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Parliament activity, July 19-23, 2004
29 July 2004

During July 22 session both Communist faction in Parliament and Christian-Democrats commented on the situation around Moldovan schools in Transdnistria. The latter accused Russian Federation of supporting Tiraspol, whereas communist leader in Parliament dubbed Tiraspol actions as banditries. The third faction in Parliament headed by Dumitru Braghis submitted for examination a draft official declaration to be issued the Parliament, however majority faction replied it was too early for the legislature to make such kind of declaration as long as the President of the country and Government had already voiced their standpoints and undertook all the necessary steps to settle the issue.

During the aforesaid session, deputies examined more than 20 draft laws that were already examined in the first reading and were to be adopted by the end of the summer session.

I. Law on Granting Information and Security Service the Right to Baking Information

ADEPT Comment: Although the draft was severely criticised during the first reading, majority faction decided to amend the Law on Banking Institutions and the Law on Commercial Secret. Under the current law, bank administrators, officials and agents are obliged to keep the commercial secret and are prohibited from using information they handle while exercising their work duties in their own interest or in the interest of a third party.

This kind of information may be only submitted to National Bank, its inspectors, accounting experts and authorized accountants, legal bodies, Court of Accounts, Centre for Combating Crime and Corruption, fiscal bodies, as is provided by law, as well in cases when in order to represent bank interests in court commercial secrets should be disclosed.

Commercial banks are obliged to submit legal bodies information on accounts considered doubtful according to normative acts issued by the National Bank. However, under the law passed by the Parliament the list of organizations to be notified includes Information and Security Service as well. The reason behind this decision is to track suspicious transactions, fight money laundering and undercut funding of terrorist organization so as to ensure state security.

Experts say besides controlling financial flows and fighting money laundering, these amendments would enable ISS to collect information and even interfere into the activity of businesses competing with those controlled or hold by state oficials.

II. Law on the Amendment of Legal Acts on Privatization of Enterprises in Energy Sector

ADEPT Comment: Current law provides that upon distribution of enterprises distributing electricity, at least 75% + 1 shares were to be auctioned. This enabled investors to control the company and administer it according to their own plans.

However, under the recently passed amendments up to 50%+1 of the shares are to be auctioned. This enables the state to hold the enterprise under control. The move was inspired by the on-going conflict between authorities and "Union-Fenosa", owner of RED Centre and Red-South Distribution Networks. Measures undertaken by the company leadership constantly trespassed on Chisinau authorities' interests, which oppose raising tariffs on electricity and disconnecting consumers for the failure of payment. Noteworthy, the disputes between Union-Fenosa and Government led them to the court. That is turn determined international organisations to interfere on the grounds that wielding heavy pressure on investors was illegal and inadmissible. Although there is much ado about governors' fault who struck the deal on privatising distribution networks for much lower prices, even a resolution of the Court of Accounts being issued as regards terms of privatization, so far no official person was hold liable, the governing preferring to harass the investor in an attempt to protect the interests of social-vulnerable strata.

Probably to avoid similar situations in the future, specifically in the case of North and North-West Distribution Networks governing came up with a new procedure.

Noteworthy, several tenders have been held already for the privatization of distribution networks in state property, however all of them unsuccessful because of the low bids. Given that investors are offered a even lower share package, it is very unlikely that many of them would be interested in biding, which in the long run would allow monopolists such as RAO ES of Russia to buy assets at low prices.

III. Law on the Amendment of the Law on Acquisition of Goods, Works and Services for the State Needs

ADEPT Comment: The amendments are aimed at decentralizing the mechanism of public acquisitions. National Agency for Public Acquisitions, which currently approves all the transactions, shall from now on only call the bids, examine acquisitions from a single source and examine complaints and litigations in the field. As for the rest of responsibilities, they shall be delegated to the organizations engaged in the acquisitions.

On the one hand the simplified mechanism might be useful to boost the responsibility of administrators in managing public funds, as they would no longer be able to blame the Agency for any irregularity found. On the other hand, given the lack of proper control and high rates of staff turnout it may well happen that certain administrators would be tempted to exploit their position to their own benefit and it would be too late for the Agency to interfere. On top of this, the personnel lacks training especially in the territory.

It would be possible to assess the law enforcement only after Court of Accounts undertakes several controls.

IV. Law on Ratifying Amendments to Agreement on Development Credit

ADEPT Comment: The Agreement ratified by the Parliament amends the previous agreement concluded between Republic of Moldova and US Agency for International Development, providing for a 10.5 million USD credit. The project includes three major components: rural extension services; rural business development services; rural financing. Amendments to the Agreement ratified by the Parliament, entitled "Investments in Rural Services", envisages additional 5 million USD with a 40 year reimbursement term and a ten years grace period at 0.75% annualized interest rate.

V. Law on Ratifying Agreement on Development Credit - Social Investment Fund of Moldova

ADEPT Comment: Government signed an Agreement worth a 20 million USD credit for implementing the second Social Investment Fund project. The project's objectives are to channel resources to the poor people in villages; contribute to human and social capital development by means of providing better social and economic services to poor communities and strengthen the capacity of local institutions.

Government shall receive the credit with a 40 years reimbursement term and 10 years grace period at a 0.75% interest rate. The project is for a five year term and shall be targeted at:

  • 280 villages that did not implement projects within FISM I and were identified;
  • 120 villages that implemented projects during FISM I project;
  • 42 small towns;
  • vulnerable strata of the society (elderly, women, youth, children, etc) in six rayons of the country (30 sub-projects for establishing innovative social assistance services).

The two credits secured by the incumbent ruling indicate a new reality, so far ruling party has claimed it was governing the country for three years in a row without any foreign assistance, however the reality is totally different - at the beginning of ruling they received a considerable credit that enabled them to preserve balance of payments. Later on, a number of credit and grant agreements were concluded and together with the two recently ratified ones, totals 10 million USD. Therefore, claims that that the country is doing quite well solely because it had tightened its belt, economic recovery and GDP growth, are not exactly true.






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