Major victory for civil society in Romania

By Adriana Iordache, Romanian Academic Society

For the past 15 years, gold and silver ore under the picturesque Roșia Montană has been at the centre of a fierce fight between environmental activists trying to protect cultural heritage sites in the area and mining supporters who have shown they will stop at nothing to see the land eviscerated for financial gain. Mine supporters, both company insiders and Romanian political elites have resorted to bribery, fraud, and procedural rule-bending. The activists took to the streets in September 2013, with the protests attracting numbers not seen since 1990. Activists won a decisive victory in December 2013, when both a specific law addressed to Rosia Montana and a generic mining law were rejected. The last did not garner the necessary majority in the Chamber of Deputies.

The project involved the mining of gold and silver ore by the Roșia Montană Gold Corporation (RMGC) in Alba County in the Apuseni Mountains of Western Romania. RMGC is controlled by the Canadian firm Gabriel Resources, which owns 80.7% of its shares, while the state-owned company, Minvest Deva, owns the rest. According to the failed mining law, the Romanian Government would have only received a 6% royalty if the project had come to fruition. This draft law also went against several court decisions, which have repeatedly declared the authorisation process for the project illegal. The actual extraction would have involved using cyanide, putting the local environment, Roman ruins and nearby residents at considerable risk. Approval for the mine at Roșia Montană had been pending approval for many years due to environmental protection disputes and concerns regarding its impact upon the renowned Roman ruins in the area.

photo-Cristian-Vasile
September 2013 protests against the Roșia Montană gold mine. Photo: Cristian Vasile

According to the Romanian Constitution and the current mining law, natural resources are the exclusive property of the Romanian state. For these to be exploited, the state can lease them to private companies in exchange for a fee, payable in cash. Some experts have claimed that a much better option would be for the state to grant Production Sharing Agreements (PSA) as opposed to leases. In contrast to leases, a PSA keeps the full property of the state over the extracted resource (oil, gas), but grants a percentage of the raw resource to the private contractor. This system was used in Romania up to 1995, but was abolished by subsequent legislation. Romania has not signed the Extractive Industries Transparency Initiative (EITI), which calls for openness and increased accountability in the management of revenues from natural resources, meaning that decision-making is secretive.

In an attempt to shed some light on this subject, Romanian anti-corruption watchdog, Alliance for Clean Romania has published a “black list” public figures who, in their official capacity, have promoted or contributed to the advancement of the project of gold mining at Roșia Montană. The list reads like a “who’s-who” of Romanian politics, journalism and business past and present and includes the current President. By listing the explicit involvement of Romanian leaders it also provides a useful context for tracking corruption throughout the development of this project.

At the time of publication of this article, the list was still open for submissions, so long as they are accompanied by relevant documentation.

Suspicious Beginnings

Apart from the current controversy, Gabriel Resources has aroused suspicion of illicit actions since before its founding. The Roșia Montană project began in 1999 with the establishment of the legal entity known today as “Roșia Montană Gold Corporation (RMGC).”

Frank Timiș, founder of Gabriel Resources, is a Romanian-Australian businessman who fled Romania as a political refugee in the 1980s and started working in the Western Australian mining industry. There he began a series of failed businesses and was twice convicted for possession of heroin. Timis started Gabriel Resources in the late 1990s, but the effort flopped. This enterprise was later replaced by another legal entity with a similar name registered in the Jersey Island (a small island in the English Channel and well-known tax haven). It is yet unclear whether he founded the company with the express goal of investing in the Roșia Montană perimeter due to previous knowledge of the site.

Following the establishment of Gabriel Resources, several other events raise suspicions regarding the legality of the current project as well as illustrate the non-existent boundary between Romanian public officials and mining interests. First, according to Romanian military prosecutor Gheorghe Oancea, an as of yet unidentified – former Army officer entrusted with charting the Roșia Montană area in the late 1990s, resigned his commission and soon became a leading director for Gabriel Resources. Secondly, according Oancea, Timiș officially received a license for re-processing of spent ore-bearing rock, but used this to extract and explore virgin land in the area. Thirdly, he asserts that Timiș forged a document in order to claim that he owns the mining rights to the Roșia Montană perimeter and used this document to list his company at the Vancouver stock-exchange. Of course, the value of the company increased exponentially afterward.

Ultimately, despite other potentially superior offers, the Romanian state (through the state-owned company Minvest Deva) began a business joint venture with Gabriel Resources under very unfavourable conditions for the former. This involved transferring the mining rights for the Roșia Montană perimeter from Minvest Deva to the newly formed Roșia Montană Gold Corporation and expanding the perimeter over which the mining rights were granted.

The transfer was undertaken in 1999, approved and supervised by Mugur Isarescu, Radu Berceanu, Radu Rusanu , Calin Popescu Tariceanu . As Prime Minister, Isarescu approved the lease of the mining rights to RMGC. Berceanu and Tariceanu (as successive Ministers of Commerce and Industry) together with Rusanu (as Minister of Finance) initiated and signed the government decisions agreeing to the joint venture and the transfer of mining rights. In their operation, they were aided by Mihai Ianas, the then president of the National Authority for Mineral Resources, who agreed to receive RMGC sponsorship for Las Vegas and Rio de Janeiro trips for government employees in 2000.

