Blog Bucharest

brake-the-corruption-chain

The arrival of enforcement of the corporate offence of failing to prevent bribery.
By Neil McGregor, Managing Partner of McGregor & Partners and Vice-Chairman Elect of the BRCC
9 December was International Anti-corruption Day and I was very pleased to represent the BRCC as a speaker at the event organised in Bucharest. Even if some people had not got the message that corruption is taken very seriously in Romania following the tragedy of the Colectiv Club fire, the importance of the issue was emphasised by the presence on the speaker’s platform of the British and American Ambassadors and by a representative of the FBI, as well as the president of the American Chamber of Commerce.

It was a very timely event. In my blog in March on this subject, I warned that a major change was coming. It is not that bribery and corruption is illegal – it has been for years – and that the Romanian authorities are actively investigating and prosecuting cases of corruption under the Romanian law. The change is that British companies – and companies which have any part of their business activities in the UK – now have a duty to prevent bribery by someone on their behalf.

What made the event so timely was that in the week before, documents relating to the first deferred prosecution agreement in the UK relating to this offence were made public. They make startling reading. Put in simple terms, despite all of its procedures about anti-bribery, anti-money laundering and so on, a British bank managed not to notice that a deal it was working on for a foreign government involved a payment of $6,000,000 to a company with connections to a member or members of that government. Embarrassing and expensive for the bank, although there were no allegations that anyone at the Bank in the UK was involved in the bribery. From a rough calculation, the cost to the bank looks like being at least eight times greater than the fee that the bank received for the project.

In countries where there has been a culture that bribery is a normal way to get things done, steps to prevent bribery need to be considerably more robust than getting people to do e-learning questionnaires – particularly where the questionnaires have been prepared in a country where corruption is not such a problem. Take steps now to check what the people you are working with – not just your employees – understand is a proper and legal way to do business. Unless you tell them what your expectations are, you cannot really be surprised if they may not operate in quite the way that you had expected!

McGregor & Partners announce the passing of new regulations in the community customs legislation, for the purpose of simplifying and reasoning the activities of customs authorities. Passed in accordance with the Regulation of the European Parliament and EU Commission, the new Community Customs Code shall apply as from 1 June 2016 and shall be binding, in all its aspects, with direct application, upon all member states.

One of the objectives of the EU customs policy is to enhance the efficiency of organizing the customs controls, aiming to streamline the customs procedures and reduce the administrative duties. The recent regulations at European level in the customs field extend, as such, the competences of the customs authorities in EU with a view to enhance the controls and confiscate the counterfeited goods ”traveling” within the EU territory. In this respect, the community customs authorities are allowed to control and confiscate, as the case may be, goods which are transiting the EU territory with a non-EU destination.

The counterfeited products entering EU represent a concern for the European companies, and more and more companies declare to be affected by such phenomena.

The new regulations bring, therefore, good news for the holders of trademarks, as they will contribute to prevent the entry of counterfeited products on the EU markets, or their misappropriation on the EU territory.

The ”Illegal Industry” producing counterfeited goods includes more and more sectors. As such, apart from the traditional domains affected: fashion, jewelries, money, there are recorded cases of counterfeit in the food industry, pharmacy or car spare parts, industries if touched by such phenomena, could seriously affect the health and safety of public consumers.

A report of the European Commission presents a statistic regarding the sectors affected by the presence of counterfeited product on the community market. In 2013 the first three positions of the classification of counterfeited products were occupied by clothing, followed by medicines and cigarettes.

In 2008 the value of counterfeited products raised up to 525 milliards euro, and in 2015 it is estimated that the value of these goods shall exceed 1.400 billion euros.

“One of the reasons for which the community customs legislation suffered in the last years some amendments and updating, was also justified by the need to prevent and fight against the continuous increase in the amount of counterfeited goods from different fields of community markets“ explains Boiana Berchi, Partner McGregor & Partners.

Besides the New Community Customs Code, two other main types of regulations have positively influenced the norms regarding the measures to fight counterfeiting: controlling the goods at the custom point and the specific regulations of each sector.

All these changes at European level regarding the protection of intellectual property rights make part of a larger strategy of fighting against the counterfeiting and piracy phenomena, sustained by the community customs authorities together with the trademark holders and the European companies affected by this phenomenon.

At the moment the medical field experiences a lack of medical malpractice regulations in the national legislation. This deficiency leads to the creation of defensive medicine because there is no filter in the malpractice legislation for physicians to protect themselves in case of abuses. The accusations of malpractice became a routine lately, and the doctors are disadvantaged merely only by the unresolved accusation itself, which most often due to a lack of clear regulations is solved contradictory.

