2066d5_postprivat.doc - CASE RESEARCH FOUNDATION INSTITUTE...

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CASE RESEARCHFOUNDATIONINSTITUTEFORMARKETECONOMICSEVALUATIONOFTHEPOST-PRIVATIZATIONMONITORINGSYSTEMINBULGARIAASSENKAYONKOVAGEORGISTOEVJULIANPANKOW(EDITOR)KRASSENSTANCHEV(EDITOR)LATCHEZARBOGDANOVSVETLANAYANAKIEVATZVETADIMITROVAFEBRUARY2000THECOPYRIGHTOFTHISREPORTISOWNEDBYCASE ANDIME.1
CONTENTSEXECUTIVESUMMARY........................................................................................................................................iiiRecommendations iiiBackgroundivFindingsivConclusionsvINTRODUCTION.....................................................................................................................................................1Rationale 2Goals and Topics3Acknowledgments5TYPESOFPRIVATIZATIONPROCEDURES...............................................................................................................6Legal Framework6Practices of the Privatization Bodies6Analytical Remarks7TYPESOFFUTURECOMMITMENTS.......................................................................................................................9Generally Applied Commitments9Specific Types of Commitments10Analytical Remarks11POST-PRIVATIZATIONCONTROL..........................................................................................................................13Institutional Framework and Practices13Analytical Remarks15REPORTINGTOTHEPRIVATIZATIONAUTHORITIES..............................................................................................17Documents Verifying the Fulfillment of Commitments17Direct Costs and Time Needed For Report Preparation19Analytical Remarks19AMENDMENTSTOPRIVATIZATIONCONTRACTS..................................................................................................21Practices and Procedures21Analytical Remarks22SANCTIONSFORBREAKINGCOMMITMENTCLAUSES.........................................................................................24Types of sanctions and ways/reasons to dissolve a contract24Mechanisms of imposing sanctions25Analytical Remarks26PROBLEMSTHATCOMPANIESFACE, STEMMINGFROMNON-PRICECOMMITMENTS..........................................27Companies’ View: Business Strategies vs. Privatization Commitments27Problems Related to the Labor Commitments27Problems Stemming from Other Commitments28Analytical Remarks28CONCLUSIONSANDRECOMMENDATIONS...........................................................................................................30Conclusions30Recommendations 322
EXECUTIVESUMMARYThe recommendations and conclusions below are drawn from a CASE1/IME survey based on in-depthstructured interviews with 11 companies (eight privatized by the Privatization Agency (PA), three - bythe Ministry of Industry (MI); four management-employee buy-outs (MEBO), five bought bydomestic investors, and two by foreign investors) One of the companies was sold in 1995, four – in1996, and six – in 1997. We also had access to and studied thoroughly the privatization contracts ofthese companies, and we conducted structured interviews with seven senior privatization officials andone ex-executive director. The research was carried out between October 1999 and January 2000. It isnot fully representative but rather has explanatory value.We believe that the recommendations, findings and conclusions will contribute to the public debate onthe role of the government within the concluding stage of the privatization process. We believe theywill also reflect upon and will improve the operation of privatization bodies, according to thepreviously expressed commitments of the leaders of the country and the government.RecommendationsThe idea of post-privatization control is that the government retains a means to interfere. Thisphilosophy needs to be reconsidered. If controls are to be retained, they must follow clear andtransparent rules. Privatizing agents must rely on the use of predominantly “open” procedures –

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