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The new draft law on the management of state-owned enterprises still needs amendments

The new proposal of the Law on the Management of Public Enterprises Owned by the Republic of Serbia is better than the previously withdrawn one. Still, it also needs to be amended, primarily in the area related to preventing misuse of public resources during the election campaign, transitional provisions and sanctions. Transparency Serbia will propose amendments that would improve those shortcomings.

The government sent this bill to the Parliament, although no report from which one could see the reasons for accepting and rejecting the proposal from the public consultations was previously published. The bill's explanation specifically stated that such a report would be published within 15 days after the consultation, which would have been August 1, 2023. Still, the report is not available on the Ministry of Economy website or the eConsultation portal. Also, the opinion on the corruption risks in this act was not requested from the Agency for the Prevention of Corruption, nor the Agency drafted it independently.

The most significant improvement in the bill is that directors, acting directors, members of supervisory boards and the assembly of shareholders of state-owned companies will still have the status of public officials. This will be achieved by amending the Law on Prevention of Corruption. The draft amendments to that Law published two days ago, will practically put out of force the very harmful and legally unfounded authentic interpretation of the term "public official", voted by the Parliament in 2021.

Norms on acting directors are specified, but not sufficiently. Unlike the previous draft law, the new one establishes the obligation to appoint an acting director until the director's election in the competition. However, there are still some rules missing from the current Law on Public Enterprises - that the acting director must meet the conditions required for the director, as well as that the total duration of the state of the acting director (and not only for each acting individual) cannot last longer than one year.

Regarding abuses for political purposes, the bill includes a provision of the existing Law on Public Enterprises that prohibits using property, activities, names and visual identity of state-owned enterprises for an election campaign. However, as it has happened countless times, the prohibition formulated this way was insufficient to prevent and punish such abuses. That is why Transparency Serbia proposed the introduction of several new measures - among other things, the publication of data on certain expenses of state-owned enterprises and the restriction on employment during and immediately after the election campaign, the prohibition of influence and pressure on the business partners of state-owned enterprises and the expansion of the term "enterprise resources", in order to include all cases of abuse recognized in practice. Also, no misdemeanour norms are prescribed for violating these rules, and it is not definite that there is another effective mechanism for sanctioning the violation of this prohibition.

The draft law omits restricting the advertising of those state-owned enterprises that do not operate in market conditions, which exists in the Law on Public Enterprises. That opens up space for making unnecessary expenses, buying media influence and achieving other hidden goals unrelated to the role of state-owned enterprises.

Transitional provisions do not elaborate on important issues or leave too long deadlines. Thus, it can be expected that the current directors and acting directors of public companies whose mandates have expired will continue to illegally perform these functions until the implementation of the new rules, which will take at least a year. There are no specific deadlines for harmonizing the acts of companies that have already been transformed into joint-stock companies, such as EPS and Telekom. It is particularly worrying that the deadline for determining the assets owned by companies is as much as three years from the start of the Law's implementation, which means that these data will become known only in the second half of 2027. This indicates that companies currently do not have accurate records of their assets.