He accused the Lottery’s former management of having made overpriced acquisitions.
“I come from the private environment and I was shocked to see the company’s financial records. The former management had no notion of ‘efficiency’ and focused on spending money on overpriced acquisitions and less on increasing revenue. The current financial status is not good and without measures to render the National Lottery more efficient it could enter insolvency, which is nevertheless the last solution we take into account,” Ghita said.
He added the Lottery’s profit rate sets at around 8%, and if slides under 5% “we could closed down the company.”
Early July, Romania’s Finance Minister Florin Georgescu appointed Dan-Alexandru Ghita as general manager of the Romanian Lottery, replacing Gheorghe Benea.
Ghita, a former sales manager with Galaxy Games, also took over as chairman of the company’s managing board.
According to Ghita, the Lottery cash-ins decreased by 50% between 2007 and 2011, while expenses where at high levels, through overpriced acquisitions.
For example, the Lottery paid EUR1.7 million for a software application with a market value of only EUR300,000, he said. Also, it paid 4.4 million lei (EUR97.000) for a staff entry-exit monitoring software application, RON3.9 million (EUR85.000) more than it actually worth.
Hence, the biggest financial problem of the Lottery is the deal concluded with a group of companies in Greece. The deal was signed back in 1992-1993 on a ten-year period and was renewed on another ten-year period upon expiry.
Thus, the Greek companies cash 70% of the net income of the Lottery on the video-lottery games segment, while the Lottery remains with 30%. In fact, the Lottery remains with less than 30% as it equally pays for the machines functioning expenses, he said.
“These prejudicial contracts (…) could not be cancelled,” said Ghita.
An investigation conducted by the Court of Accounts revealed at the beginning of the year that the Romanian Lottery lost 89.8 million lei (EUR19.69 million) following several contracts signed over the past years, and from unjustified pay to managers. Half of this amount comes from a deal with Shelter Security on providing the security system.
Ghita concluded he accepted the position of general manager “as a challenge.”
“I know this sector very well. I will try to keep the National Lottery boat floating. Unfortunately, the company has not yet approved the budget of revenues and expenses for 2012.(…) The old management had proposed investments of RON110 million in 2012. Following an analysis, the proposed amount was reduced to RON20 million,” Ghita also said.
Ghita also stressed upon the very high growth potential of the National Lottery, comparing it to Hungary’s National Lottery that posted a profit of EUR200 million in 2011 at a country with only 10 million citizens. (EUR1=RON4.5647)