Fondul Proprietatea
Fondul Proprietatea is a joint-stock company established by the Romanian state, and is intended to become entirely private and independent from the state. Its specificity lies in the fact that its purpose and its operations are governed by special legislation. Shareholders are limited to those dispossessed owners of their property by the Romanian state during the Communist regime.
Origin
is a country of the former Eastern Soviet bloc where a very large number of properties have been nationalised by the communist government. The state would appropriate by decrees, the most important being decree nr 92 of 1950, more than 400,000 buildings, around 150,000 of them having been demolished during the following 40 years. In 1995, under the presidency of Ion Iliescu, a law allowed tenants to buy from the Romanian State, at very low cost, real estates built before 1945 that had been nationalised, thus preventing previous owners from recovering those properties. The complex legal situation that has resulted has led to an attempt to compensate the former owners, to whom the state was unable to restore previous property, through the foundation of the Proprietatea fund. Figures between 150,000 and 250,000 concerned property owners - only for real estate - are frequently used by associations or newspapers but no verifiable official statistic is available.Created on November 24, 2005 by law 247/2005 in Romania, Fondul Proprietatea or Property fund is a fund that collects a part of the debts that other countries owe to Romania. It also contains shares of certain state companies.
The distributed shares constitute reparations to the owners whose properties had been nationalised between 1945 and 1989 and were unable to recover their properties after 1989 due to various causes.
According to the website site of the fund, Romania would be the only eastern country trying to compensate at a fair value the people who have been dispossessed by the communist regime.
Management
Until the appointment of a selected administration, the fund has been managed provisionally by the Ministry of Public Finance through the Board of Supervisors.After selecting through an international public tender, a management company will take over the powers of the administrator of the Fund property.
Following a tender selection process, a Selection Commission has recently designed "on June 9, 2009 Franklin Templeton Investment Management Ltd as the manager of the fund."
Structure of the shareholders
- On 31 October 2019
| Shareholder type | % of subscribed share capital | % of paid-up share capital | % of total voting rights |
| The Bank of New York Mellon | 27.69 | 29.08 | 30.67 |
| Romanian institutional shareholders | 25.65 | 26.94 | 28.41 |
| Romanian private individuals | 17.92 | 18.82 | 19.85 |
| Foreign institutional shareholders | 16.03 | 16.83 | 17.75 |
| Foreign private individuals | 2.90 | 3.05 | 3.22 |
| Ministry of Public Finance | 4.87 | 0.09 | 0.10 |
| Treasury Shares | 4.94 | 5.19 | 0.00 |
| Total | 100.00 | 100.00 | 100.00 |
Portfolio structure
By the end of December 2008, the portfolio total value was evaluated around 16,498,879,195 RON . In June 2009, the available information regarding 90% of the portfolio value is as follows:- Stock-Exchange listed Companies:
| Name | % of the share capital held on 31/12/2008 | Market value on the Valuation date | Valuation date | % of the portfolio |
| OMV PETROM S.A. | 20.11% | 5,408,000,000 | 30-June-08 | 32,78% |
| Alro S.A. | 9.93% | 507,000,000 | 30-June-08 | 3,07% |
| Transgaz S.A. | 14.99% | 365,000,000 | 30-June-08 | 2,21% |
| Transelectrica S.A. | 13.50% | 283,000,000 | 30-June-08 | 1,72% |
| TOTAL | ns | 6,563,000,000 | 30-June-08 |
- Unlisted companies:
| Name | % of the share capital held on 31/12/2008 | Market value on the Valuation date | Valuation date | % of the portfolio |
| Hidroelectrica S.A. | 19.94% | 2,890,469,000 | 31-Dec-07 | 17,52% |
| Nuclearelectrica S.A. | 17.21% | 991,696,873 | 31-Dec-07 | 6,01% |
| Romgaz S.A. | 14.99% | 815,123,000 | 30-June-08 | 4,94% |
| CEZ Distribuție S.A. | 30.00% | 696,400,000 | 31-Dec-07 | 4,22% |
| Complexul Energetic Turceni S.A. | 24.93% | 364,165,000 | 30-Sep-08 | 2,21% |
| Enel Distribuție Muntenia S.A. | 12.00% | 321,871,900 | 30-Sep-08 | 1,95% |
| Poșta Română S.A. | 25.00% | 307,250,000 | 30-June-08 | 1,86% |
| Distrigaz Sud S.A. | 12.00% | 285,434,000 | 30-Sep-08 | 1,73% |
| Electrica Distribuție Transilvania Nord S.A. | 22.00% | 267844000 | 30-June-08 | 1,62% |
| E.ON Moldova Distribuție S.A. | 22.00% | 262186000 | 31-Dec-08 | 1,59% |
| Complexul Energetic Craiova S.A. | 24.98% | 260,901,600 | 31-Aug-08 | 1,58% |
| Electrica Distributie Muntenia Nord S.A. | 22.00% | 241,029,000 | 30-June-08 | 1,46% |
