The Anticorruption Report Vol. 4: Beyond the Panama Papers

The final title in the series The Anticorruption Report covers the most important findings of the five-year-long EU-sponsored ANTICORRP project on corruption and organized crime. How prone to corruption are EU funds? Who wins and who loses the anticorruption fight? And can we have better measurements than people’s perceptions to indicate if corruption changes? This issue introduces a new index of public integrity and a variety of other tools created in the project.

The Anticorruption Report Vol. 4: Beyond the Panama Papers looks at the performance of EU Good Governance Promotion in different countries in the European neighbourhood. Case studies focussing on Spain, Slovakia and Romania are considering the impact of EU structural funds and good governance promotion within the Union. Further chapters looking at Turkey, Egypt, Tunisia and Tanzania are analysing EU democracy and good governance support in third countries. The report, edited by Alina Mungiu-Pippidi and Jana Warkotsch offers a comprehensive and overarching look at the successes and pitfalls of the EU’s efforts to democracy promotion and introduces new ways to assess the state of good governance in different countries around the world.

Questions and Answers on Romania’s Anti-Corruption Implosion – Updated

In this brief report, Alina Mungiu-Pippidi answers key questions on the recent events in Romania regarding the passing of Ordinance 13/2017. This report covers questions on the ordinance itself, the protests which were triggered by it and the fight against corruption in Romania. The report was updated on 13 February 2017.

Measuring Government Favouritism Objectively: The Case of Romanian Public Construction Sector

Government favouritism in the allocation of public funds raises costs for any society in which corruption prevails. Particularistic transactions can be identified in three different situations: uncompetitive awards of public contracts when there is only one “competitive” tender, when public money is spent on contracts supplied by politically connected firms, and a situation of capture in which one private contractor obtains a disproportionate share of contracts issued by some public agency. This present research has tested for the relevance of those three types of particularistic transactions that signal government favouritism as they apply to the Romanian construction sector for the period from 2007-2013, and to do so has made use of original public procurement databases. Furthermore, it will be proposed here that the “kickback”—a percentage of particularistic awarded values—can be used as a measurement of corruption. Even conservatively estimated, kickbacks account for much of the cost borne by any society that fails to eradicate corruption. For our purposes here, amounts of kickbacks at county level have been controlled against criminal convictions for corruption at county level. As a result, data analysis provides strong evidence that kickbacks based on particularistic allocation of public funds are indeed relevant in the measurement of corruption, and the steps used to evaluate kickbacks can be used just as well for other countries.

ERCAS Congratulates Martin Mendelski

ERCAS congratulates Dr. Martin Mendelski, a member of the EU FP7 ANTICORRP project and affiliate of ERCAS partner Romanian Academic Society (SAR): He was awarded the “THESEUS Award for Promising Research on European Integration” for his PhD thesis entitled “The Limits of the European Union’s Transformative Power: Pathologies of Europeanization and Rule of Law Reform in Central and Eastern Europe”.

Mendelski’s doctoral thesis argues that the EU’s impact on the rule of law depends on the social order in which countries (from Central and Eastern Europe) are located. The findings of the study show that EU-driven reforms tend to undermine the rule of law in closed-access and transitional social orders (e.g. Moldova, Romania, Western Balkans), by reinforcing legal pathologies (e.g. legal instability and incoherence, politicization). These detrimental effects of Europeanization tend to occur when empowered and unchecked reformers instrumentalize judicial and anti-corruption reforms (including newly created anti-corruption agencies, judicial structures and laws). In contrast, the “pathological power” of the EU is less harmful in open-access social orders (e.g. Poland, Estonia) where it is constrained by reform-resisting and independent horizontal accountability institutions (e.g. Constitutional Courts, Ombudsmen, judicial councils). To explain differences in the rule of law more systematically, an original causal theory of “virtuous and vicious reform cycles” is proposed. The main implication is that EU conditionality is not transformative but reinforcing, i.e. reformers tend to reproduce the respective social order in which they are embedded and thus cement the post-communist divergence in the rule of law. The thesis further makes several policy recommendations to remedy the pathological impact of donor-driven reforms.  Two papers resulting from his research can be found on the ANTICORRP website.

The THESEUS award is awarded for excellent work by junior researchers in the field of European integration. The rewarded works have been PhD theses or publications in major journals, which analyse on-going challenges for the European Union and its member states with regard to the institutions, policies or policymaking processes of the European Union or from a comparative perspective across the member states of the European Union, recommending potential institutional or policy solutions.

