EU-freshman Romania has a great record on corrupt politics, oligarch-style governing and no respect for the rule of law. As if the 45 years of communism hadn’t been bad enough, 12 years of post-communist ruling under apparatchik Ion Iliescu hampered reforms, perpetuated an oligarch-style ruling and maintained a justice system functioning as an enforcer of political commandos, with no perspective whatsoever to become a truly independent one.
Up until 1999, Romania didn’t even have a clear European perspective. The Helsinki Summit in December 1999 which granted Romania the status of a candidate country was merely due to pressure from the US after the Romanian President Emil Constantinescu (elected 1996 and facing serious sabotage-attempts by Iliescu, who came back to power in 2000) granted overflight rights to NATO aircrafts in the Kosovo war,
2004 marked a change of government many had already given up hope for. Although the parliamentary elections were won by the same post-communist party (PSD) by a narrow margin, the presidential ones shifted completly. Instead of Iliescu’s Prime Minister and heir, Adrian Nastase and in spite of some fraud attempts, the opposition leader Traian Basescu became the first "orange" president, with a clear anti-corruption agenda, promising to get Romania into the EU by 2007. By then, this was seen as an optimist view, the new Enlargement commissioner Olli Rehn being very tough on corruption and stating clearly that he "would not hesitate" to postpone Romania’s accession by one year. He was exactly the opposite of his predecessor, Gunther Verheugen, whose ties to the PM and presidential wannabe Nastase even made him step over his attributions as an impartial EU commissioner: just days before election day, Verheugen predicted that Geoana (by then Foreign Minister) will be the next Prime Minister, thus suggesting that Nastase will win the presidential elections. He even announced an earlier than expected closing of accession negotiations, despite lingering problems in the field of Justice and Home Affairs (high level corruption, lack of independence and accountability), as well as Competition (with state aides being attributed by party loyalty).
The reform of the Justice system and the fight against corruption, especially first cases of high-level corruption, became the main focus of Basescu’s mandate and subsequently of his government, led by PM Calin Popescu Tariceanu. A bold reformist Justice Minister, Monica Macovei, not politically affiliated, soon became the champion of the reforms, broadly acclaimed by the European Commission and member states. Justice Commissioner Franco Frattini even stated that "A big part of the success of Romanian accession will have been achieved thanks to Ms. Macovei". The first "big cases" started with former PM Adrian Nastase and his wife, both on trial for corruption, but continued with members of the current government, such as former vice-PM George Copos or former Economy Minister Codrut Seres.
Even if Romania is a EU member since Jan 1st, it still has to carry out the judicial reforms and has a set of "benchmarks" in this regard. The first deadline is soon coming up, March 31st, when Romania must submit to the European Commission a report on its progress. But despite Mrs. Macovei’s commitment, the Parliament has subsequently tried to water down her projects and even voted a motion against her, asking for her resignation. Macovei warned as early as the beginning of January that after EU-accession, Romania’s clampdown on corruption is slowing down, her own PM showing "the wish of non-involvement". A key-agency for investigating conflicts of interests, one of the 4 benchmarks due this year, is being constantly delayed in the Romanian Parliament, whose main occupation right now is to find ways to impeach the President. With very low approval rates in the polls and in a constant open war with the President, the PM has decided to postpone until autumn the elections for the European Parliament scheduled for May 13. The President himself makes no secret out of his non-approval towards the Premier, engaging in a true media-war in this respect.
For investors and businessmen, this looks rather grim: after the European elections in autumn follow the parliamentary ones in spring 2008 and then the presidential ones in 2009. Time for reforms and clampdown on corruption and red tape? Rather unlikely.
When visiting Bucharest yesterday, US deputy assistant secretary of Commerce Paul Dyck encouraged the Romanian government to continue the reforms. Here are the US’ recommendations:
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First, Romania must continue to exert significant efforts to eradicate corruption’s influence in the economy. This means corrupt officials, at all levels, must be held accountable for their actions.
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Second, intellectual property rights must be enforced and protected. Not only should counterfeit goods be seized, but their producers and distributors must be prosecuted to the full extent of the law. Only then, will there be a real deterrent to further IPR infringements.
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Third, Romania’s judicial system must be modernized so that judges and prosecutors understand not only the necessity of protecting intellectual property rights, but also of enforcing contracts and operating in a timely and efficient manner. Court decisions must be made in a transparently and in a reasonable amount of time.
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Finally, government decisions, including procurements, should be made in a transparent manner. Laws and regulations should be drafted so that companies and effected parties have adequate opportunity to comment and provide input.
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Mar 14th, 2007
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March 2008 - This article still holds true today, one year later. Adding insult to injury is the fact that the European Court of Human Rights has turned its back on the corruption by disallowing a case registered against Romania in their court. The case involved corruption committed directly by The Central Bank of Romania who stole $12 million U.S. from a privately held company owned by a Canadian citizen. To cover their theft they accused and illegally tried a Canadian Citizen. Read on:
The case in reference, 9701-04, was registerd with the ECHR in September 2004. It revealed a polticial scam exposing The Central Bank of Romania in the act of thievery from The Darianne Program for Agriculture, a private company developed by an individual who defected from Communism under Ceausescu returning only after the supposed fall of Communism.
The Program, reviwed and approved by The Romanian Parliament and Senate even had the blessing of then President Iliescu. The Program flourished employing 1,500 Romanians in its bakeries, slaughter houses, milk processing factories, ice cream manufacturing factories and retail stores. Dariannes’ success created such credibility in the European community; it was able to bring unprecendented foreign financing to the Program. This financing was administered by Banco di Napoli (Italy) and Den Danske Bank (Denmark). Because of the value of the financing, in the eyes of the lender the only credible bank to guarantee the loan was The Central Bank of Romania. The Central Bank gladly accepted this responsibility assigning administration of the loans to two newly formed Romanian banks, Dacia Feliz and Credit Bank.
