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EUROPE: Romania defends sale cancellation - Financial Times; Jul 2, 2001 - By PHELIM MCALEER

The Romanian privatisation minister has defended his government's moves to cancel the sale of a steel mill to a US company and reasserted Bucharest's commitment to liberalising the economy.

Ovidiu Musetescu said the company, Noble Ventures, had not fulfilled its obligations under the contract to buy Resita steel mill in south-western Romania. 'It is very clear, a contract is a contract everywhere in the world, with rights and obligations,' he said, adding that he was forced to act because the company had not made payments due under the contract.

The deal was potentially the largest US investment in Romania last year. Noble Ventures paid Dollars 4m for the mill, which employs 3,850 people. It also promised to invest Dollars 67m and pay Dollars 45m in debts.

Mr Musetescu admitted the Romanian government had failed to comply with contractual obligations regarding rescheduling debts. He blamed this on the change of government and said Noble Ventures 'used the late rescheduling as a justification for non-compliance with other clauses'. The minister said the decision to go to court to cancel the privatisation was sparked by Noble Ventures' failure to pay Dollars 2m and by social unrest after a halt in production and a failure to pay wages.

In a conciliatory move, Mr Musetescu said the company could prove its commitment to the privatisation by adhering to the contract before the court hearing.

'The court action has to be seen as the last chance for the owners to solve the problems. (It) will take three to four months, in which time the present owner can fulfil his obligations,' he said. Mr Musetescu said the social difficulties caused by workers not being paid had threatened to spiral out of control.

He said the legal action had not affected relations with international financial institutions. 'We have good relations with the World Bank and the IMF and have numerous privatisation procedures ongoing.'

The sale of Sidex, the giant steel mill, Romania's largest and probably most important privatisation in recent years, would be concluded later this month, he added.

Michael McNutt, Noble Ventures' representative in Romania, said: 'The cancellation will be addressed in the courts or preferably in discussions with the privatisation agency.' For regional reports, www.ft.com/europe

 

Financial Times; Jul 2, 2001 - By PHELIM MCALEER
July 02, 2001