The Anticorruption Report. Volume 3: Government Favouritism in Europe

This volume reunites the fieldwork of 2014-2015 in the ANTICORRP project. It is entirely based on objective indicators and offers both quantitative and qualitative assessments of the linkage between political corruption and organised crime using statistics on spending, procurement contract data and judicial data. The methodology used in the analysis of particularism of public resource distribution is applicable to any other country where procurement data can be made available and opens the door to a better understanding and reform of both systemic corruption and political finance. The main conclusion of this report is that public procurement needs far more transparency and monitoring in old Member States, where it is far from perfect, as well as new ones and accession countries, where major problems can be identified, partly due to more transparency and monitoring.This policy report is the third volume of the policy series “The Anticorruption Report” produced in the framework of the EU FP7 ANTICORRP Project. The report was edited by Prof. Alina Mungiu-Pippidi, PhD from the Hertie School of Governance, head of the policy pillar of the project.

Print and e-book versions of all full reports can be purchased here.

Reviews for this publication

Public infrastructure projects and other types of government procurement almost everywhere in the world suffer from favoritism and corruption, if not outright criminality. The spoils always go to the people with the right connections, wealth, or the willingness to use or threaten violence. This is among the most difficult aspects of governance for scholars to study: those who talk don’t know, and those who know don’t talk. This slim volume summarizes detailed studies of favoritism in Bulgaria, Croatia, Hungary, Italy, Romania, Turkey, and Ukraine. A final chapter shows how criminal organizations in many countries—including Mafia-like groups in Bulgaria and Italy—infiltrate national and EU-level public spending projects. Each chapter is packed with a remarkably rich set of charts, graphs, and statistical analyses that capture how much corruption exists and how it works. These succinct and eye-opening quantitative estimates of what really goes on beneath the surface of government make for indispensable reading and should straighten out anyone who doubts that the powerful always find ways to reinforce their influence and wealth, even on the “cleanest” of continents.

Andrew Moravcsik, Professor of Politics and International Affairs, Princeton University in Foreign Affairs

Report on Romania on institutions in public procurement for the infrastructure sector

Improving infrastructure in Romania has been a significant project in the past 25 years. Unfortunately, although large amounts of public funds were spent in the construction sector from 2007 to 2013 (an average of 6.6% of GDP), the physical results in terms of project quality and completion do not match this investment. One of the explanations for this is that public contracts were awarded to companies based on corrupted practices or political connections, the focus being on redistributing public money and not achieving high quality construction works.The present research points to the fact that statistical data analysis can be used in detecting corruption. The practice of single bidding and the tendency to establish political connections exist in the entire public procurement market. Nonetheless, non-EU funded contracts present a higher corruption risk. Only 1 out of 7 contracts receiving European funding were awarded to a single bidder, as opposed to 1 out of 4 contracts financed by the state budget. Still, 1 out of every 3 contracts won by a politically connected firm involved European funding. Data analysis also concluded that the number of contracts awarded per company can be explained by single bidding and the existence of a political connection in 44% of the cases. The agency-capture analysis revealed that favouritism in public procurement occurs especially at the local level and in state-owned companies. Most of the companies that “captured” contracting authorities are politically connected firms.At the same time, the case studies give an account of how firms’ owners go to great lengths to consolidate a network of relationships with high ranking officials so as to keep their doors open and contact political elites, but also various state institutions whose activity can favour or disrupt their companies’ economic well-being.

The Splintering of Postcommunist Europe

There are two radically different versions of the postcommunist narrative. One tells the triumphal tale of the only world region in which the reforms recommended by the “Washington consensus” worked. The other and more realistic account speaks of a historic window of opportunity that lasted for only a quarter-century, during which efforts by the West and patriotic elites of Central and Eastern Europe managed to drag the region into Europe proper, leaving Europe and Russia pitted against each other along the old “civilizational” border between them. This essay argues that while Institutional choices matter in the postcommunist world, geopolitical and civilizational boundaries still set the horizons of political possibility.

Why Eastern Europeans did not vote

greva cetateneasca_1
“I vote, you vote, he/ she votes, we vote, you vote, they vote? , #they rob us!” (Photo from: Uniti Salvam)

By Alina Mungiu-Pippidi

The night before the European elections I dragged myself – despite not being in top form – to plead for one hour by myself in a TV talk show that my Romanian countrymen should vote the next day. A boycott had been called by a group of Facebook activists under the catchy slogan: “Always voting for the lesser evil amounts in the end to choosing an evil.” As turnout in the previous elections for European parliament in Romania (when I declined being a candidate for the President’s party unless his daughter, a model, stepped down) had been 27%, I was worried that the boycott call would be answered massively in all urban areas. In poor rural areas subsistence farmers are ferried to vote by political entrepreneurs. Leaving Romania, a country of 18 million voters, to be represented by its poorest and most disempowered voters seemed to me an extraordinary forfeit of our efforts prior to 2007 to make the country join EU.

