Nicosia, Cyprus, 10 March 2016 – The Central European Aluminum Company (CEAC), a Cyprus-based major shareholder and one of the largest creditors of Montenegro’s Kombinat Aluminijuma Podgorica (KAP), today has welcomed the European Parliament’s strong-worded resolution on Montenegro with reference to the European Commission’s 2015 Progress Report.
The European Parliament resolution slams Đukanović’s government for lack of progress in strengthening the rule of law and governance and fighting corruption and organised crime. It says that “corruption remains a serious concern, particularly in […] privatisation” and “reiterates the need to eliminate corruption on all levels since it undermines democratic principles and negatively affects social and economic development”. It has criticised the government’s lacklustre approach to tackling corruption by calling on it “to make combating corruption one of its priorities by allocating sufficient human and budgetary resources to it”, and urging it to make the Special Prosecutor's Office “fully operational as soon as possible”.
The resolution explicitly expresses the Parliament’s grave concern over “the delay in the resolution of the KAP bankruptcy proceedings as it is in breach of the country's obligations under the SAA” and calls on the government of Montenegro to “reach a sustainable and negotiated solution for KAP bankruptcy proceedings in compliance with state aid rules, the SAA and based on transparency and the rule of law”. This is not the first time that the European Parliament has made such a call, but it has significantly strengthened its rhetoric, insisting that Montenegrin authorities “ensure the appropriate use of public funds and compliance with the relevant law” and, most importantly, encourage the commissioning of “a full and independent audit of KAP’s finances, from its acquisition by CEAC in 2005 to the present day”.
Commenting on the resolution Andrey Petrushinin, CEAC’s Director of Corporate Affairs, said:
“The European Parliament’s resolution shows how the elaborate façade of Đukanović’s charm offensive towards the West is crumbling at his feet. His European interlocutors realise that the emperor is indeed quite naked. We particularly welcome the Parliament’s call for a negotiated solution to and an independent audit of the KAP case: it is testament to how the Parliament’s trust in and patience with Đukanović has evaporated. If he wants to restore that trust, Đukanović will not be able to ignore the Parliament’s request. Pressure is mounting on Đukanović from both within and without, and it is behoves the Montenegrin government to find a swift, negotiated resolution to the KAP dispute.”
The protracted political crisis and upcoming elections in the country have put the spotlight on Montenegro and its ongoing legal battles with foreign investors. CEAC has repeatedly called for a negotiated settlement of the KAP affair, and is greatly encouraged by the European Parliament’s demand for a full and independent audit.
About the KAP dispute
CEAC acquired a controlling stake in the KAP aluminium smelter and a nearby bauxite mine in Montenegro in 2005. After investing over €200m in modernisation of the smelter CEAC was illegally stripped of its assets and removed from the management of KAP by the government of Montenegro. CEAC has initiated international arbitration proceedings against the government of Montenegro for breach of the KAP settlement agreement, and the foreign investments protection agreement between Cyprus and Montenegro. CEAC’s claims against Montenegro include for damages incurred as a result of the actions of the government of Montenegro and for violation of investor partnership agreements. CEAC has repeatedly called for a negotiated settlement to the KAP dispute, which the Montenegrin government has consistently ignored or rejected, imperilling the welfare of its own citizens. CEAC is not the only aggrieved foreign investor from EU with claims pending against the Montenegrin government: the cumulative value of which are now in excess of €1bn, which represents almost a third of the country’s GDP.