The consequence of the lacunar regulatory of medical malpractice, leads to the development of defensive medicine which is detrimental not only to the doctor, but also to the patient and to the whole health system, leading to increased costs, deficiencies of liability of the insurers, with a high risk in the evolution and development of the health system. The legislation currently governing malpractice it is very confused and contains inadequate terminology which creates a false idea of impunity for health practitioners.

Today the malpractice legislation is not unitary, being found in several acts, not structured into one law, disfavoring the interests of the subjects which are concerned by these regulations. Regulating malpractice in a single act will be a beneficial step for subjects envisaged by these regulations, as they could understand and could be aware of all the correlative rights and obligations incident when a medical malpractice case occurs.

“It is very important to establish clearly what obligations does the doctor has regarding the patients, because doctors like lawyers, must submit all their efforts and all science and medical means to obtain a result, but are not required to get that result. However, there is a group of physicians who are under an obligation of result, namely aestheticians, dealing with changing the image of a person. Also, the surgeons are also another category of doctors who are highly exposed to malpractice lawsuits, given the risk they face on the daily basis, through the nature of their activity.

A big disadvantage for the physicians is the fact that the medical malpractice case is not truly judged by the medical malpractice commission but by the investigation bodies, based on criminal procedure provisions and not on the specific malpractice legal provisions, as these are very unclear. This commission is indeed required to analyze and find the existing crime, the guilt and the link between the act and the result produced. However the Criminal Procedure Code has a provision whereby the decisions which are pronounced by the medical malpractice commission and by the civil courts regarding malpractice case does not have a “res judicata” power in front of the criminal investigation bodies.

“Therefore, this regulation may give the false impression that once a malpractice commission will solve the malpractice case or the civil, the dispute is finalized. The truth is that the way that medical malpractice is regulated is unclear and has repercussions on how the profession shall exercise their activity by practicing a defensive medicine”.

In our opinion the actual legislation disadvantage primarily the doctors who are left uncovered in front of potential malpractice cases, even though they signed a malpractice policy, the insurer will not be responsible. Also, the patients which are a subject of a malpractice case are disadvantage by the favorable position of the insurer who is not obliged to pay the insured amount. In this case the patient will try to recover the prejudice from the doctors, who often do not have the means to pay. The physicians should benefit from malpractice insurance policies that will cover their risks and enables them to perform their activity unconstrained, and really insures them that in case of a malpractice case the insurer will pay the patient the fair amount established by the court, in the limit set through the insurance policy.

How to successfully pass the public auction “test” when you want to buy / lease / rent land which is part of the private property of the Romanian state? Unfortunately at the moment the practice regarding public auction is not uniform or clear, often leading to contradictory solutions. The set of legal provisions that governs public auction procedure establishes certain sine qua non conditions to success in fulfilling your public auction procedure.

When you are interested in buying, leasing or concessioning of a land which is part of the private domain of the State, as a diligent investor, you should consult the legal provisions on the procedure to be followed in such cases. Law 215/2001 on local public authority refers to how “the local and county councils decide that goods belonging to the […] private domain of the State can be given in administration, for concession or rented. They decide on buying, selling or renting the goods belonging to the private domain, under the law. The sale, lease and concession are made by public auction, organized under the law.” So, it is clear that the land which is part of the private domain of the State can be sold, leased or rented only through public auction, this being a requirement, which has to be done “under the law”. But, what does “under the law” mean, given that Law 215/1991 does not provide any regulation on the procedure to be followed?

We can turn our attention to the provisions of Law 50/1991 regulating

the authorization of execution of construction works, where the procedure to be followed in case of land concession for construction can be found.

For example, land owned by the state or local government units, for construction purposes, can be sold, leased or rented through public auction according to the law and the legal provisions regarding town planning documentation of landscaping.

The statutory provisions of law 50/1991 permit and regulate certain exceptions, listing the cases where building land can be leased without auction, and these cases represent the exception to the rule.

The identification details of the land which makes the object of the auction shall be published by the mayors of the territorial administrative units where they are located, through notices displayed at their offices and published in at least two newspapers of national circulation at least 20 days before the auction date. The published information concerning the auction will include the date and place of the land, the surface and destination set by the planning documentation and the minimum annual royalty fee.

A pre-feasibility or a feasibility study will accompany the offer, as appropriate, including the mandatory technical elements necessary to describe the building functionality and capacity, the occupancy rate of the land, and the other elements of the certificate of urban planning. Offers will not be accepted only on the basis that they correspond to the provisions of the urban planning documentation, approved by law. Obviously, this information is not sufficient.

