Selective checks of the state of legality in the performance by commissions for the prevention of economic insolvency (bankruptcy) of their assigned functions were carried out

The prosecutor's offices of the Vitebsk region conducted selective inspections in 12 regions of the region to assess the state of legality in the performance of functions assigned to commissions for the prevention of economic insolvency (bankruptcy) under district executive committees (hereinafter referred to as commissions) concerning state enterprises (with a share of state ownership in the authorized fund).

The results of the inspections indicate that the commissions' work is not sufficiently effective.

A typical violation is the lack of promptness in changing the commission's staff. There are frequent cases of individuals who have terminated employment relations with executive committees or have not yet been included in the commission participating in meetings as commission members; non-compliance with the quorum of participants.

The regulations of the commissions did not fully regulate the duties and powers for performing certain functions assigned to them by legislative acts.

There were cases of executive committees not making decisions on proposals submitted by the commissions, and, conversely, cases of decisions being made without prior commission meetings; cases of executive committees violating decision-making deadlines.

A number of shortcomings were identified in the timeliness and completeness of the execution of the commissions' work plans, as well as in the control of assignments given by the commissions. The content of the commission meeting minutes indicates that not all planned issues are always considered fully and objectively with proper analysis of the incoming information.

The lack of results in restoring the solvency of organizations undergoing pre-trial rehabilitation indicates the low effectiveness of the commissions' work.

Overall, the position of the commissions is often passive; during the consideration of proposals from insolvent organizations, the real reasons for the current situation are not adequately investigated, the reasons for the deterioration of certain economic indicators, and the cause-and-effect relationships between the ensuing insolvency and ineffective management decisions are analyzed ineffectively. The proposals are generalized and essentially duplicate

immediate responsibilities of legal, economic services and officials of enterprises.

The resulting indicators of the financial condition of a number of agricultural organizations undergoing pre-trial recovery attest to this.

By the decision of the Vitebsk Regional Executive Committee dated 05.04.2019 No. 176, the List of insolvent organizations of the Vitebsk region subject to financial recovery was approved. At the same time, most of these organizations (39 out of 49) were once included in the List of agricultural organizations subject to pre-trial recovery, approved by the Resolution of the Council of Ministers of the Republic of Belarus dated 31.10.2016 No. 889, which indicates the ineffective implementation of pre-trial recovery measures in 2017-2018.

Thus, in 2018, pre-trial recovery was carried out in the region for 177 organizations, of which approved measures were not fulfilled by 124 enterprises (70%), including 121 for the second year in a row. According to the results of 2019, although the indicators are more effective (out of 154 organizations, 29%, or 44 enterprises, did not fulfill the measures, including 32 for the second half-year in a row), a significant part of agricultural organizations still remains in a difficult financial situation due to the lack of working capital, qualified personnel, a high percentage of equipment wear, insufficient mineral fertilizers, feed base, and medicines for the prevention and treatment of livestock, leading to incomplete compliance with agricultural production technology and violation of technical regulations.

The analysis of the financial and economic condition of individual organizations subject to recovery indicates the ineffectiveness of the planned measures in certain areas and the failure to achieve the set production and economic indicators.

Despite the granted payment deferral, organizations incurred current debt to processing enterprises. The funds earned from the supplied dairy products are insufficient for

for the repayment of accrued liabilities (credit obligations, execution of court decisions, payment for fuel and lubricants, advances for salary payments, etc.).

The absence of strict requirements for enterprises in organizing the work on recovering accounts receivable contributes to formalism in this area. Despite the presence of debts in most agricultural organizations, claim and lawsuit work is practically not carried out by them.

The main reasons for the deterioration of the financial condition of agricultural enterprises in the region, which subsequently form the basis for applying to the court with statements on initiating proceedings on economic insolvency (bankruptcy), remain deviations from the technology and organization of agricultural production, the use of largely outdated machinery and equipment, low animal productivity, reduced crop yields, and others.

At the same time, during the implementation of pre-trial recovery measures, these reasons are not fully eliminated, the performance indicators of agricultural organizations, determined by business plans, are often not met, and the recovery goals (improving the financial condition, restoring the solvency of farms) are not achieved.

The results of the inspections were the submission by prosecutors to the local executive committees of 7 submissions on eliminating violations of the verified legislation, the causes and conditions contributing to them. The regional prosecutor's office sent an informational note to the Vitebsk Regional Executive Committee with proposals for eliminating the identified violations and properly organizing the work of district commissions.

Prosecutor of the Department for Supervision
over the Enforcement of Legislation
and Legality of Legal Acts   
of the Regional Prosecutor's Office  Pavel Sukhov