Part 1: ‘Transparent privatisation’ with a non-transparent valuation
Part 2: Part 2. You cannot simply make assumptions; you can impose penalties
However, the new Council will scrutinise both the report and the valuer.
Thus, the system ends up with the perfect scapegoat. If the price is too low, the valuer is to blame. If the price is too high and there is no buyer, it is the valuer again. If the asset is incorrectly defined, the source data is incomplete, or the terms are unattractive, the report will still be scrutinised.
Who cannot lodge a complaint
Only the client commissioning the valuation, the designated user, the Public Prosecutor’s Office, a court, a criminal prosecution authority or a public body is entitled to initiate an audit. This is an exhaustive list.
An unsuccessful tenderer cannot. A debtor in insolvency proceedings, whose property has been valued at the creditor’s request, cannot. A person from whom a plot of land is being seized cannot. A professional association cannot. A journalist certainly cannot.
In a privatisation case, only the state itself – which commissioned the valuation – may initiate a review.
The remedy devised to combat undervalued privatisation valuations does not work in the context of privatisation valuations.
Corruption does not always take the form of an envelope
In the professional market, it begins when an administrative body is given the power to decide who is entitled to practise, to define the boundaries of acceptable professional opinion, to choose whom to investigate, to impose penalties without any measurable criteria for error, and to consider complaints against the decisions of its own system.
This is how regulatory rent is created.
Relationships with the regulator become crucial for securing commissions. An independent valuer becomes a threat: their conclusion may not align with the client’s interests. A compliant valuer understands the limits of permissible independence.
The market is divided into those who are inspected and those who carry out the inspections. Moreover, the three external members of the Council are active participants in that same small market, who will be granted the right to review competitors’ reports.
A formal declaration of a conflict of interest does not resolve this. The rules on recusal cover past relationships and do not address future commercial interests in weakening a rival.
What will happen to the market?
Independent valuers will withdraw from complex segments – precisely those where valuation is most needed: insolvency, expropriation, public ownership and forensic valuation. The more contentious the subject matter, the higher the likelihood of scrutiny.
Reports will become longer, more cautious and less definitive, because certainty is the main source of vulnerability. The market will end up with more paperwork and fewer valuations – exactly the opposite of the stated aim.
Prices will rise: administrative risk will be factored into the cost of the work. High-quality valuations will become more expensive, whilst cheap ones will remain cheap – their purpose is usually not to determine value, but to produce the required figure.
The market will centre on administratively stable companies. Smaller players will be squeezed out.
Banks and courts will be given an administrative argument instead of a valuation. Instead of a contest of calculations, there will be a reference: ‘The Council has deemed the report non-compliant.’ For the court, this is a way of avoiding having to grapple with complex economic issues; for the bank, it is a way of absolving itself of liability; and for the official, it is a way of justifying a decision that has already been taken.
A separate point regarding the past: the regulations apply to reports drawn up prior to their entry into force, and the document contains no statute of limitations whatsoever. A report dating back ten years could serve as grounds for revoking a certificate. A tool that applies to everyone but is applied to few is, by definition, not justice.
What is the point?
The explanatory note states that, for the period 2014–2024, shortcomings were identified in approximately 54 per cent of the roughly 280 reports audited.
Look not at the percentage, but at the denominator. Twenty-five reports a year – that is all the state has managed to audit over the course of a decade. And this is not a random sample, but documents that have already been referred to the complaints commission. Such a proportion is not representative of the market.
The new body is budgeted for twelve paid meetings per year, with a budget of 0.78–0.83 million lei; additional meetings are permitted only within the limits of available funds. The budget acts as a cap on the number of cases. The documents contain no forecasts regarding the number of applications or measures of effectiveness.
The authors themselves state that the draft does not comply with the EU act. A review of the chapter on company law highlighted a supervisory function. It did not stipulate that the body should be subordinate to the same agency, nor did it prescribe a closed circle of applicants, a ban on reconsideration, or the absence of a limitation period.
It is stipulated that the composition of the Council, announcements, the annual report and statistics must be published. The conclusions themselves are not included in the list. The only public benefit that such a body could deliver – a methodological framework accessible to all – is not planned to be implemented. An assessor only becomes aware of the applicable standard once they are a respondent.
The draft was approved accordingly. The published package contains two submissions – from the Ministry of Justice and the Ministry of Finance – both without objections; moreover, the Ministry of Justice’s submission states that the draft was examined through the prism of the law on the State Agency for Intellectual Property. This has no bearing on valuation activities, and the wording is repeated twice.
Three professional associations of valuers and a technical university are listed as requiring approval – yet none of their opinions are included in the package. Ten days were allowed for comments on the act, comprising one hundred and seventeen clauses and eight annexes.
Corruption really is invincible
It is not invincible because it cannot be fought. It is invincible when the fight against it is entrusted to the very same system that has been drafting non-transparent rules for decades.
Instead of making privatisation reports public, a Council is being set up. Instead of disclosing the terms of reference for the valuation, control over the valuer is being tightened. Instead of holding officials to account, the threat of losing their certification is being introduced. Instead of a market-based system, a licensing system modelled on that of 2000 is being proposed.
Not a single clause in the draft obliges the publication of even a single valuation report on state property.
Those who have failed to establish a functioning valuation market are attempting to cement their influence over it permanently. But authority does not confer knowledge. Five people do not become competent in all types of valuation simply because the government has given them the right to vote.
One can scrutinise a report. One can scrutinise a certificate. One can regulate entry to the profession.
You cannot create intelligence, independence and professional reputation by decree.
Corruption becomes invincible the very moment it is granted the right to write the rules for combating itself.
Dmitri Taraburca,
expert in property valuation and development
This story was translated with the assistance of artificial intelligence.The translation was also reviewed by the Logos Press editorial team.
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