorica, Montenegro (17 October 2014) – In his opinion piece, Director of Corporate Affairs of the Central European Aluminum Company (CEAC), tries to generalise his problem and suggests a false conclusion that Montenegro is a country that does not respect property and thus the state that supposedly does not meet the essential requirement for the integration into the European Union and NATO.

The problem is not, as suggested, Montenegro, but the facts that would back up such a claim, and the article apparently lacks them. Elementary logic is also the problem. If everything had been as the CEAC’s director claimed, Montenegro would not have been recognised as an attractive investment destination, which attracted EUR 479 million in foreign direct investment solely in 2013, whereas the inflow in previous years makes Montenegro leader in South East Europe in terms of the amount of foreign direct investment per capita – EUR 652 million in 2010, EUR 494 million in 2011, and EUR 634 million in 2012.

If the CEAC's director was right, how did we manage to trick so many investors? Is it possible, if the allegations made by the CEAC’s director were accurate, that all comparative indicators, namely the Doing Business, Freedom House Index, Transparency International, Human Development Index, show that Montenegro is a leading country in the region and that it has advanced on a broad reform front? 

Why everything that bothers the CEAC does not bother the Aman or Porto Montenegro's stakeholders, whose world-wide business reputation significantly exceeds the one of the CEAC? Or Qatari Diar, which has confirmed that it does not give up an investment worth EUR 350 million? Or the Socar, which is currently carrying out the largest works in a tourist complex in Europe worth hundreds of millions of euros? Why does it not disturb the German T-Mobile, Scandinavian Telenor or numerous foreign banks and insurance and other companies operating in Montenegro?

Therefore, it is not about the alleged threats to investors’ property. On the contrary, the irresponsible investor has endangered the property of the state, which did not hesitate to create an attractive business environment for all investors, in particular for those investing in the aluminum industry.

In 2009, the state of Montenegro approved the restructuring programme for the CEAC's company including EUR 132 million of loan guarantees, EUR 60 million of subsidies for electricity and rescheduling of debts for the Aluminum Plant Podgorica (KAP), which, on the grounds of taxes and contributions in 2009, amounted to EUR 8.8 million. All these took place at the time when the KAP was operated by CEAC.

The government did so believing that the restructuring programme will result in the company’s recovery, but, as the CEAC had been irresponsible in managing the KAP and had not carried out the approved programme, the banks activated guarantees and the state had to pay them. At that point, the KAP’s debt, under the CEAC’s management, reached a level of over EUR 350 million, which exceeded the value of the company. This is, in any economy, especially in developed countries, more than enough reason to initiate bankruptcy proceedings. Therefore, the bankruptcy proceedings were introduced at the request of the KAP’s creditors due to overload debts and outstanding liabilities arising from the period when the KAP was managed by the CEAC.

Many successful foreign investments in Montenegro are the best proof that the country's legislation, which is largely aligned with the EU acquis, fully protects foreign capital. The Bankruptcy Law that had been applied in the Aluminum Plant Podgorica, is fully harmonised with the EU legislation and positively assessed by all relevant international institutions.

The opinion piece by the CEAK Director of Corporate Affairs, calculated to extrapolate the issue to whole Montenegro, is a transparent, tendentious, speculative and cheap attempt to distract attention away from a series of bad business decisions to allegedly flawed and unsuccessful process of European and Euro-Atlantic integration of the country in which the CEAC operates. Once again, there is a problem with facts, as Montenegro, in both processes, holds a leadership position in the region.

Montenegro knows its path and neither the CEAC nor anyone else can do anything to put that path into question.

Public Relations Bureau of the Government of Montenegro