Activity of the Parliament on April 26 – May 9, 2004

Tensions build

Parliament convened for only two sessions during the past two weeks, which were as tensed as the previous ones. Again Christian-Democrats blocked the central tribune, thereby demanding data on the controls conducted by the Court of Accounts on public funds spending by central public administration to be made public and calling on Parliament Chair resignation.

As usual, at the beginning of the session Parliament Chair called on Christian-Democrats to observe the Parliament Regulation, however they refused to do so. Last week thought, majority faction proceeded to amend the Parliament Regulation that would allow sanctioning deputies who obstruct plenary sessions.

Legal acts

Law on establishing diplomatic duty free shops

The law provides for opening a duty free shop in Chisinau to serve diplomatic corps. Goods shall be sold based on identity cards issued by the Ministry of Foreign Affairs in amounts enough for personal or family use and shall not be subject of resale. Foreign missions would be allowed to purchase goods in larger amounts with the previous authorisation of the Ministry of Foreign Affairs. The Government is to decide on the establishment, operation and sale of goods in the diplomatic duty free shops.

Previously, the initiative has attracted a storm of criticism on the grounds it was solely intended to serve the murky bargains of the ruling party. The law of December 21, 2001 amended the Customs Code in particular in that goods should be sold in foreign currency only to those who passed customs control. Also, duty free shops are to be located at the customs checkpoints, or on airplanes flying on international routes.

Lawmakers cited in favour of the law the numerous requests from diplomatic corps to open such shops allowing them to buy better quality products at lower prices.

The law does not stipulate whether duty free shops would be state-owned, joint venture or private; or whether a tender is to be held to select the successful bidder. The Government would have to decide on those issues in the Regulation it is to develop. And only then, would we see whose interests are at stake.

Law on converting the debts of the “Tracom” tractor plant into shares

Parliament decided to convert the 12.5 million Lei debt into shares to be owned by the state. Thereby state would hold 93% of the registered capital, fact that reportedly would boost production of agricultural machinery and tractors in the country.

Law on settling historic debts to the state budget of “Mezon” joint venture under insolvency procedures

The law authorized Ministry of Finance and Creditors Council to settle Mezon’s debts worth 1.7 m Lei by transferring its patrimony into the property of Basarabeasca rayon. The patrimony shall be transferred via alienation. Noteworthy, the plant was part of the industrial military complex. Upon the collapse of the Soviet Union its production shrank and in 2000 it undergone insolvency procedures under a resolution of the Economic Court at the request of the Ministry of Finance.

Draft law on the modification and completion of the Law on Joint Stock Companies

The law obliges joint stock companies to pay dividends amounting at least 30% of its net annualized profit. Under the current law the net profit is used to:

pay interests or other relevant payments to the company obligations;
cover the losses incurred in the previous years;
form reserve fund;
award compensation to members of the company council and censor commission;
invest in developing production;
pay dividends, etc.

The decision to distribute net profit throughout the financial year is taken by the Company Council based on the norms set by the General Assembly of the shareholders, whereas the decision to distribute net annualised profit by the annual General Assembly of the shareholders at the recommendation of the Company Council.

As for dividends the law says the company is entitled to pay intermediary, quarterly and semester dividends and annual ones on the shares in circulation. The Company may not decide on paying dividends:

prior to redeeming shares placed that should be redeemed;
if, at the date decision to pay dividend is taken, the company is insolvent or if payment of dividends would lead to its insolvency;
if the value of net assets, according to the last balance sheet, is less than its registered capital, or shall become so, as a result of dividend payment;
on ordinary shares if there is no similar decision on preferential shares;
on any shares if there is no decision on paying interests on obligations.

The modifications drafted and approved by the Parliament in the first reading is to protect the interests of minority shareholders, who sought to get dividends for placing shares, but are deprived of those dividends by the decision of the majority shareholders seeking to capitalise the business. At the same time, this requirement would be yet another infringement on the autonomy of the companies and would force its leadership to pass decision regardless of the short sight interests or long-term development perspectives.

Draft law on the modification and completion of the legal acts on obligatory medical insurance

Under the draft law passed in the first reading, pregnant and breast-feeding women shall enjoy a free medical insurance to be covered from the Government allotted funds. Also a notification was proposed to the effect that only unemployed receiving unemployment aid or allotment for professional integration shall benefit of free medical insurance. This provision alone would reduce the burden on the state budget, as many more people register as unemployed so as to get free medical insurance and refrain from job hunting that would enable them to cover its costs.

