Alexander Lukashenko discusses methods of trust management of insolvent enterprises

Alexander Lukashenko discusses methods of trust management of insolvent enterprises

Belarus may introduce the institution of trust management of enterprises. On February 9, the Government presented the new legislative initiative to the President. Its meaning is simple. Unprofitable plants, factories and state-owned agricultural farms will be given to private investors temporarily (for five years).

The new leadership should help restore the operation of these companies, and in return the temporary managers will keep part of the profits.

According to officials, it's a good alternative to privatization. The President insists that one must carefully consider all the details and not get bogged down in red tape.

Alexander Lukashenko also warned that this new provision in law must not lead to raider attacks.

About 2,000 unitary enterprises will be under control of the institution. Among them are more than 350 agricultural enterprises.  How to improve the efficiency of insolvent companies? And what are trustees and crisis managers responsible for? Let’s weigh the pros and cons of the effective know-how.

Obviously, this Belarusian weaving mill is known all over the CIS, because it supplies 70 % of the goods to the Commonwealth countries. But the economic performance wasn’t that good a few years ago. Everything has changed in 2013. The new leader managed to increase the capacity up to five times. The enterprise underwent optimization, and the problem of shortage of experts was also tackled.

Irina Grigoryan, director of a spinning and weaving factory:
Our goal was to launch production, enhance capacity, raise salaries of the staff, improve working conditions, and, of course, to develop markets. We are determined to produce new goods.

It is trust management that will help save insolvent enterprises without their liquidation. It means that jobs will be preserved.  Only with a manager and a chief accountant of an insolvent enterprise will an employment contract be terminated. However, is it necessary to adopt a new document? Or is it enough to amend the Civil Code? The President urges to consider this issue.

Alexander Lukashenko, President of Belarus:
How many unprofitable enterprises did these managers save? I don't remember any. Therefore, should we start it altogether? Is it so difficult to sit, take your head into your hands and see how life goes on and only then make these suggestions? We have our owner - the state; we distributed the property between the district executive committees, regional executive committees and the government. Let's manage these companies then! We can't find normal managers to manage companies properly but you are now proposing to find trust managers somewhere. Can't you make it easier and clearer for our people and managers? Why follow the example of the Russian Federation? Let's see what we need ourselves and what effect we could get.

According to the developers, trust management is a gentle way to attract investments in production. There is an example of a similar control organization in Belarus. Two years ago OAO 8 Marta took under its wing the Rechitsky Tekstil plant.  As a result, the output per worker as well as production volume has been increased. The benefits are obvious. The one side gets the opportunity to expand its production, while the other side can use the raw materials and the dealer network of the assisting company.

Andrei Gayev, chairman of the State Property Committee of the Republic of Belarus:
The most important thing is to preserve labor collectives. It is the way that keeps people in their jobs, preserves social guarantees as well as collective agreements, and allows improving of efficiency.

Pavel Stainov has been working as a crisis manager for less than half a year (by the way, it’s a new position on the labor market in Belarus). But the export at the enterprise he works at has increased almost three times. Pavel shared the secret of his success.

Pavel Stainov, crisis manager:
The most important thing is to prepare an enterprise to enter the market. We managed to find interesting financial offers. We also found partners in foreign countries. We correctly forecasted the financial flows that accompany the flow of our goods. These measures helped to formulate some kind of a recipe for this enterprise.

In addition, the State Control Committee, tax authorities, security agencies and the prosecutor's office will be involved in this process. Obtaining of an insolvent enterprise is allowed on a competitive basis only. At the same time, the subsequent purchase is required to be discussed before the signing of a contract.

Andrei Gayev, chairman of the State Property Committee of the Republic of Belarus:
The option of the subsequent purchase of an enterprise must be agreed by the head of state on a case-by-case basis. Once the permission is obtained the trustee must enshrine all the basic conditions in the contract. These conditions will be monitored. That is, the state will accompany the process. In case all the terms of the contract are properly performed, after the due date the object will be available for private purchase only.

In general, the President supported the proposals for improving the efficiency of Belarus economy. Alexander Lukashenko instructed to promptly prepare the final document and to introduce new methods of work as soon as possible.