Voters have good reasons to be upset with politicians. They always do. Romania’s successive governments were unable to spend more than 25% of its EU development funds. Had the EU not introduced a rule allowing engaged money to be spent even after the end of the budgetary cycle (but not indefinitely), the opportunity costs would have been at about 18 billion Euro presently and they will probably stabilize at half of this. Romanian MEP Mr. Severin, filmed on tape taking money to pass legislation, was the only MEP who did not resign after the scandal. And at the current rate of growth, the trade with the rest of the Community might get some balance after 2019- until then Romania is a net importer. An op-ed of mine called “Futility of Joining the EU” got 50,000 likes on Facebook in a few hours last November. People do not blame the EU, but they blame their leaders, and for good reason, for wasting a historic opportunity.

But why boycott the vote? How would this help? I was still arguing, my eyes on the clock as the Champions League Final was approaching when I knew everyone would switch the channel, that this will be the strongest Parliament still on record. That issues everybody is concerned with, from Ukraine to fracking (hydraulic fracturing) are far more likely to be decided in Brussels than Bucharest. That the elections for European parliament might not always be, if people like Nigel Farage or Marine Le Pen win (they did). At the gas station on the way back home people then asked me how would they even know who in Brussels favors fracking and who is against. They had no idea. In one month of domestic political bickering otherwise known as an ‘electoral campaign’ nobody had told them anything and since they work all day long, they don’t have time to search on the Internet.

All over ‘new’ Europe voters, even in capitals, do not know what these elections were about. This is why only 17% of Slovaks came out to vote (Romanians actually outdid themselves with over 30% turning out this time). People have absolutely no idea:

  • What is decided in their capitals and what in Brussels;
  • What is the position of the European parties on major issues;
  • How their national parties position themselves on issues compared to their EU party family.

In my experience as a pollster, I frequently used a question called “subjective competence” where I asked people: Do you know enough on voters and candidates to make an informed choice? This question is the best predictor of turnout. People do not come out to vote in EU elections in the East because they don’t know the issues and the candidates and they are aware of their ignorance. Their leaders and media failed in informing them during their national disputes and scattered efforts such as mine were too disparate to matter.

According to the Eurobarometer, Eastern Europeans, unlike their Western counterparts, continue to trust EU institutions more than they trust their national politicians. But as national politicians are the ones claiming votes on behalf of the EU, confusion and skepticism reign supreme. And this is how the continent’s perhaps last untapped reserve of Euro-enthusiasts fall out of Europe’s politics.

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.

Corruption in universities: a blueprint for reform

What is to be done when an entire education system is corrupted, when universities sell cheap diplomas and the best academics move abroad? Corruption in the academy can be challenged by a ‘clean universities’ ranking and the power of press coverage.

The Anticorruption Report. Volume 1: Controlling Corruption in Europe

The first volume of the Anticorruption Report series provides a comprehensive analysis of causes and consequences of corruption in three European regions, presenting corruption risks for several European countries and concrete policy recommendations on how to effectively address those risks.

Print and e-book version of the report can be purchased here.

Bottom of the Heap. The Case of Romania

The suspension of EU payments in four operational programmes in 2012 showed how problematic Romania’s correct and effective management of EU funds is. Such funds aim primarily at decreasing the socio-economic disparities among EU members and support the economic convergence with their Western counterparts of less developed new EU members. Consequently, a poor absorption rate of EU funds threatens income convergence between old and new member countries, thus representing a major challenge for EU integration. Currently, Romania has the poorest absorption rate among all the EU Member States and the worst among the ten new Member States. Moreover, the financial corrections, which amount to roughly 22% of the assimilated European funds, further reduce the real absorption rate, a loss which can be attributed entirely to corruption and mismanagement. The present report investigates the proportion of EU funds which can reasonably be considered at risk because of mismanagement and corruption, asks what are the main defrauding tactics used at national level to obtain European money illicitly, and considers the extent to which the suspension or cancellation of EU assistance might be the best policy for dealing with the situation. In addition, the report will put forward a list of recommendations for the next EU programming period which are intended to mitigate the effects of corruption and mismanagement that result in a waste of public resources.

Bottom of the Heap. The Case of Romania

The suspension of EU payments in four operational programmes in 2012 showed how problematic Romania’s correct and effective management of EU funds is. Such funds aim primarily at decreasing the socio-economic disparities among EU members and support the economic convergence with their Western counterparts of less developed new EU members. Consequently, a poor absorption rate of EU funds threatens income convergence between old and new member countries, thus representing a major challenge for EU integration. Currently, Romania has the poorest absorption rate among all the EU Member States and the worst among the ten new Member States. Moreover, the financial corrections, which amount to roughly 22% of the assimilated European funds, further reduce the real absorption rate, a loss which can be attributed entirely to corruption and mismanagement. The present report investigates the proportion of EU funds which can reasonably be considered at risk because of mismanagement and corruption, asks what are the main defrauding tactics used at national level to obtain European money illicitly, and considers the extent to which the suspension or cancellation of EU assistance might be the best policy for dealing with the situation. In addition, the report will put forward a list of recommendations for the next EU programming period which are intended to mitigate the effects of corruption and mismanagement that result in a waste of public resources.