Resolution on approving the membership of the Administration Council of the Fund of guaranteeing the deposits made by natural entities in banking system

Under the law on guaranteeing deposits made by natural entities in banking sector, the Fund is to be administered by a Council including 6 members:

3 members designated by Banking Association;
1 member by each of the following: Ministry of Justice, Ministry of Finance and National Bank of Moldova (non-voting members).

The following persons were approved as members of Administering Council:
Calpagiu Vasile, Foca Silviu and Veverita Petru (designated by the Banking Association), Esanu Nicolae (designated by the Ministry of Justice); Jurminschi Veronica (Ministry of Finance) and Mustata Radu (National Bank of Moldova).

Law on the modification of the Law on Local Public Administration

The law provides that privatisation and other auxiliary activities shall fall within the competence of rayon public administration. Given that territorial agencies of the Privatization Department were shut down, their functions have been delegated to rayon (municipal) local public administration. Therefore, selling plots, real estate in state property shall be the prerogative of local authorities. There area also exemptions from the law, specifically in Chisinau and Balti municipality and Gagauz Autonomy the aforesaid functions shall be exercised by the branches of the Privatisation Department.

The law is a major step in ensuring local autonomy, however it would raise many problems, especially given the lack of resources and qualified personnel among local authorities.

Law on the ratification of the Protocol on free railway tickets for veterans

Parliament ratified the Protocol on enforcing the Resolution of the Council of the CIS Chief of States that entitled WWII veterans to a free railway ride once per year. The Protocol also enables veterans to choose a 50% discount on maritime or airfare. Noteworthy, on the eve on May 9, airlines announced a 50% discount to veterans and accompanying persons.

Law on modification of the Law on Budgetary System and Process

Under the law funds administrators shall be responsible for executing writs of execution issued by courts, namely in the case of local and central authorities — their heads, whereas in case of debts to the central budget — Ministry of Finance via State Treasury. The amendments are aimed at bolstering the responsibility of funds administrators that sometimes refrain from enforcing writs of execution affecting them leaving it in the responsibility of the Ministry of Finance.

Law on the modification of legal acts on social protection of citizens affected by the Cernobil accident

The law increases monthly allocations to 100 Lei for the following: spouses incapable to work of those who took part in liquidating accident consequences and died; children up to 18 of deceased participants in liquidation; one of the parents unable to work of the deceased participants in liquidation; first degree disabled unable to work as a result of the accident, etc.

Law on modification of legal acts on declaring and control of the income of public officers

The law distinguishes on the status of various categories of public officers and state officials. Also the law obliges officials to declare their income and estate, the failure to do so being sanctioned. The law extends the list of persons obliged to declare their income and estate to include elected bodies, heads of various central or local control bodies and law enforcement bodies. The minimal amount of goods to be declared is set at 50 thousand Lei. The law also perfected the mechanism of checking the declarations.

Noteworthy, on July 19, 2002 Parliament passed the Law no.1264-XV on declaring and control over the income and assets of state dignitaries, judges, prosecutors, public officer and high rank officials. Later on the law was amended, however still little is known about its enforcement.

Law on the modification of legal acts on the free economic zones

The law provides for:

enlarging the territory of the Free Economic Zone Expo-Business Chisinau, to include a 27 ha plot belonging to “Tracom” joint stock company;
establishing a sub-zone as part of the FEZ “Ungheni-Business”. It will be located at the “Covoare-Ungheni” joint stock venture, and seek to attract investments and boost manufacturing output (establish a joint carpet manufacturing enterprise). Noteworthy, as of now, the companies’ debts amount to 40 m Lei.

Draft law on the modification of the Parliament Regulation

Draft passed in the first reading includes a series of provisions on sanctions for deputies breaching plenary session’s procedures. In particular, in cases when a deputy continues to violate the Regulation after he/she was called to order, the Chair of the session would refuse him/her the floor, however if the deputy still insists, the Parliament would decide on his/her removal from the hall.

In case the sanctioned deputy refuses to leave the Parliament hall, the Parliament would apply a sanction — interdiction to attend plenary session for up to 10 sessions. State Protection and Defence Service shall ensure the enforcement of the sanctioning decision.

It also proposes that throughout the sanctioning period, deputies shall not be entitled to compensation, except for indemnities and per diems to cover for transportation and rent expenses.

The sanction may be lifted any time at the initiative of the Parliament Chair or any parliament faction, or at the written or public request of the sanctioned deputy acknowledging that he/she was wrong and pledging to abide Parliament Regulation and order.

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