The Ministry of Finance reform of state property trading did not find support from the Prosecutor General’s Office

As Kommersant learned, the Ministry of Finance’s efforts to reform state property trading have not yet received approval from the State Legal Administration of the President. The current procedure for conducting tenders there is considered sufficient, and the proposed inclusion of the Treasury as an intermediary in the mechanism is considered a factor in reducing the effectiveness of privatization (electronic platforms will incur costs, and the risks of technical failures will increase). The Ministry of Finance, which ensured transparency in public procurement, does not agree with these arguments – now the lack of control allows bidders to make transactions on almost any terms. De facto, the debate is about assessing the effectiveness of the current and projected bidding systems. According to Kommersant, the White House is still discussing reform at the level of an ideological approach and there is no final decision on it.

Attempts by the Ministry of Finance to convert the sale of state property into a fully electronic form using the GIS “Torgi” (its operator is the Federal Treasury, FC) have not yet received the support of the State Legal Administration (GPU) of the President. Let us recall that the Ministry of Finance previously announced plans to transfer all tenders to electronic form on the basis of this information system, integrated with electronic trading platforms operating within the framework of the law on public procurement.

The automation of government procurement based on the Unified Information System (its operator is also FC) is obviously the target model of the Ministry of Finance for the digitalization of the sale of state property. By analogy with government procurement, the Treasury planned to collect data on sales of government property throughout their entire cycle, from planning to concluding transactions in electronic format. So far, the Ministry of Finance has only proposed a pilot project to introduce legally significant electronic document management with registration of trading participants in the GIS “Torgi” (see “Kommersant” dated March 19).

However, according to Kommersant’s source, even the launch of a pilot project is impossible without adjusting the legislation. In accordance with the Law “On Privatization” (178-FZ), the GIS “Torgi” website has only an informative function (about the progress of sales of state property), and the pilot project intends to provide it with functions that have legal significance. “Concluding an agreement by signing one electronic document limits the freedom of discretion of the parties and contradicts the Civil Code, which directly provides for the possibility of signing an agreement by exchanging letters or electronic documents,” explains Kommersant’s interlocutor.

Denis Ezhov, senior lawyer at the international commercial law practice of Melling, Voitishkin and Partners, confirms that the Ministry of Finance’s draft resolution on the “pilot” contradicts the provisions of the law “On Privatization” and other regulations defining the procedure for the sale of state property in electronic form. “Implementation of a pilot project without changes to the law may become the basis for challenging property sales transactions due to violation of the procedure established by law,” warns the lawyer.

To get out of this situation, the Ministry of Finance has already prepared a bill with amendments to 178-FZ on introducing the obligation of participants in the sale of state property in electronic form to register in the GIS “Torgi”, as well as the requirement to conclude a purchase and sale agreement in electronic form.

However, this bill did not receive conceptual approval from the State Legal Administration of the President. In a letter dated December 1, 2023, the head of the State Political Directorate, Larisa Brycheva, indicates that the bill could disrupt the stability of the current bidding model (the administration considers it more appropriate) and reduce the efficiency of privatization. In addition, innovations will require additional budget expenditures. The GPU’s comments are related to the fact that the draft gives the Treasury the authority to control any conditions of purchase and sale transactions, which is regarded as excessive government intervention in economic activity. The mechanism of mandatory registration in the GIS “Torgi” can lead to additional costs for bidders and will require improvements to the information system software and its full technical compatibility with electronic platforms: the inclusion of an intermediary in transactions increases the risks of technical failures and can lead to delays in concluding contracts and losses for business entities , the GPU believes.

The Ministry of Finance does not agree with these comments. The department told Kommersant that the finalization of the GIS “Trading” and, accordingly, additional funding will not be required (the possibility of registering participants and concluding electronic contracts already exists). Also, the Ministry of Finance does not foresee additional costs for bidders (the changes do not require the installation of new equipment or software) and denies the existence of provisions that give the Treasury the authority to control the terms of contracts. The Ministry of Finance explains that concluding contracts in the GIS will allow them to correlate their terms with the terms of the auction – this is the subject of sale, information about the winner, terms of the contract, the proposed price. Now participants can enter into agreements on terms that do not correspond to the results of the auction, and it is also possible to make changes to the agreements on new terms of the transaction. Let us note that the Ministry of Finance does not directly comment on the possibility of conducting a pilot project without changes to 178-FZ, explaining only that a number of legal acts already have an obligation to register bidders in the GIS (for example, in the law “On Fisheries and Conservation of Aquatic Biological Resources “).

The secretariat of Deputy Prime Minister Dmitry Grigorenko told Kommersant that the Ministry of Finance’s bill has not yet been submitted to the government for consideration. According to Kommersant, the Ministry of Finance has not yet received formal instructions to refine or change the fundamental approach to the controversial issue – if it is being discussed in the White House, it is at the level of an ideological approach, and no fundamental decision has yet been made.

Diana Galieva, Oleg Sapozhkov