The auction is organized in accordance with the legal provisions which the commission has established for this purpose on the basis of the decision of the local Council or, if the case may be, on the basis of the decision of the General Council of Bucharest, in accordance with the powers of authorization set out by the law. The commissions operate at the local council related to the location of the land.

There is a minimum limit of the concession price which is established by the decision of the local council or the General Council of Bucharest, in order to ensure the recovery in 25 years of the sale price of the land, under market conditions, plus the cost of the works regarding the infrastructure.

Based on the minutes of the award of tender or the decision of the local council or of the General Council of Bucharest the concession agreement is concluded, and will be recorded by the concessionaire in the real estate advertising records, within 10 days from the awarding date or from the date the decision was issued.

The conditions for the concession of land are provided in accordance with the law, the duration of which being determined by the local and county councils, respectively the General Council of Bucharest, according to the provisions of the town planning documentation and the nature of construction.

Natural and legal persons receiving land under the above mentioned conditions are required to apply for a building permit and begin the construction within one year from the date the act of leasing was issued. If these conditions are not met, the contract becomes invalid and consequently stops to produce any effects.

The question that normally comes in everybody’s mind is what happens if the conditions for undertaking the public auction procedure are not all observed? In this case, the risk might be significant and the consequences might go to even have the entire procedure cancelled. This situation involves besides the loss of money invested in fees, training materials and all the costs needed in order to prepare the bidding offer, the fact that if you still want to buy, lease or rent the land you will have to take from the very first start, the long and heavy procedure of the public tender.

Therefore, the biggest disadvantage when it comes to start all over again with the public auction, are not necessarily all the money spent, which are not few, but mostly the time lost, and when we talk about investments and project development, loosing time might destroy any business.

How to successfully pass the public auction “test” when you want to buy / lease / rent land which is part of the private property of the Romanian state?Unfortunately at the moment the practice regarding public auction is not uniform or clear, often leading to contradictory solutions.The set of legal provisions that governs public auction procedure establishes certain sine qua non conditions to success in fulfilling your public auction procedure.

When you are interested in buying, leasing or concessioning of a land which is part of the private domain of the State, as a diligent investor, you should consult the legal provisions on the procedure to be followed in such cases. Law 215/2001 on local public authority refers to how “the local and county councils decide that goods belonging to the […] private domain of the State can be given in administration, for concession or rented. They decide on buying, selling or renting the goods belonging to the private domain, under the law. The sale, lease and concession are made by public auction, organized under the law.” So, it is clear that the land which is part of the private domain of the State can be sold, leased or rented only through public auction, this being a requirement, which has to be done “under the law”. But, what does “under the law” mean, given that Law 215/1991 does not provide any regulation on the procedure to be followed?

We can turn our attention to the provisions of Law 50/1991 regulating
the authorization of execution of construction works, where the procedure to be followed in case of land concession for construction can be found.

For example, land owned by the state or local government units, for construction purposes, can be sold, leased or rented through public auction according to the law and the legal provisions regarding town planning documentation of landscaping.

The statutory provisions of law 50/1991 permit and regulate certain exceptions, listing the cases where building land can be leased without auction, and these cases represent the exception to the rule.

The identification details of the land which makes the object of the auction shall be published by the mayors of the territorial administrative units where they are located, through notices displayed at their offices and published in at least two newspapers of national circulation at least 20 days before the auction date.The published information concerning the auction will include the date and place of the land, the surface and destination set by the planning documentation and the minimum annual royalty fee.

A pre-feasibility or a feasibility study will accompany the offer, as appropriate, including the mandatory technical elements necessary to describe the building functionality and capacity, the occupancy rate of the land, and the other elements of the certificate of urban planning.Offers will not be accepted only on the basis that they correspond to the provisions of the urban planning documentation, approved by law.Obviously, this information is not sufficient.

The auction is organized in accordance with the legal provisions which the commission has established for this purpose on the basis of the decision of the local Council or, if the case may be, on the basis of the decision of the General Council of Bucharest, in accordance with the powers of authorization set out by the law. The commissions operate at the local council related to the location of the land.

There is a minimum limit of the concession price which is established by the decision of the local council or the General Council of Bucharest, in order to ensure the recovery in 25 years of the sale price of the land, under market conditions, plus the cost of the works regarding the infrastructure.

Based on the minutes of the award of tender or the decision of the local council or of the General Council of Bucharest the concession agreement is concluded, and will be recorded by the concessionaire in the real estate advertising records, within 10 days from the awarding date or from the date the decision was issued.

