Cyprus Mail
Cyprus

Power struggle over privatisations

By Elias Hazou

A bill designed to boost financial transparency in state-owned and semi-public enterprises is really a way for the government to wrest control away from parliament ahead of the privatisation process, MPs from across the board said on Monday.

The government bill provides for the introduction of a process that starts with drafting annual budgets and their timely submission in a unified form for all organisations. It also sets the qualifications, responsibilities, and procedure to appoint and dismiss boards, and includes provisions about conflict of interest.

But for MPs, a key bone of contention is a clause allowing the government of the day to abolish, merge or sell off departments of these organisations, without parliamentary approval.
Currently, such action needs the nod from parliament.

The proposed legislation is being discussed jointly by the House finance and legal affairs committees.

As it is framed, the bill abolishes the autonomy of these public entities and gives the government “draconian” control over them, DIKO MP Nicolas Papadopoulos said.

This, he added, goes far beyond the stated intent – exercising effective budgetary control over public organisations and clamping down on corruption.

“With this bill, the government will effectively be able to order CyTA not to implement 4G technology, so that another company will,” claimed AKEL deputy Aristos Damianou.

And his colleague Pambos Papageorgiou called the bill “a bad joke” as “it aims to re-write the book on business administration.”

Likewise AKEL’s Stavros Evagorou said the bill functions as “a bridge” to the intended privatisation of SGOs, which his party fiercely opposes.

But a senior finance ministry official countered that the organisations would continue to draw up strategic plans and submit them to the relevant ministries. The difference is that SGO directors would no longer “proceed blindly”.

The bill also mandates an implementation plan, an obligation to inform officials about important events that could affect the budget, and corrective action.

Among others, it stipulates that an SGO may sue, and seek compensation from, members of the board of directors, for actions or decisions that turned out to be financially detrimental.

The attorney-general’s office meanwhile said the bill is not in breach of the constitution. Specifically, article 22 states that public-law organisations are established and operate by an act of law.

Greens MP George Perdikis demanded that the Privatisations Commissioner brief parliament on how the privatisations drive is progressing.

“It seems privatisations are being pushed through the backdoor,” he said.

Speaking to reporters later, Perdikis revealed that AKEL is mulling drafting a legislative proposal to freeze privatisations until 2017.

AKEL was sounding out the other parties for support, he added.

Such a move would represent a direct challenge to the bailout agreement, setting the stage for a clash with the government, which is obliged to comply with the terms set by its international creditors.

To pay down a €10bn bailout, Cyprus must generate proceeds from privatisation of at least €1bn within the bailout programme period (by 2016) and €0.4bn outside.

Revamping the operation of these entities is another condition of the Memorandum of Understanding between Cyprus and international creditors.

The government insists the bill in question is merely reform of semi-public and state-owned enterprises and has nothing to do with privatisations.

Workers at SGOs are fretting over their job security. To assuage those concerns, finance minister Harris Georgiades earlier told MPs that there was not a single labour matter raised in the bill.

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