The Agency for the Protection of Competition (AZZK) has determined after almost five years that the debt forgiveness for utilities in the amount of EUR 5,6 million to Adriatic Marinas (AM) from August 2018, which was given to it by the Municipality of Tivat under pressure from the Government, is not state aid. and that therefore there is no room for further investigation as to whether in that case there was talk of legally compliant assistance.
This company that manages the tourist-nautical resort "Porto Montenegro" is freed from the multimillion-dollar obligation to pay fees for the communal equipment of the construction land. The money was supposed to belong to the budget of the Municipality of Tivat.
"It is determined that the measure of reduction of claims based on the fee for communal equipment of construction land, that is, the measure of offsetting of mutual claims between the Municipality of Tivat and Adriatic Marinas does not constitute state aid within the meaning of the Law on the Control of State Aid," reads the decision issued by the Agency on September 25. .
"Vijesti" has insight into that solution, which is written on 84 pages.
Is it state aid?
In October 2019, the Agency launched an examination procedure to determine the possible non-compliance of state aid allocation to AM with the State Aid Control Act. This assistance was given in August 2018, but the Agency did not officially open this case, but its Council initiated the procedure on October 21, 2019, after being approached by the Delegation of the European Union (EU) about this matter a month earlier. in Montenegro, considering the resolution of this case extremely important for the further progress of Montenegro in negotiations with the EU in Chapter 8 - Protection of competition.
In the decision on the initiation of the investigation, the agency clearly stated that the honorarium for utilities was state aid that put the company AM in a privileged position, and it gave itself a deadline of 90 days to resolve this case, but the work ended after five years with the conclusion that this the deal was not even state aid to a company that has been turning over hundreds of millions of euros in Tivat for years in the business of building and selling luxury real estate on the seashore.
The decision to forgive the utilities was made by the former authorities in Tivat, which consisted of DPS-SD-HGI. The agreement to sign the contract with Adriatic Marinas at the end of 2017 was given by 17 DPS councilors, but the then mayor Snezana Matijević refused to sign that arrangement for half a year, doubting its legality. Under the pressure of his party, DPS and its leaders, the then president of the state Milo Đukanović and the then prime minister Duško Marković who publicly demanded that the arrangement with Porto be signed as soon as possible, Matijević resigned in the summer of 2018. Her successor Siniša Kusovac in August 2018, he signed a contract and thus caused the city a multimillion-dollar financial loss. The Special State Prosecutor's Office (SDT), which was headed by the Chief Special Prosecutor Milivoje Katnic, stated in 2018 that in this procedure "there were no irregularities that would indicate that a criminal offense was committed for which he is being prosecuted ex officio", but that it is a "civil-legal relationship, debtor-creditor relationship, so if there are differences based on certain grounds and established amounts of compensation, the dissatisfied party can protect its rights in court proceedings before the competent court".
The agency, among other things, took the position of SDT as one of the arguments for making the final decision.
In the explanation of the decision, the Agency stated that after five years "it has not been sufficiently proven that the debt forgiveness contained an economic advantage for Adriatic Marinas", which was insisted on by the representatives of the Municipality of Tivat as one of the arguments. Claims of the lawyer of the Municipality that "Article 107, Paragraph 3, Point C of the Treaty on the Functioning of the European Union, as well as all six criteria from the announcement of the European Commission for Regional State Aid C(2021)2594, which was also accepted as part of the domicile legislation in procedure for controlling the legality of state aid in Montenegro", the Agency rejected and stated that "it is indisputable that Adiatic Marinas is not a company that provides services of general economic interest", and therefore, according to the Agency's interpretation, specific European judicial practice cannot be applied to it which was invoked by the lawyer of the Municipality of Tivat.
Other investors can also ask for free utilities
The representatives of Adriatik Marinas claimed in the proceedings before the Agency that everything was done according to the law, that the Law on Foreign Investments allows them to use legislative solutions more favorable for investors, that they invested 21 million in the construction of new infrastructure in the area of Porto Montenegro and that this was not done by the local management, with which they then entered into compensation for part of those investments by offsetting their own obligations for utilities. They pointed out that they did it knowingly and allegedly to their own detriment, because the law allows them to compensate their investments in infrastructure construction only up to the amount of total calculated utilities for all the facilities they will build. That compensation, they explained, is currently only at the level of about a quarter of their total cost for infrastructure construction. They announced that they would ask the Municipality to write off another 6,6 million of their obligations for utilities, but neither they nor the representatives of the Municipality adequately explained why the new public infrastructure built in the area of Porto Montenegro (roads, public parking lots, footpaths, water and sewage infrastructure, public lighting and others) have not yet been registered with the Municipality of Tivat as it should be according to the Law on Communal Activities, but are used in a way that suits this company economically and organizationally.
Even though the representatives of the Municipality of Tivat in the proceedings resolutely asserted that neither according to the former, nor according to the current laws, the arrangement and furnishing of construction land, which is the responsibility of the local administration, cannot include the demolition of buildings, except for those that are on the routes of the new infrastructure that needs to be built, and especially not "area of buildings before 1945" as it was in this case for AM, the Agency did not take that into account. In this way, the Agency indirectly admitted that the forgiveness of 4,2 million euros to AM in the name of "the area of facilities in the Arsenal before 1945", i.e. more than 1,5 million in the name of the costs of demolishing all the buildings of the former military shipyard, and not only those on the route of the new infrastructure, whether it was established that it should be borne by the local self-government through compensation with the AM.
The Agency accepted the interpretation of the representative of AM that this is something that all investors who build new buildings in Montenegro have the right to, in fact, the Agency opened the possibility for many other companies in the country engaged in the construction and real estate business to embark on similar projects. financial exhaustion of local governments, for which utilities are one of the main sources of income.
Details from the examination procedure
Many details can be read in the decision, which describes the five-year course of this procedure: that the Government and the State Archives of Montenegro today allegedly do not know where a large part of the documentation from the beginning of the sale of the former Tivat military shipyard Arsenal in 2005 and 2006, which ended in in the hands of AM as a plot for the construction of ultra-expensive apartments and business premises. In addition, the Agency did not want to enter into the legality and constitutionality of the contract on the sale of Arsenal, which was signed at the end of 2006 by the then Prime Minister Milo Đukanović and the original owner of AM, the Canadian businessman Peter Munk. The agency stated that its legal competence is to "exclusively determine whether the measure constitutes state aid, and if it does, whether it meets the requirements established by the Law on the Protection of Competition".
The Agency stated in several places that the Municipality of Tivat, which expresses doubts about the legality of the basic Agreement on the sale of Arsenal and which imposed obligations on the local administration, has not yet initiated its review before the courts.
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