WITHOUT VALUATION STANDARDS, PRIVATIZATION WILL BE DETRIMENTAL TO STATE BUDGET. EXAMPLE OF AIR MOLDOVA

An exclusive commentary to "INFOTAG" news agency by the Executive Director of the Society of Independent Valuers (SIV) Dumitru TARABURCA

Practically all privatization takes place under the scheme of selling real estate, although the object of sale is business. This happens because of the excessive "servility" of the market regulator - the Agency for Land Relations and Cadastre, which provides not only methodological support for the "right" amounts, but also services to appraisers. The Public Property Agency (PPA) announces a tender and chooses the cheapest appraiser. The level of qualification of the appraiser does not matter, then he works according to the instructions and additions of PPA specialists. These appraisers often do not understand what they are appraising and this is not a problem. The doers have years of unpunished experience wasting government property and full confidence that the system will protect them, which has been the case for years.

The situation has lasted for decades and impunity is accompanied by a system of market regulation that, in the absence of national standards harmonized with European norms, does not correspond to the changes taking place in the country. In April 2002, the final provisions of the law "On valuation activities" obliged the government to develop national valuation standards within six months. More than 20 years have passed, but nothing has been done. The dynamics of change in the world in this part is crazy - international standards have been changed four times, and European standards - written anew.

The practice and consequences can be conveniently traced back to the privatization of the state-owned company Air Moldova - the valuation was done by a combination of real estate and business valuation methods, without determining the right to land and other things. The company had to go bankrupt with criminal cases against former directors, but the trademark of Air Moldova was valued at 7.174 million euro by a permanent member of the qualification commission under the Agency for Land Relations and Cadastre. For reference: such a price is almost equal to the value of the KODAK trademark. By simple arithmetic, the company's losses were deducted from this amount and the result was 2.5 million euro - the sale price of Air Moldova.

The damage to the budget is equivalent to bank robbery. With a gross revenue of 3 billion lei per year, even the minimum value of the object sold would be 10 times higher than the amount of the transaction. The minimum profitability of the airline - 3%, which means that we are talking about 22.5 million euros, taking into account the minimum payback period of five years. In fact, the company was sold for a week's worth of revenue.

This egregious case was made possible by the lack of valuation standards and its fragmentation by regulators. All this together led to the fact that Moldovan asset management is based on outdated institutional and methodological norms, which do not fit into the rhythm of the processes in progress and encourage impunity for enrichment. Changes are overdue, but we have to think with our heads about which changes to implement.