President Nicusor Dan has sent to the Constitutional Court of Romania (CCR) a notification of unconstitutionality regarding the Law on the approval of Government Emergency Ordinance no. 73/2018 for the completion of art. 1 of Government Emergency Ordinance no. 109/2011 on the corporate governance of public enterprises.
The law subject to constitutional review introduces the following paragraph to art. 39 of Government Emergency Ordinance no. 109/2011: "(5) In the case of public enterprises whose shares are admitted to trading, the expenses for representation, transportation, per diem and accommodation of administrators and directors, in the case of the unitary system, respectively of members of the supervisory board and members of the board of directors, in the case of the dual system, incurred for the purpose of exercising their mandates, do not represent benefits or advantages within the meaning of paragraphs (2) and (4)", agerpres reports.
These paragraphs refer to the capping within the limit of two fixed gross monthly allowances during one year of certain benefits, individualized as those related to the coverage of representation, transportation and per diem expenses, as well as other benefits, undetermined, also capped at the level of two fixed gross monthly allowances during one year.
According to the complaint, the amendment introduced by the legislator, as a separate paragraph, paves the way for unlimited expenses, which would be made arbitrarily within state-owned companies, more precisely, public enterprises whose shares are admitted to trading, these expenses being related to the idea of being affected for the purpose of exercising the mandates.
Through this amendment, the legislator paves the way for arbitrary settlements under the guise of "exercising the mandate", the complaint shows.
Furthermore, it is argued that although formally these amounts are no longer qualified as "benefits", in reality they will represent material advantages which, by eliminating the legal ceiling, can be used to circumvent the remuneration limits established by the mandate contract. This "liberalization" of expenses within listed public enterprises - entities that manage strategic state assets - directly makes the way public money is spent vulnerable.
Thus, the scope of expenses that may be incurred by administrators and directors, as well as by members of the supervisory board and members of the board of directors of public enterprises whose shares are admitted to trading, will include the following categories: those incurred with representation, transportation and per diem - for the purpose of exercising their mandates - which may be incurred without limit, and benefits - capped at two gross monthly allowances/year.
"The configuration of expenses admitted for settlement, in this area of social relations, allows for a quasi-universality of the settlement of expenses of these categories of employees, from the state budget, which far exceeds, in our opinion, the intention of the initiator - the Government of Romania. By excluding expenses for 'representation, transportation, per diem and accommodation' from the category of benefits (which are usually capped by the mandate contract), the premise of discretionary and unlimited expenses is created. Since these companies use public capital, any erosion of profit through excessive protocol expenses contravenes the state's obligation to protect national economic interests", the notification reads.
In addition, says the President, the amendment introduced in the decision-making chamber paves the way for the possibility of spending considerable amounts in terms of future benefits for a wide category of employees, namely: administrators, directors, members of the supervisory board and members of the board of directors. Most of the targeted enterprises (listed on the stock exchange) are strategic entities for the national economy.
The head of state evokes a possible "camouflage" of material advantages.
"A legislative framework that allows the 'camouflage' of material advantages in the form of professional expenses can lead to non-transparent corporate governance, undermining the economic efficiency that the state is obliged to guarantee," he details in the notification to the CCR.
Also, the problem of predictability of the normative act arises, because the consequence is the impossibility of estimating the amount of expenses that can be included in the law, determinable by the phrase 'made for the purpose of exercising the mandates' that the legislator uses in order to circumscribe them to a certain criterion.
"Quantifying the expenses that can be included in the settlement based on this criterion is practically impossible, there being a risk of violating the provisions of art. 135 paragraph (2) letter b) of the Constitution, which stipulates that 'the state must ensure the protection of national interests in economic, financial and foreign exchange activity' since, obviously, the arbitrary and uncapped management of the resources of public enterprises-companies is likely to directly affect the state's patrimony and, implicitly, the national interest", the document also shows.
President mentions that through this notification he does not bring criticisms of unconstitutionality regarding GEO no. 73/2018, which supplemented art. 1 of Government Emergency Ordinance no. 109/2011 on the corporate governance of public enterprises, but only the manner of adoption and the content of the additions made to it by the Chamber of Deputies, within the scope of the approval law.
