Law establishing Air Albania

Tailor-made laws in the Western Balkans and Turkey

Introduction

On 16 May 2018, the Albanian government adopted Decision of the Council of Ministers No. 309 establishing the Air Albania company with joint capital from Turkish Airlines (49-per cent stake), the state-owned company Albcontrol (10-per cent stake) and a private company, MDN Investment (41-per cent stake). The agreement also gave Turkish Airlines disproportionate management power by allowing it to appoint the administrator.

Country: Albania

Sector: Public contracting

Type of Law: Capturing a market, an industry or public resources

Description of the law

The statutes of MDN Investment state that the company’s purpose is to build and manage Vlora Airport. However, its involvement in the establishment of Air Albania links both projects. MDN Investment was established on 7 May 2018, only nine days before the adoption of the government’s decision to establish Air Albania on 16 May 2018. It is also worth noting that the Prime Minister announced the name of the airline and presented its staff before the council decision was approved.

It is unclear why the government chose a newly formed company, MDN Investment, with no experience in air transport, what procedure was used and why it refused to open up the procurement process to competition.

The media reported that the decision to establish Air Albania may have violated Albania’s Stabilisation and Association Agreement with the EU because it bypassed public procurement rules.

Questions also remain about ownership of the company, with two owners selling their shares after little over a month in the job.

Full Law Name

Decision of the Council of Ministers (DCM) No. 309 dated 16 May 2018 establishing the Air Albania Company.

Type of law

Decision of the Council of Ministers (DCM) No. 309 of 16 May 2018

Scope of application

Substantial: Air transport

Personal: Private companies (not allowed to bid due to a lack of transparency and non-existent competition)

Territorial: National

Temporal: Yes

Time of adoption and entering to force

Adopted on 16 May 2018

Who drafted it

The Ministry of Finance and Economy and the Ministry of Infrastructure and Energy

Who submitted it to Parliament or to another collective body

Submitted to the Council of Ministers by the Ministry of Finance and Economy and the Ministry of Infrastructure and Energy

Relevant developments in the process of adoption that show signs it’s tailor-made

Over the past few years, Prime Minister Edi Rama has intensified cooperation with Turkey and stepped up his meetings with Turkish President Recep Tayyip Erdogan. Since 2017, part of these interactions have focussed on Vlora Airport and the establishment of Air Albania. Rama mentioned such plans in public for the first time in an interview in March 2017.

The timeline of the project highlights political and economic ties that led to the tailoring of the law to establish Air Albania (see here).

In May 2017, Prime Minister Rama met Turkish Airline CEO Ilker Ayci and announced the plan to establish Air Albania in cooperation with Turkish Airlines, a project that was also supported by President Erdogan. Several meetings and exchanges took place between Turkey and Albania before 23 March 2018, when Prime Minister Rama announced the name of the new company. On 11 May 2018, Rama presented the employees of Air Albania, five days before Decision No. 309 was adopted by the Council of Ministers on 16 May 2018. At this point in time, Air Albania had not yet been formally established. Air Albania was registered at the National Business Centre on 13 September 2018.

MDN Investment was formed just nine days before the government decided to give it, a company with no experience in the air transport sector, a 41-per cent stake in Air Albania.

At the time MDN Investment was established, it was owned by Sinan Idrizi, a local businessman who had attended meetings with PM Rama and President Erdogan. On 18 July 2018, the company extended its list of owners. It now included Sinan Idrizi, two of his family members and a fourth owner, Ron Yeffet. One month later, on 28 August 2018, Yeffet and Idrizi sold their shares to Idrizi’s two family members, Najada and Rejana Idrizi. It is unclear why Ron Yeffet stayed as a co-owner for just 42 days.

Who adopted it

Government

Enforcement

Yes.

Initiatives to challenge it and their outcomes

The opposition Democratic Party contested the process, but did not formally challenge it (see here and here).

Affected sector

Public contracting

MDN INVESTIMENT, the Idrizi family and related persons within the ruling Socialist Party majority as well as TÜRK HAVA YOLLARI A.O. (Turkish Airlines), which holds a 49-per cent stake in Air Albania.

Direct victims

Companies could not compete for the contract

Socio-economic impact (on markets, sectors, etc)

Concerns over state aid, a closed procedure (for choosing MDN Investment) and a lack of transparency

Impact on rule of law

The prosecution has not investigated why ownership of MDN Investment changed within the space of a month (July–August 2018), especially in terms of potential concerns over money laundering or suspected corruption. Nor has it investigated links between MDN Investment’s owner and officials in the ruling majority.

It is unclear why the competition authority has not looked into the (non-existent) procedure for choosing MDN Investment as a partner of Air Albania the Government, in its decision no 549 date 27 September 2018 on Authorizing the realized concentration through the creation of "Air Albania".

Initiatives to challenge it and outcomes

A member of the EPP put a question to Commissioner Johannes Hahn on this matter. The commissioner responded by saying that the Commission was aware of the allegations of a possible violation of Albania’s Stabilisation and Association Agreement with the EU and had looked into the matter. He added that while the Commission had not established an outright breach of the agreement at the time of his statement, a broader and deeper assessment of the public procurement and competition/state aid framework in Albania was planned for the months that followed (see full response here).

Is there any corruption case that is linked to the tailor-made law?

It is linked to the Vlora Airport plans.

Every effort has been made to verify the accuracy of the information contained in this database. All information is believed to be correct as of December 2020. Nevertheless, Transparency International cannot accept responsibility for the consequences of its use for other purposes or in other contexts.