The conditions for the concession of land are provided in accordance with the law, the duration of which being determined by the local and county councils, respectively the General Council of Bucharest, according to the provisions of the town planning documentation and the nature of construction.

Natural and legal persons receiving land under the above mentioned conditions are required to apply for a building permit and begin the construction within one year from the date the act of leasing was issued.If these conditions are not met, the contract becomes invalid and consequently stops to produce any effects.

The question that normally comes in everybody’s mind is what happens if the conditions for undertaking the public auction procedure are not all observed? In this case, the risk might be significant and the consequences might go to even have the entire procedure cancelled. This situation involves besides the loss of money invested in fees, training materials and all the costs needed in order to prepare the bidding offer, the fact that if you still want to buy, lease or rent the land you will have to take from the very first start, the long and heavy procedure of the public tender.

Therefore, the biggest disadvantage when it comes to start all over again with the public auction, are not necessarily all the money spent, which are not few, but mostly the time lost, and when we talk about investments and project development, loosing time might destroy any business.

All changes that occurred in the last year in respect of the energy produced from renewable sources of energy have created uncertainty and instability regarding new investments in this field. Is the situation as bad as it looks? The measure to postpone GC until 2018, shall create inflation of GC on the market and shall place the decision factor from the hand of producer of energy from renewable sources into the “select” hand of purchaser?

After the amendments brought to Law 220/2008 establishing the promotion system for energy production from renewable sources of energy („Law 220/2008”) by the Government Emergency Ordinance 57/2013 („GEO 57/2013”), certain aspects regarding the issue of green certificates have been approached in a more detailed and elaborate manner in the legal provisions of Order of President of the National Agency for Energy Regulation (A.N.R.E.) 56/2013 amending and supplementing the Regulation to issue green certificates as approved by Order of the President of A.RN.R.E. („Order 56/2013”), as published in the Official Gazette of Romania no. 472 of 30.07.2013.

According to the amended legal provisions of Law 220/2008 as well as of Order 56/2013, during the period 1 July 2013 – 31 March 2017, from the number of GC issued according to the provisions of art. 11, the transport and system operator shall postpone from trading on the GC market, including from the transfer from the producer account into the supplier account for the accomplishment of the annual binding acquisition quota of GC, a number of GC according to the provisions of art. 6 par. (2¹) of Law 220/2008, as amended. Law 220/2008 stipulates that in the relevant period also indicated by Order 56/2013, it will be postponed one green certificate for wind electric plants from the two green certificates issued for each 1 MWh produced and delivered by producers of energy from wind power.

The procedures to issue green certificates granted to accredited economic operators, for the energy produced from renewable sources of energy, stipulates that the number of GC postponed from trading, including from transfer from the account of producer into the account of supplier for the accomplishment of annual binding acquisition quota of GC is distinctly registered on each individual economic operator, and their code and number shall be communicated on a monthly basis both to producers and ANRE and OPCOM, pursuant to provisions of Regulation to issue GC approved under ANRE Order 43/2011, as subsequently amended and supplemented.

The recovery of green certificates postponed from trading of producers of energy from wind power shall be made in tranches, as from 1 January 2018 until no later than 31 December 2020. The method by which the postponed green certificates shall be recovered shall be established by A.N.R.E. and shall be approved by order of the president of the institution.

GC postponed from trading shall be recorded in a distinct manner in the Register for beneficiaries of green certificates and of green certificates issued, and shall be recovered monthly, until 31 December 2020, in tranches, in accordance with the Procedure of CN Transelectrica SA for the issue of GC as approved by ANRE Approval 31/28.08.2013.

It is provided that, as from 1 January 2018, for the wind plants, it will be recovered
a number of GC for each calendar month of the recovery period equal to the multiplication between
(a) average number of GC postponed for each calendar month of an year and
(b) rate between
(i) total number of GC postponed from the postponement period and
(ii) total number of GC for their recovery period
established by using the number of GC postponed for each calendar month of an year mentioned above, with the recovery of total number of CG postponed.

Under these circumstances, beginning with the recovery in tranches for the period 1 January 2018 – 31 December 2020, practically the economic operator who already has an operational wind project, shall receive until 2017 one GC for 1 MWh produced and delivered into the grid, and after 2018, it will receive 1 GC plus a number of GCs postponed which shall be recovered according to the method stated above, stipulated by the Procedure of CN Transelectrica SA for the issue of GC. The projects accredited after 1 January 2014, shall receive 1.5 GC for each 1 MWh produced and delivered in the grid until 2017 and 1.75 GC for each MWh produed and delivered into the grid.