Foreign financing was directed to a specific turn-key project in The Program, giving Darianne the right to access equipment, not cash. The idea was revenues generated by the new manufacturing facilities would repay the loan. The Program did just that until two major projects were skillfully compromised by falsified documents showing delivery of equipment, when in fact equipment was not delivered. Even though this was immediately reported to the Romanian police, Interpol, the Romanian Ministry of Finance and The Romanian Central Bank, The Romanian Central Bank ignored the reports and release $3.6 million U.S. in payment of the non-delivered equipment. The $3.6 million was paid to the Bank of DiNapoli, Italy. (Note: The Banco Di Napoli who had more than $1 billion in “bad loans” was later closed by the Italians. Assets were bought by Banco di Roma. To uncover the scheme, the Banco di Roma was taken to court in Canada. During cross-examination, the Financing Project Manager of former Banco Di Napoli, Luxembourg testified that based on non-credible documents, no money should have been released from The Central Bank to Banco Di Napoli in payment of the non-delivered equipment. Also sighted was the agreed system of document verification had not been followed. Two signatures were always required prior to release of funds. The principal of the Darianne Program was to sign as well as a Commercial Officer in the Italian Embassy in Bucharest, Romania. This procedure had been followed for each prior equipment delivery. Without both signatures, The Central Bank of Romania was not to pay for any equipment.)
Immediately after The Central Bank released the money, they then took $22 million U.S. worth of projects from The Darianne Program and transferred them to a company called SYBCO. This was done despite lack of approval from the owner of Darianne and used as a method to silence his protests. (Note: The owner of SYBCO was the former Chief of The National Orgniazation of Young Communists under Ceausescu.)
Shortly thereafter, as clearly documented in the press $12 million U.S. was cashed out of the SYBCO program exactly as it had been done in The Darianne Program for Agriculture. To this day, the criminal file against SYBCO has never come to trial in Romania. Where did the $3.6 million and the $12 million U.S. go that was cashed out of these programs?
To silence the Canadian owner of Darianne, The Central Bank directed Credit Bank and Dacia Felix bank to file a lawsuit against him personally for mismanagement and theft of the money from The Darianne Porgram.
Throughout this entire scenario, misuse of power became obvious. Eventually a trial took place in Romania in which the defendant was clearly denied:
1. The right to present witnesses or evidence in his defense.
2. The right to present exculpatory accounting evidence.
3. The right to adequate opportunity to test and challenge the evidence presented against him.
Also,
1. There wer inaccuracies and inconsistencies in the accounting evidence presented by the plaintiff to which the defendant was not permitted to present evidence to show otherwise.
2. The amount of damages claimed was exorbitant and never substantiated.
3. The sitting Judge, Rodica Caragea was under penal investigation at the time of the the trial. She was later convicted.
4. Proceedings were conducted in a manner contrary to Romanian written law.
5. The final decision in the case was obtained by fraud.
6. There was no connection to the owner personally and the amounts claimed by the Plaintiff.
In September 2007, 3 years after filing the case with the European Court of Human Rights, the owner of Darianne sent notification to the ECHR documenting a change of address. Astoundingly, a response came from The Court. It was a brief letter from a Clerk stating the following:
“A decision to disallow the case was taken on June 20, 2006.” (Note: this was the first notice ECHR had sent to the owner of Darianne - 17 months have the case was disallowed.) Attached to the brief letter was a non-dated, non-signed letter written by a clerk stating that the decision had been taken by 3 judges (one of whom was Romanian), that the case had been dismissed under the vaque Articles 34 and 35 of the Convention. It stated that they found no violation of right and freedoms. Additionally, it stated that the file would be destroyed after one year and there would be no recourse for appeal.
Odd isn’t it. If the owner of Darianne had not notified the ECHR of a change of address, would he have been notified at all?
There are obisous irregularities and oddities with this case handled by the European Court of Human Rights:
1. Neither the owner of Darianne or his lawyer were notified of the decision until the change of address notification - 17 months after a decision had been taken.
2. Despite all previous correspondence from The European Court of Human Rights having reached the Owner in a timely manner, this notification was neither singed, dated or sent by Register Post.
3. Sitting on the committe of 3 rendering a decision to disallow this case from the ECHR was a Romanian Judge. Is this not partisanship. Seating this individual on a Committee to judge a volitile Romanian case clearly demonstrates a conflict of interest.
4. By the time the owner of Darianne was notified, the case files were destroyed by The Court allowing no review of the Court opinion.
5. Only reference to two vague articles 34 and 35 are sighted for the Committee’s dcision.
6. The letter from the European Court of Human Rights stating disallowance of the case carries NO DATE and NO SIGNATURE.
7. During the time the facts of this case and ultimate results of this case were suppressed, Romania became a full member of the EU.
The only reasonable conclusion that can be drawn from this is that if one is not permitted witnesses and doucmented defense in a trial, it appears that The European Court of Human Rights has regressed to the days of the French Revolution.
It appears that the ECHR has chosen in fact to push aside a case that clearly defies Human Rights to hide the extent and level of thievery and corruption in Romania. Was this case in fact too politically volatile to hear? Was it easier to push it aside and hope that it goes away?
It appears that the only recourse is to present documents and proof to anyone who will listen and to warn the North American business community of the dangers of investing business dollars in the European community, particularly Romania. There are niether laws nor courts big or small that are preapared to expose the extreme, high-level of corruption in Romania let alone to protect foreign investors.
Note: court cases registered in Canada (which are part of the public record) and Romania clearly document the above. All facts are support by legal document and testimony.