| ENEL Distribuție Banat S.A. | 24.13% | 230,300,000 | 31-Dec-07 | 1,40% |
| Complexul Energetic Rovinari S.A. | 23.73% | 224,117,000 | 30-Sep-08 | 1,36% |
| Electrica Distribuție Transilvania Sud S.A. | 22.00% | 220,865,000 | 30-June-08 | 1,34% |
| TOTAL | ns | 8,379,652,373 | ns |
Effectiveness of the fund and challenges
- The fund has been experiencing serious management difficulties, delays and scandals since its creation. This fund is also widely disputed by the beneficiaries and all owners associations, considering it is not a real compensation scheme since the shares cannot be properly sold on the market and that it is insufficient in size. It has been also criticized by the press, the civil society or political parties in Romania. It appears that the fund is still not in a position to compensate anyone, mainly because it cannot be floated in the financial market and for the weak amount of money that the Romanian State makes available for the fund. In 2009, according to many newspapers and commentators, the image of the fund and of the State of Romania has been seriously tarnished by the long series of issues and failures.
- In fact, the fund has been liquid for the victims only once, for a very limited amount: 500,000 Lei for each owner, whatever the extent of injury, and for a very limited time. It allows only rarely the compensation of the deprivation of property. Many of the former owners die before receiving any compensation.
- The European Court of Human Rights has repeatedly condemned Romania for its failure to return the real estates, but also to pay for compensation. In November 2009, it is still not considered by the European Court of Human Rights as an acceptable means of compensating the confiscations. According to the Romanian newspaper Ziua, the refusal of Romania to change its legislation in order to make effective the restitution of confiscated properties, or to offer a swift and decent compensation, led the ECHR to threaten Romania of an outright exclusion of the organization. On 21 October 2009, the newspaper Evenimentul Zilei dedicates a long article of the never ending condemnations of Romania, considered by the ECHR unable to compensate dispossessed owners. Romania has lost more than 100 trials since 2007, and had to pay nearly 18 million euros in damages awarded by the Court to the plaintiffs.
- It can also be noted that the Council of Europe states that a systemic problem in Romania due to the mechanism of the fund. The Committee of Ministers has regularly highlighted a deficiency regarding the respect of private property right. The Committee emphasizes particularly the lack of compensation following the deprivation of property, which amounts to confirm the ineffectiveness of Fondul Proprietatea.
1. recall that the issues raised in these cases relate to a major systemic problem, particularly related to the absence of restitution or compensation for nationalized property, subsequently resold by the state to others, a problem that must be addressed as quickly as possible to avoid a significant number of new, similar violations;
2. note that the European Court in a number of cases that have recently become final, said, inter alia, that the Romanian authorities should take the necessary legislative measures to prevent the occurrence of situations where two titles related to the same property coexist, and also amend the administrative mechanism established by the laws of repair so that it becomes really coherent, accessible, timely and predictable;
3. invite the Romanian authorities to submit an action plan on measures taken or envisaged to improve the current mechanism of restitution;; in this context they noted with interest that bilateral consultations are envisaged between the authorities involved in the process restitution and the Secretariat;
5. consequently decide to resume consideration of these matters at the latest af their 1st HR meeting in 2010 in the light of the action plan and to provide information on individual measures.
Romania is the only country in the former Eastern bloc to join the European union where such a problem concerning the situation of property in connection with the collapse of communist regimes remains unresolved. None of the other ex-Soviet bloc countries have raised a real estate issue with such a magnitude at European level.
Given the seriousness of the situation and the inertia of the Romanian state, despite hundreds of convictions of the European Court of Human Rights, the latter launched on 25 February 2010 a pilot-judgment procedure. The hearing was held 6 September 2010. The ruling is expected in September 2010. It could be accompanied by sanctions against Romania such as the obligation to amend its legislation, or the exclusion of the Court.