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| Headquarters of Albcontrol |
The Albanian government found itself compelled to dip into taxpayers' pockets to provide a loan to the state-owned company "Albcontrol" as its financial situation reached the brink of bankruptcy, according to Reporter. This predicament arose from the blocking of tens of millions of euros earned by the company, following the demand for payment of a fine imposed by the Arbitration Court against Prime Minister Edi Rama's government.
Despite Prime Minister Rama repeatedly asserting that he had no intention of paying the hefty fine ruled by the International Court of Arbitration in favor of controversial Italian businessman Francesco Becchetti, it appears that Albanian taxpayers are not only footing the €108 million bill determined by the court for the violation of Becchetti's rights but likely also covering additional interest.
Payments are being processed through the accounts of the state-owned company "Albcontrol" within the organization "Eurocontrol."
"Throughout 2022, as well as in 2021, the company has not received any income from en-route and terminal charges due to a decision by the Brussels first-instance court to freeze the accounts of 'Albcontrol Sh.A.' within 'Eurocontrol,'" states Albcontrol's 2022 financial report.
The total amount of these blocked funds until December 2022 was 6.75 billion leks (over €60 million at the time's exchange rate).
Currently, Albcontrol is at risk of bankruptcy because it cannot access its revenues from services sold due to the freezing of its accounts. In December, the government granted Albcontrol a loan of around €30 million without providing explanations. However, it seems that this loan is linked to Albcontrol's inability to carry out regular operations under the circumstances of blocked accounts.
While the government remains silent on the situation, additional information is revealed in Albcontrol's financial report, recently deposited at the National Business Center. The balance sheet, deposited six months late, depicts the situation at the end of 2022. The audit of the balance has withheld reporting on the company's financial administration, emphasizing that the blocking of its revenues in Belgium suggests the company is in a different financial state than reported.
Blocked Funds
Albcontrol is a joint-stock company under the ownership of Albanian taxpayers, providing air traffic services for flights landing or passing through Albanian airspace. The company's ordinary revenues for 2022 exceeded 2.7 billion leks (around €24 million). However, since the company operates as part of an international civil air transport service system, its clients' payments are deposited in Brussels before being transferred to the company.
In at least two cases, Albcontrol's accounts in Belgium were blocked due to the Albanian government's unwillingness to comply with court decisions. The first instance was with "General Electric," which sought and received a $25 million compensation when the government of former Prime Minister Sali Berisha unilaterally canceled a contract signed by the previous government with the American company for the construction of a railway line.
This time, however, the figures at stake are substantial. Albcontrol's balance sheet seems to have classified the blocked accounts as "collectible accounts." The financial statement shows that these "collectible accounts" amounted to 6.7 billion leks at the end of 2022, a figure likely to have increased further in 2023. The company seems to have received a 2 billion lek loan in 2022 to cover expenses under the circumstances of revenue blocking, in addition to the 3 billion provided by the Council of Ministers in December.
In fact, government loans to Albcontrol seem to be a play on words, and company auditors have "withheld" their report on the financial statements of the company's administrators, providing an "opinion with reservations." Auditors note that the company is a nonprofit joint-stock company, aiming to guarantee the public service it offers rather than generate profits. Therefore, the company cannot generate profits to repay the loans granted by the government from taxpayers' money. Ultimately, taxpayers are indirectly paying Becchetti's fine, despite Prime Minister Edi Rama claiming otherwise.
According to auditors, "we have encountered public information, as a result of the Brussels Court of Appeals decision, that may create material uncertainty about the Company's ability to continue as a going concern."
Auditors also note that, according to the law, Albcontrol is "not a for-profit subject." It covers its needs with revenues, which must be equal to profits. Therefore, it appears that the Albanian government is giving Albcontrol a loan with zero chance of repayment.
Becchetti's fine is one of the financial consequences of the various governments' behavior towards foreign investors. Recently, several companies have filed additional claims against the government for the arbitrary termination of contracts regarding Rama's unexpected decision to concession the construction of towers in the port of Durres.