Republic of Moldova. Political interference and poor performance of inspectors prompted Tofilat’s resignation

Rarely is the resignation of the manager of an infrastructure company accompanied by such detailed explanations of the obstacles in his way as that of Oleg Tofilat as head of the Moldovan Railways. Unnecessary and damaging political interference and financial controls carried out by inspectors who did not understand the workings of the railway made him resign.

Moldova-Romania rail link Wages at the Moldovan Railways transport in the Republic of Moldova

Oleg Tofilat, who resigned a week ago as head of the Moldovan Railways, wrote a few lines on his social media page explaining his decision. We reproduce his explanations, the intertitles belong to us.

Managerial tools in the hands of the state, in fact

In short, about the reasons that led me to resign:

1. I am deeply concerned about business continuity. At least two conditions are necessary to ensure it:

  • Liquidity – current assets must exceed current liabilities by 2-3 months;
  • Operational proficiency- annual income must exceed expenditure.

The corporate instruments available to the MFC manager are not sufficient to satisfy these conditions. The measures required – capitalisation, loan guarantees, sale of non-operational assets, staggering of tax liabilities, annual budget allocations for infrastructure and passenger transport – are at the discretion of policy makers. And they come neither in time nor to the extent needed.

Lack of state support. Zero transfers from the Republic of Moldova

2. Inconsistency of visions on risks, priorities and actions between political and corporate. We have some key divergences in approaches:

Is the railway a business or a public service? In other words, should it be self-supporting or have contributions from the budget? In my view, about 20% of the railway’s revenue should come from the budget. At the moment it is zero. So any reduction in demand for transport leads to difficulties in paying.

What is the priority in rail reform, form or content? Is it important to deliver as soon as possible the split of the company or to ensure the modernisation of corporate governance and market mechanisms to increase the competitiveness of rail transport?

What is the decision-making independence of the CFM (or other large enterprises) manager in its activities? To what extent can it decide on tariffs, operational logistics, cooperation with business? Is it necessary to coordinate any step with the board, founder, ministry, government or can clear powers and a notification and reporting system be established? In the corporate field it is essential to be able to take decisions quickly and consistently, otherwise you are irrelevant and uncompetitive.

Tofilat’s resignation. Miserable performance by inspectors

3. Lack of any protection from adverse interference by “justice” and “regulators”.

The last five years of financial inspection reports are somewhere between inept and criminal. I have vehemently challenged the miserable performance of the inspectors since March 2023 – at the head of the financial inspectorate, at the Ministry of Finance, in Parliament. I have called for public hearings of the “findings”, I have called for the abusive prescriptions to be rescinded – zero effect to date.

I find the performance of the security and investigative bodies execrable, in the almost three years that I have led the MFC. I don’t know if this is only the case at CFM, but I have the impression that the bodies do everything to complicate and compromise my work as administrator and nothing to support me in revitalising the company. I have made complaints about concerted attacks on me and colleagues from 2021 onwards. I have reported specific instances of risk and harmful activity – to no avail to date. And while I found the vast majority of officers I interacted with to be well-meaning and competent, the outcome of institutional efforts left me with nothing but a bitter taste.

Tofilat: Responsible managers are morally obliged to resign

And when the enterprise is in danger, and the manager and senior decision-makers cannot agree on a common vision for a remedy – I believe that a responsible manager is obliged to resign. This is the right way everywhere in the world.

I will be submitting a progress report soon – and I am indeed proud of CFM’s achievements over the past three years. I am very grateful to my colleagues in the management team and to all the railway workers, together we have delivered these successes. I have every appreciation for my colleagues on the Board of Directors, who have demonstrated competence and dedication throughout.

I have every gratitude to CFM’s partners, suppliers and funders, who have invested confidence in our capabilities and I hope we have not let them down. I thank my colleagues in the ministries, the Government and the Parliament who have been instrumental in promoting the projects needed to develop the railway sector. I express my admiration and gratitude to our external partners – from Ukraine, Romania, USA, France, Japan, Germany, Poland, but also to the many international organisations with which we have managed to launch and carry out many projects necessary for the sector. I also thank the journalists who have covered our activities. And a special mention to the friends and followers who made it to the end of this boring post – you are absolutely special.

In these three years we have succeeded together to show that at CFM it can be done differently, that CFM can be a resource, not just a problem for society. I have all the openness and desire to help my successor to achieve more than I have. I am sure that with vision and coherence, the new CFM management – together with the Ministry of Infrastructure and Regional Development and the Government – has all the prerequisites to remedy the temporary problems we are facing, but also to achieve the strategic objectives of modernising the railway sector. (center photo, Oleg Tofilat)

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