Privatization of Troubled Bulgarian Arms Manufacturer Terminated

Business | January 14, 2013, Monday // 18:00| Views: 1160 | Comments: 1
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Bulgaria: Privatization of Troubled Bulgarian Arms Manufacturer Terminated Bulgaria's Privatization and Post-Privatization Control Agency (PPCA) terminated Monday the procedure for the sale of the ailing state-owned military plant VMZ Sopot. Photo by BGNES

Bulgaria's Privatization and Post-Privatization Control Agency (PPCA) has terminated the procedure for the sale of military plant VMZ Sopot, according to PPCA Executive Director Emil Karanikolov.

In an interview for the Bulgarian National Radio (BNR), Karanikolov noted that the sole candidate to buy the state-owned arms manufacturer, EMKO EOOD, had submitted a binding offer by the deadline (3 p.m. on January 14) but had failed to transfer the EUR 3 M deposit for participation in the privatization procedure.

The PPCA Executive Director made clear that the bid of EMKO EOOD had not been opened because the company had not observed the mandatory requirement to submit a deposit.

He argued that the problem was that the sole candidate to buy VMZ Sopot had requested a re-negotiation of the collective bargaining agreement between the trade unions and VMZ Sopot.

Karanikolov explained that the collective agreement stipulated that employees of VMZ Sopot could only be dismissed with the explicit agreement of the representatives of both trade unions at the plant, the Podkrepa Labor Confederation and the Union of Independent Trade Unions in Bulgaria (CITUB).

He noted that if an employee of VMZ Sopot was dismissed without the consent of Podkrepa and CITUB, the court authorities would order the worker reinstated, regardless of the payment of compensation to the state or to the worker.

The initial deadline for submission of a binding offer for VMZ Sopot expired on Friday but the governing body of the PPCA decided to extend the deadline by Monday afternoon to enable the sole candidate to give more thought to the bid.

Emiliyan Gebrev, owner of EMKO EOOD, met Friday with the heads of the two trade unions at VMZ Sopot to tell them that he wished to cut the staff of the plant from the current 3200 to around 1800.

Karanikolov said that there were three options for VMZ Sopot, including bankruptcy proceedings, the preparation and submission of a new privatization strategy for the arms manufacturer with Parliament, and the removal of the plant from the "strategic list," thereby paving the way for a privatization procedure without a strategy.

The PPCA head claimed that the third option was the most suitable.

Meanwhile, workers of the troubled arms maker continued Monday their months-long protests over delayed salaries.

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Tags: VMZ Sopot, military plant, Emil Karanikolov, Privatization and post-Privatization Control Agency, bankruptcy, trade unions, Podkrepa Labor Confederation, CITUB, Confederation of Independent Trade Unions in Bulgaria, staff cuts, collective bargaining, Emko
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#1
Ironmike - 14 Jan 2013 // 20:12:25

Having been part of the assessment of the entire defense industries of Bulgaria in 2002-2005, I know the capabilities of VMZ Company to produce high technology and high quantities of a large variety of weapons and munitions. Having not been informed of management initiatives since my departure from Bulgaria when the Socialist Party became the ruling party in late 2005, I am not aware of the marketing strategy for international investment to privatize the defense industries of Bulgaria. It seems to be a very inefficient process for it to have taken 7 more years to market and receive only one offer, which was submitted as a rejected conditional offer, when there are literally hundreds of international defense corporations that would love to include VMZ in its portfolio of production capabilities. Perhaps the National Assembly and Ministry of Economy should consider turning the strategy, marketing, and sale of the remaining National Defense Industries of Bulgaria over to a private consulting firm that uses innovation, modern marketing techniques, and has the flexibility to negotiate the best agreement of sale that benefits both the taxpayers of Bulgaria and the employees of those remaining legacies of Bulgaria's socialist past. Mike Toler, Consultant to the US Army and formerly to the Ministry of Defense of Bulgaria, Bosnia-Herzegovina, and Montenegro.