A decade of violations of the Law on Public Enterprises

The Law on Public Enterprises (PE), adopted precisely ten years ago, did not bring the promised professionalisation of management but became a symbol of open mockery of the rule of Law.

Out of 34 companies owned by the Republic of Serbia, obliged by the Law to elect directors in a competition, 17 have not had a person elected lawfully at the head for a single day.

Only eight companies currently have a legal director selected in the competition.

In 22 companies, the directors are in acting status and subject to political mentors' influence because they can be replaced at any time without explanation. For the vast majority of the 22 acting directors – 18 of them – the maximum allowed duration of that status of 12 months has expired. They are citizens who illegally sit in the director's offices but, in fact, manage public resources worth billions of euros. In the remaining four cases, the new acting directors have been in those positions for less than 12 months, having as predecessors also acting directors. That is also illegal practice since the Law does not limit the acting status duration for one person but the total period from the end of the mandate of the elected director until the election of a new one in a competition.

In three public companies, the director's mandate expired a long time ago; they are not in acting status anymore. Still, neither are they in the legal position of elected or appointed director. One state-owned company's assembly elected a director without competition.

The harmful consequences of the political appointment of personnel who, in some cases, do not meet the criteria of expertise prescribed by the Law became clear to the general public at the end of 2020 with the energy crisis. At that time, it was no longer possible to hide how ruined the Electric Power Industry of Serbia (EPS) was.

Implementing the new Law did not solve other previously recognised problems either, such as party abuses in employment and for providing support in the election period, extracting money through rigged public procurement.

In 2021, instead of fully implementing the Law, the Government adopted The Strategy for the Management of State Enterprises. The Strategy predicts that by 2027, PEs will be transformed into joint-stock and limited liability companies. It also announces a new law that will regulate corporate governance issues.

At the same time, the thesis that PE's status hinders the improvement of the operations of these state-owned enterprises is presented in public, for which there is no foundation. Only a change of status, without a change in the relationship of the state towards PEs, freeing companies from party restraints and returning social policy from state companies to the relevant ministry, will not bring either an improvement in the quality of work or better protection of public resources.