The Rama government has submitted to Parliament a draft law establishing an Albanian Investment Corporation that would take over the responsibility to manage all public properties. The draft law sanctions that the AIC will be excluded from the Public Procurement Law as its focus will be to promote and establish investment / real-estate projects using state and private assets.
The Democratic Party has denounced AIC initiative from its early days as another special law that deviates from standard legislation in order to serve corrupt interests (reminder special “Fusha” law – national theater scandal). The International Monetary Fund in a recent statement appears to back Albanian opposition’s conclusion.
More practically, AIC’s operational framework is as follows :
1. The draft law implies the creation of a scheme ensuring the transfer, by force of law, of state properties to unknown individuals even without compensating state budget. This comes because of the exclusion of AIC from the Public Procurement Law. De facto, this implies that AIC’s “beneficiaries / partners” will be selected without any procurement, transparent, competitive procedure but only through a private undisclosed negotiation run by AIC managing staff representing practically PM Rama’s most inner circle.
2. The AIC will be given the right to treat state properties as assets that can be pledged in various private investments, or as a collateral for credit lines the Corporation can seek in the private financial market. When promoting / developing a “project” (mainly real estate initiatives), the Corporation will be able therefore to freely issue a debt in the form of a commercial bond without any supervision and correlation to Public Finance Procedures. After these bonds will be traded in the stock market / banking sector, they will result clearly – in those situations when the Corporation’s obligation is not respected – to the transfer all available collateral to the buyer of the bonds. This collateral representing practically the AIC portfolio has created by absorbing public and private properties.
3. The draft law is against the Constitution and severely harms Local autonomy of Albanian Municipalities and their rights into managing their local assets that will be arbitrarily transferred to AIC portfolio. Albanian law on local autonomy stipulates that the local municipal propriety rights can be exerted exclusively by City Councils voting on a qualified majority of 3/5. AIC’s draft law states that it can unilaterally absorb to its portfolio any local asset without requiring any Municipal consent.
4. The Corporation does not exclude itself neither the right to take properties from private citizens as well. This, because the draft-law gives a greater power than the Constitution, to government in obtaining a private property for allegedly public interest. The draft law stipulates, in practical terms, that the Prime Minister’s new corporation will transfer any type of Albanian properties (let them be public or private ones) to undisclosed projects, chosen without any procurement procedure. These projects giving an unlimited access to preferred oligarchs that will undoubtedly have the best lion’s share of public and private property in the country, particularly in the coastal areas.
5. The draft-law currently being discussed in the Albanian Parliament Commissions represents the most flagrant case how public/private properties can be unconditionally transferred to a legal entity subject to private law. An entity that affects also free competition because it introduces in the market a business entity of private law, benefiting from a privileged status and resulting in a clear violation of the Stabilization and Association Agreement. It
6. The draft law is unconstitutional and against organic budget law, which presents in an exhaustive manner the financing of the state budget for commercial activity. AIC’s pledges in the bond/banking sector will have therefore impact also for public finances. These effects, particularly as of Public Debt, are not yet clear considering the exclusion of the Parliament, of the Procurement & Public Finance laws.
The IMF mission in Albania appears to be against the draft-law creating an Albanian Investment Corporation due to the high risks it may imply for the national economy.
“We strongly advise Albanian authorities to reconsider recent proposals for establishing the Albania Investment Corporation (AIC), to help avoid risks to the budget and to the integrity of the public investment management framework. The draft law would allow the government to direct individual investment decisions, which could make the AIC an off-budget spending tool that risks eroding fiscal discipline and circumventing public investment management processes. Instead, the framework should ensure that the AIC will operate on a commercial basis and at arm’s length of government. The law should affirm the independence of the AIC in operational decisions and in selecting individual investment projects. The AIC should also be subject to the Public Procurement Law.”
