Press Release on the issue of EPS management

Regarding the issue of Milorad Grcic's responsibility for the situation in the Electric Power Industry of Serbia (EPS), Transparency Serbia calls on the Government of Serbia to ensure at least essential legality of work in public companies and to appoint directors elected at public competitions.

We also recall that the Government does not fulfil its legal obligation and that the President of the Republic decides on staffing in public companies undermine the establishment and functioning of the rule of law in this area. President's message to Milorad Grcic at the Government session was interpreted as an invitation to resign, while less than two years ago, president Vucic stated that "he does not give the acting directors" because it is easier to control them than directors selected in competitions.^[1].

Currently, Milorad Grcic cannot be dismissed or resign as the acting director of EPS because he has not been acting director for 4,5 years. He is a citizen who has no greater right to manage the largest Serbian public company than anyone else. The only thing he can do is stop falsely presenting himself and illegally managing that company. Also, the Government of Serbia cannot dismiss him from his term of office but only pass a decision confirming that his mandate ended on March 23, 2017, when 12 months had passed since Grcic was appointed acting director.

The Law on Public Enterprises stipulates that "the term of office of the acting director may not exceed one year" and that "the same person may not be twice appointed acting director".

According to available data, Grcic was unlawfully appointed acting director in 2016 – he did not meet the condition of having five years of experience in jobs requiring higher education. Four years ago, the private faculty from Sremska Kamenica EDUCONS, in response to the request of Istinomer, announced that Grcic graduated in April 2012.

Grcic is not an isolated case of an illegal acting director. Out of 34 public companies (owned by the Republic of Serbia) to which the Law on Public Enterprises applies for the election of directors, 22 (13 public companies and nine JSCs and LLCs) have management positions of directors or acting directors with an expired term of office. Some of them have been in illegal status for more than seven years.

TS also wrote about the situation in EPS under Grcic's leadership, false presentation of profits at the expense of investments, party employment, in the 2018 study "Elements of the Captured State in Serbia".^[2]

At that time, we warned about the possible consequences: "This all affects adversary EPS's ability to perform its functions and future development of this enterprise overall. Extra expenditures, bad management, reluctance to invest in the maintenance of the system and development of new capacities, while might bring some individual Pecuniary or political interest could have damageable long–term effects for the company".

TS also stated in the same study that in EPS, "the operative management and in particular acting director, is purely politically appointed and widely considered as incompetent for the position; similarly, many of lower-level managers are considered incompetent as well."

We also pointed out that "EPS is practising party-affiliated employments facilitated by frequent reorganization of company structure, discretionary based changes of Systematization Act with the description of working places, and maintaining several firms formerly connected to EPS plants from Kosovo".

Finally, we warned that "the profit of the enterprise is artificially increased in order to make a transfer to the budget, to present a budget suffices and to obtain political gain by linking it with the success of the governmental policy", and this seems to be at the expense of investment.

The competition for the election of the EPS director was announced on March 23, 2016, the same day when Grcic was appointed acting director as a successor of the dismissed Aleksandar Obradovic. That competition has not ended until today. Despite that fact, a new competition was announced on March 24, 2017, but that competition has not finished either.

^[1] https://www.021.rs/story/Info/Srbija/232450/Uprkos-zakonu-i-preporukama-status-vd-direktora-opstaje.html

^[2] https://www.transparentnost.org.rs/images/dokumenti_uz_vesti/Elements-of-State-Capture-in-Serbia-eng-A5.pdf