Political Support Deepens

Traian Basescu, Democratic Liberal Party (DLP) member and current president of Romania, has consistently backed the project, even without a renegotiating a higher percentage in royalties. During the 2012 political crisis, Basescu held a speech before Parliament on the very day his impeachment was voted. In this speech he emphasized the importance of foreign investment in mining, a direct reference to the Roșia Montană project.

Since the initiation of this project there have been a series of national and international initiatives to ban the use of cyanide in mining. Yet many Romanian politicians have expressed their views or voted against such regulations. In 2008, Iulian Iancu, Social Democratic Party (SDP) member, blocked a legislative initiative to ban cyanide mining in the Parliament’s Industry Commission.

In 2012 Mircea Hava (DLP) mayor of nearby Alba Iulia appeared concerned by the delay of the Ministry of Culture in issuing the approval for the Roșia Montană mining project, which postponed the government’s decision. Meanwhile, the president of the county council of Alba County, Ion Dumitrel (DLP), issued several certifications, later deemed illegal by the court.

A number of Romanian MEPs voted against the resolution adopted by the European Parliament which recommended banning the use of cyanide in mining. Another Romanian MEP, George Becali (New Generation Party, Great Romania Party), even went as far as supporting the official RMGC point of view, in the debate regarding the ban of cyanide mining held in May 2010 by the European Parliament.

This project was also a priority for former Prime Minister Mihai Razvan Ungureanu, during his short term in 2012. He also made clear that he is not an environmentalist while expressing his support for the project.

Current Prime Minister Victor Ponta (SDP) has proved to be two-faced on the issue of cyanide mining. He was vehemently opposed to the project during his campaign, only to forward the Roșia Montană draft law to the parliament. Once in office, he supported the draft law only to tell the media that he would vote against the project in parliament. Furthermore, he acknowledged on public TV that “RMGC has probably bribed politicians (story in Romanian) [in order to support the project], but there is no evidence”. Yet, he did nothing to request an investigation thereafter.

Ponta was not alone in expressing support, as the draft bill also requires approval by relevant ministers. Rovana Plumb (SDP), Minister of the Environment also voiced her support for this project and called it “the safest in Europe” without providing any evidence. She also declared that the environmental permit will be granted on political grounds, depending on the parliamentary decision.

Daniel Barbu (NLP), Minister of Culture, promoted the project as one of the three ministers to forward the bill to Parliament, despite the official Liberal party line being against it. Barbu also denied the existence of a 2010 report authored by independent archeological experts Andrew Wilson (Oxford University), David Mattingly (University of Leicester,) and Michael Dawson (of the British consulting firm CgMs) which stated that the Roman relics at Roșia Montană could be designated as a UNESCO World Heritage site – something which would make the entire project impossible. However, the former Minister of Culture, Kelemen Hunor, who was in office at the time this study was conducted, then declared that he is aware of this study, which he, and not the ministry, possesses. He declared that the report was not made public because it was an independent research, not commissioned by the ministry, and supported by extra-ministerial funds.

Finally, the Minister of Large Projects, Dan Sova (SDP) also declared his support of the project, highlighting a conflict of interest since his mother; Ana-Diculescu Sova was a RMGC attorney until December 2012.

On August 27th 2013 the government approved a draft law enabling Roșia Montană Gold Corporation (RMGC) to use cyanide in order to mine hundreds of tons of gold and silver, sending it to the Parliament for a final vote. It is worth noting that the draft law would not have even emerged without the support of the current governing coalition.

Public Reaction and Future of Roșia Montană

News about the discussion of the draft law in parliament prompted massive public protests in September 2013. Protesters took to the streets for weeks in Bucharest, as well as nation-wide and even abroad. In Bucharest, protesters blocked the traffic by marching on the largest streets, without being granted an authorization.

Faced with strong public discontent over the draft law, the Prime Minister Ponta decided to establish a special committee to further discuss the project and to consult with all interest groups. Yet, the reputation of this body has been strongly affected by the appointment of a number of MPs who had already issued an opinion favorable to the project.

Meanwhile, a number of politicians openly tried to delegitimize the opposition in order support the project. President Basescu has called representatives of the most prominent environmental NGO opposing the project, Alburnus Maior, “Bolsheviks”. In September 2013, MP Mihăiţă Calimente (NLP) declared that the tens of thousands of people marching in the streets nationwide against the project are paid from abroad. His party has issued a statement dissociating itself from the statement, but has not retracted political support for Calimente. He was not alone in making inflammatory statements about the protestors. Ionel Blănculescu, an unpaid adviser of Prime Minister Victor Ponta, who is a notorious public supporter of Gabriel Resources, has recently compared the demonstrators to terrorists.

After the draft law specifically authorizing mining at Roșia Montană was defeated in parliament this month, a generic mining law was proposed. If this had been approved, the project could still have gone forward. The new law contained most of the controversial articles of the old one, but is not directly addressed to one beneficiary. On December 2nd 2013, the Senate also rejected the new law by a margin of only two votes. The deciding vote was held in the Chamber of Deputies on December 10th and the new mining law was also rejected.

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