Concerns raised as Tirana mulls exiting ICSID over Becchetti affair €120-million judgement
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- Independent experts and the political opposition say that the withdrawal from ICSID would hamper foreign investments and leave Albania at the mercy of arbitrary decisions.
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TIRANA, April 11, 2023 – With Albania’s government losing its final appeal to reverse a €120-million penalty in the Francesco Becchetti affair case earlier this month, Tirana is mulling exiting the jurisdiction of the international arbitration court that issued the ruling, according to Prime Minister Edi Rama.
The tribunal organized under the jurisdiction of the International Centre for Settlement of Investment Disputes (ICSID), which is connected to the World Bank, had ruled against Albania and ordered compensation for what it deemed was the illegal expropriation of Mr. Becchetti media company, Agonset, in violation of the bilateral investment treaty between Italy and Albania.
Independent experts and the political opposition say that the withdrawal from ICSID, a body that includes most of the world’s advanced economies and all democracies, would hurt foreign investments and leave Albania at the mercy of government arbitrary decisions.
Mr. Rama has repeatedly said Albania will not “pay a cent” to Mr. Becchetti; however, the legal ruling is binding and the Italian businessman’s lawyers have already started seizing funds of the Albanian government abroad wherever they can get local courts approval to do so.
– Becchetti affair as a political hot potato –
Triggered by journalists’ questions about the large toll on the state budget due to the international arbitration court’s ruling against the government’s actions, Mr. Rama said he was angry both at the court’s decision but also at the political criticism he had received by the opposition “whenever there is an election campaign.”
“A criminal tried and sentenced to 17 years in prison for defrauding the Albanian state manages to get his way in a court. … Starting from next week, we are even analyzing the possibility of leaving that jurisdiction altogether because what happened is scandalous,” Mr. Rama said, referring to Mr. Becchetti.
Mr. Becchetti had several businesses in Albania, including Agon Channel, a television station with a firm anti-government bent. It was closed following an investigation by authorities on its funding, which led to charges of tax evasion and fraud for Mr. Becchetti. Convicted by Albanian courts, he is still wanted by Albanian authorities, although a court in the UK, where Becchetti lives, refused to give permission for extradition.
According to Mr. Becchetti’s spokesperson, Interpol then retracted the international arrest warrant against Becchetti, “when Albania failed to respond to queries as to the political character, lack of due process, and lack of evidentiary basis for the charges.”
Albania’s opposition has repeatedly asked for an investigative commission in parliament to deal with the government’s alleged wrongdoings in the Becchetti affair, something that had been vetoed by the ruling Socialist Party of Prime Minister Rama, citing the ongoing appeals process. The opposition also points out that it was threatening private messages to Mr. Becchetti by Socialist Party officials that led to the Italian businessman winning the arbitration case in court.
With the appeals process now concluded, there will likely be more calls from the opposition for the investigative commission on this issue to be established in parliament.
“The decision may have been Rama’s, but the costs are borne by the Albanian taxpayer. Let’s be clear: Rama does not pay a cent for the decision he himself made. The amount will come from the state coffers, in other words from the pockets of Albanian citizens,” the main opposition Democratic Party said in a statement by Floriana Garo, a spokeswoman.
She added: “This is what happens when the government makes decisions that harm not only freedom of expression, but also public funds. There are hundreds of millions that the Albanian state loses in international courts due to thoughtless, arbitrary decisions of the government.”
– What happens if Albania leaves ICSID? –
If a country wants to leave the jurisdiction of the International Centre for Settlement of Investment Disputes, it can do so by withdrawing from the ICSID Convention with a written notice to the World Bank at least six months in advance. However, any ongoing investment disputes that were already submitted to ICSID jurisdiction before the departure became effective would continue to be subject to ICSID jurisdiction. Albania would also be responsible for fulfilling any obligations it incurred while it was still a member of the ICSID Convention.
Only three countries have ever left: Venezuela, Bolivia and Ecuador — the latter later rejoined. Poland and Montenegro are the only European states that have never joined the convention.
Leaving the jurisdiction of the ICSID does not directly affect World Bank investments. However, a country’s decision to leave the ICSID Convention may have broader implications for its relationship with the World Bank and its access to World Bank resources, international experts note. The World Bank has close ties to ICSID, which operates under its auspices, and is committed to promoting international investment and resolving investment disputes in a peaceful and cooperative manner. Therefore, a country’s decision to leave ICSID may signal a lack of commitment to these principles and could lead to a re-evaluation of its relationship with the World Bank.
Withdrawal from ICISID will likely further discourage current foreign investors in Albania and “leave Albania more at the mercy of Rama’s arbitrariness, an arbitrariness for which he is already gaining notoriety,” Gjergj Erebara, a journalist that focuses on economic issues, writes in the nonprofit outlet Reporter.al.
He also points out that it’s not the first time that Albania loses at the ICSID, with a lower loss of $44 million to the Greek company Aktor.
“In both cases, there is reason to believe that the court was not unfair, regardless of what you might think of the Italian businessman. What is noticeable is that the fines were caused by the irresponsibility of the Albanian government. Rama has only himself to blame for the 110 million euros lost, regardless of whether his political opponents were happy about it or not,” Mr. Erebara adds.
– A story of Albanian transition –
For Mr. Becchetti, the win is vindication of how he was treated in Albania.
“Albania’s political persecution has upended my life and that of my family, forcing me to live in exile in the United Kingdom for almost 10 years. The ICSID tribunal, after almost 10 years, has unanimously carved in stone that Edi Rama and his government executed one of the worst political persecutions of European contemporary history against me and that the criminal accusations are totally unfounded,” Mr. Bechetti said in a statement sent to the media through his PR company.
However, there are also many people in Albania who see the Italian businessman as a controversial figure who received a lot of his wealth through legal procedures rather than fruitful investment.
Mr. Becchetti began investments in Albania in the 1990s following the fall of communism. Albanian authorities first started an investigation into Mr. Becchetti’s activities over a major hydroelectric plant in southern Albania that was promised as an investment but was never built. Prosecutors say his companies issued artificially inflated bills for work that was never done and asked for value-added tax reimbursements on forged documents. After years of failing to start work on the project, the Albanian government took away Becchetti’s concession to build the Kalivaç hydropower project in 2014.
In the most prominent case tied to the latest ruling, another of Mr. Becchetti’s businesses in Albania, Agon Channel, a television station with a firm anti-government bent, was closed following an investigation by authorities on its funding, which led to charges of tax evasion and fraud for Mr. Becchetti.
