Currently, we are observing the repercussions of detrimental effects on the state and its citizens due to contentious concession contracts for the construction of small hydropower plants (SHPs) in Montenegro, which were established during the previous administration. These agreements were tailored to benefit select individuals at the expense of the state, stated Momo Koprivica, the Deputy Prime Minister for the Political System, Justice, and Anti-Corruption.

He indicated that these contracts have been evaluated in terms of energy, ecology, spatial planning, and other similar areas, but not through the lens of anti-corruption regulations.

Following an anti-corruption review of the concession contract for the Bistrica SHP, contested by both the public and NGOs, it has been concluded that the contract is illegal and entirely null and void. sequentially, on 26 July 2016, the Ministry of Economy granted an energy permit to BB Hidro for constructing the Bistrica small hydropower plant, which is expected to produce 3.154 GWh annually in Lipovska Bistrica within the Municipality of Kolašin. The concession decision for Bistrica SHP was made at a Cabinet meeting on 6 October 2016. Ultimately, the Government of Montenegro, under then-Prime Minister Milo Đukanović, signed the concession agreement with BB Hidro from Podgorica on 28 November 2016, where Blažo Đukanović, the Prime Minister’s son, was a co-founder, co-owner, and executive director, Koprivica mentioned.

He underscored that the Law on the Prevention of Corruption, effective from 1 January 2016, explicitly articulates in Article 14, paragraph 3: “The authority within which the public official performs a public function shall not enter into a contract with any company or legal entity in which the public official or a closely related person has a private interest.”

Here, the governing authority is the Government of Montenegro as the concession provider, with the public official in question being its prime minister, who oversees its operations – at that time, this was Milo Đukanović. Per the Law on State Property and the Law on Concessions, the Government is the exclusive contracting party and concession provider, as clearly delineated in the contract. The law defines a related person to include, among others, close relatives of the public official – in this context, the Prime Minister’s son, stated Koprivica.

He further elaborated that under the law, the private interests of a public official encompass ownership along with other tangible or intangible interests related to themselves or their associated individuals.

In this instance, it pertains to the 50% ownership interest in BB Hidro held by the son of the then-Prime Minister – the company that engaged in the concession agreement and acts as the contracting party, i.e., the concessionaire. The factual situation meticulously aligns with the mandatory stipulations of the Law on the Prevention of Corruption, revealing that in their relentless quest for gain, the parties involved fell into a legal pitfall, overtly breaching this crucial norm, which is similarly upheld in comparative law and embedded in the UN Convention Against Corruption, Koprivica asserted.

He continued to note that Article 14, paragraph 4 of the Law states: “If a public official or authority acts contrary to paragraphs 1, 2, and 3 of this Article, the provisions of the Law on Contracts and Torts regarding contract nullity shall apply accordingly to the concluded contract.”

Consequently, due to the infraction of the prohibitions established by an imperative norm, any contract made by an authority where the public official is active and has a private interest is deemed null and void. The concession contract for the Bistrica SHP with the company owned by Đukanović’s son is entirely null and void and should not yield any legal effects. According to the Law on Contracts and Torts, contracts that contravene mandatory regulations or societal ethics are inherently invalid. They should not remain in effect, be legally enforceable, or generate any legal implications. Nullity represents the most severe sanction for significant violations of legality, a fundamental aspect of the rule of law, necessitating actions to eradicate the legal act from the legal framework and mitigate the legal repercussions it has engendered. This situation transcends mere procedural rules forbidding participation in decision-making due to conflicts of interest, which the previously discredited leadership of the Agency for the Prevention of Corruption attempted to downplay. Instead, it signifies a serious breach of Article 14 of the Law, resulting in the contract’s nullity. This introduces an entirely new facet to this matter, connecting it to conflicts of interest regulations and corrupt practices, explained Koprivica.

He also pointed out that numerous advantages were gained under this void contract, the most substantial being the assured procurement of every megawatt produced. The agreement even states that if selling electricity on the market proves to be more lucrative for the company, it can withdraw from the contract, sell on the market, and subsequently revert to selling to the state.

Today, I briefed the Cabinet at its session regarding the legal facets of the contract’s nullity, and tomorrow, this issue will be addressed at the National Council for the Fight Against Corruption during a thematic session focusing on corruption in the utilization of natural resources and environmental protections. Furthermore, relevant judicial authorities will be alerted, as courts must recognize nullity ex officio, while the State Prosecutor’s Office retains the authority under the Law on Contracts and Torts to petition for a ruling on nullity. The Protector of Property Interests and other relevant entities will also be notified. Initiating legal proceedings will commence the process of establishing the contract’s nullity. Contracts deemed null and void must be removed from the legal framework, and their consequences must be corrected. This serves as a countermeasure against corruption and conflicts of interest, aimed at safeguarding the public interest, the state budget, and public assets, Koprivica concluded.