Response by Ministry of Economy: Claims made by daily Dan are untrue

Podgorica, Montenegro (10 September 2010) -- Response to the article published on 9 September 2016 in the daily Dan, titled "State could have returned KAP without arbitration."

It is not true that the daily Dan had exclusive access to the document the article is referring to, because the document was published on the Ministry of Economy’s web page SIX years ago! Share Pledge Agreement of the Aluminium Plant (KAP) was published on 30 November 2010 and can be downloaded at: http://www.mek.gov.me/pretraga/101341/UGOVOR-O-ZALOZI-AKCIJA-DRUsTVA-KOMBINAT-ALUMINIJUMA-A-D-PODGORICA.html.

The fact alone speaks of superficial knowledge of the issues, or the intention to deliberately deceive the public that this is a documentation that daily Dan is publishing "exclusively." Therefore, lay and professional public, including journalists of the daily Dan, has had the opportunity to read this agreement by simple internet search for the last six years. So much for the truth of the first thesis set out in the article.

It is not true that the agreement with the CEAC could have been terminated based on the Pledge Agreement. Pledging of CEAC shares could have been activated only if there had been monetary claims by the State, which is not the case with unpaid electricity bills, because in this particular case the delay in the payment of bills could not be qualified as a monetary claim by Montenegro to the CEAC. In the given situation, the shares could have been activated only if the pre-arbitration had determined the existence of violations due to non-payment / late payment of bills to the Electric Power Industry of Montenegro or the damage resulting from the violation.

Every move that the country undertaken with regard to the KAP was complied with the Agreement, and national and international practice in this area. This position has been confirmed by the recent decision of the ICSID arbitration tribunal in Paris, stating that CEAC lost the case against Montenegro. In the present case, the Settlement Agreement provided for arbitration to settle disputes, so any dispute over whether the CEAC had breached the Settlement Agreement had to be resolved in arbitration, but not before the Montenegrin courts. Montenegro's courts have jurisdiction only after the completion of the arbitration proceedings, in the shares activation process. We have repeatedly said to the advocates of arbitration that it is an expensive process that takes time, as practice has shown, in this case it took years. We recall that the CEAC initiated arbitration proceedings in 2014 and that it was terminated almost two and a half years later; the second procedure was launched by the CEAC in late 2013, which has not yet been completed.

It is not true that the initiating of the proceedings for the takeover of CEAC shares would result in avoiding the introduction of bankruptcy - the facts speak clearly. The possible takeover of the CEAC shares should have waited for the arbitration decision which would take years, and there were no solutions to the financial situation in the KAP due to violations of the Agreement by the CEAC, which led to the introduction of bankruptcy. At that point, it was clear that the CEAC had no intention of continue production, pay electricity, create new jobs, pay its obligations to creditors. By the end of the arbitration proceedings, the CEAC should have shut the Aluminium Plant. It is known that the process of production in KAP is specific and that, once it goes out, it is difficult to restart, and all that provided that the CEAC was interested in planned shutdown. Thus, until the proceedings are completed, we would have received shares of CEAC in KAP, but they would have been worthless, because the company went bankrupt, with debts amounting to at least EUR 120 million. Not to mention what would happen in that case with 1,200 employees? And with about 500 of them who are still employed in the KAP?

It is incorrect that there was a proposal to pay EUR 40 million for CEAC shares in KAP. The proposal was that CEAC cede their shares to the Government of Montenegro immediately and free of charge, or for one euro. The mentioned figure of EUR 40 million was related to the debts of the Aluminium Plant to the CEAC and VTB Bank, which totalled EUR 120 million. CEAC then offered to discount the debt by EUR 80 million, and that KAP settles the remaining obligations to banks in the amount of EUR 40 million. The public can get to know with all the information by a simple archive search. Even the daily Dan has repeatedly published that information. All of this was discussed at the parliamentary committees’ sessions, in the media, by trade union organisations, NGOs... There is almost no issue being debated more than this. Furthermore, it should be noted that the Settlement Agreement is a public document published immediately after its signing, with all the accompanying annexes, so that all interested public was in possession of all the information related to this issue.

Furthermore, the Ministry of Economy has submitted to the daily Dan journalist the responses on the issue with all the arguments, who, however, in line with his professional practice, decided to publish only a fraction, retelling it unprofessionally. Again, the Government of Montenegro's made each move in relation to the Aluminium Plant in accordance with their legal adviser, an Austrian law office. Of course, believing that the daily Dan journalist knows this issue better, we leave him the opportunity to prove this before the authorities as well.

Podgorica, 10 September 2016.
PR SERVICE
MINISTRY OF ECONOMY