On October 3, 2013, the government published in the Official Gazette the Emergency Ordinance 90/2013, pledging to compensate the EUR14.25 million Ford was to pay for its breach of the privatization contract and pay the company EUR15 million as compensation after a contaminated area was found in the industrial site Ford uses in Romania. On the other hand, the US carmaker pledged to clean up the polluted area.
“A solution was found by both parties and we reached a common denominator. The plot in question had been polluted and had to be cleaned,” said Zoltan Brassai, managing director of Ford Romania, who is also part of the board of directors of the plant in Craiova.
“When you buy the plant you cannot investigate every single inch of it, especially when we’re talking land outside production facilities. They used to store cars there and the land in the area was polluted with toxic chemicals such as motor oil. The evaluation was done by international experts.”
Contaminated land is sometimes found inside industrial sites, and the latest case in Romania is Targu Mures, where the city hall started a EU funded project to decontaminate a 30-hectare plot, which will cost EUR31 million.
The ordinance that includes the explanation for the payment by the Romanian government also says that Ford had trouble carrying out its contract. Ford Motor Company, which made the investments in the contract as promised, was unable to meet the agreed car production levels due to the international economic crisis and would normally be liable for a penalty. However, the government noted that once the buyer took possession of the industrial site in Craiova, an environmental assessment report revealed that the groundwater at the site was polluted, so the buyer conducted a thorough investigation and took steps to address the issue, under a 2009 agreement with the environmental authorities.
Ford filed a claim with the International Court of Arbitration in order to have Romania’s privatization authority, AAAS, pay EUR15 million compensation so it could recoup these costs and any potential additional costs.
The Romanian authorities and Ford conducted talks to find a solution to settle the claim. The solution was suggested, according to the Ordinance because AAAS is in a difficult position, financially, with all its accounts frozen.
Neither the Environment Ministry nor the Government had provided an official answer to ZF’s questions about the status of the polluted plot of land at the Craiova plant site.
AAAS, whose manager Nicusor Lascu, provided an official answer to ZF, said the “penalties of EUR14.25 million due as a result of the failure to comply with article 7.1.15 in the privatization contract signed at Automobile Craiova, now Ford Romania, were paid in full.”
The government says the solution was chosen “taking into account the interest of the local and central authorities in creating a favorable climate for investments in and around Craiova and encouraging long-term private investments in the automotive sector.”
(English version by Loredana Fratila-Cristescu)