“Clean Moldova” Replicates Initiative by Neighboring Alliance for Clean Romania

clean moldova - ParliamentFollowing in the footsteps of the Alliance for Clean Romania, members of Moldovan civil society joined forces in the fight against corruption by launching the “Clean Moldova” online platform. The website is a space for discussion and analysis regarding political corruption and conflicts of interest, directed at voters, journalists, politicians, and public authorities. The main goal of this project is to prevent the election of dishonorable or corrupt political candidates, by presenting and disseminating information regarding their integrity, obtained through monitoring activities. Representatives of the two anti-corruption platforms met in June 2013 in Bucharest within the framework of a best practice transfer programme financed by the Foundation for the Development of Civil Society in Romania.

The Romanian anti-corruption alliance has been consolidated into a permanent platform following the Coalition for a Clean Parliament. This initiative monitored integrity of candidates to the national and European Parliaments in the 2004, 2007 and 2008 elections. It was followed by the Coalition for a Clean Government (starting in 2005) and the Coalition for Clean Universities (2009, 2010). The Moldovan alliance, similarly, was created by seven non-governmental organisations in November 2008, following the popular Civic Initiative for a Clean Parliament (CICP) project.

The new platform organises public events on the operation of control institutions and the effectiveness of public policies in promoting the integrity of public officials, and also seeks to support informational media campaigns on the integrity of public officials. It includes various resources as well, such as excerpts from national and European legislation and links to relevant media articles on the topics of integrity and anti-corruption. Moreover, the editorial team is conducting journalistic investigations with particular attention to cases related to the integrity of public officials reported by the media. Similarly to the Alliance for Clean Romania, Clean Moldova also presents cases of undeclared conflicts of interests of public officials. The Moldovan portal also published blacklists of corrupt politicians and brief updates about the legal proceedings initiated against the Civic Initiative for a Clean Parliament by political parties and politicians whose names were included in the lists of candidates who did not meet the integrity standards.

The composing seven entities are: Association for Participatory Democracy “ADEPT”, Association for Independent Press (API), Centre for the Analysis and Prevention of Corruption, Freedom of Expression and Access to Information Promotion Centre, The Independent Journalism Center, Journalistic Investigations Center , and Soros Foundation Moldova, which also provides financial support.

There is a strong need for such a portal in Moldova, members say, as recent poll results revealed that every other citizen thinks most, if not all, politicians are corrupt and unworthy of being elected in the local or national government. This shows that there is a public that can greatly benefit for such an initiative with more information on integrity of politicians.

(The picture featured above is from obozrevatel.com.)

 

Lessons Learned from the Recent Sentence of Soccer Tycoon George Becali in Romania

On June 4th, the controversial politician, business tycoon and sponsor of the Steaua Bucharest football team George “Gigi” Becali was found guilty and sentenced to serve three years in jail by the High Court for Cassation and Justice in the ‘suitcase’ bribery case. This is the third guilty verdict against Becali in a series of cases involving unlawful seizure of persons, complicity to abusing one’s official capacity, forging documents, and bribery. This comes at the end of a decade-long effort to hold him accountable for his wrongdoings in Romania.

Becali became well-known in the public sphere after his take-over of the Steaua football club in early 2003. The privatisation of the Steaua football club, which formerly represented the Ministry of Defence Sports Club “Steaua” (CSA Steaua), is a typical case of post-communist privatisation. In the late 1990s, it was separated from other ministry divisions and placed under the administration of a newly established legal person founded and led by businessman Viorel Paunescu, who blatantly mismanaged the club and incurred a series of debts. This radically diminished its market value (despite obtaining a 20 years lease on the premises of the Ghencea Stadium from the Ministry of Defence). At the same time, Paunescu brought Becali in the administration and the latter funded the club from his own personal assets. Only in late 2002 and early 2003 was the football section of the Ministry turned into a commercial enterprise and was to be sold, but due to the low market value and the debts it had incurred to Becali and Paunescu, the newly minted shares in the club were simply to be given to the creditors. However, in a radical – and still unexplained – turn of events, Becali pushed Paunescu into a minority position and assumed 51% of the shares of Steaua in early 2003.

After the take-over, Becali also assumed Steaua’s liabilities to the state, which he did not pay. For this reason, Becali was targeted in 2006 by the Revenue Service in order to recover Steaua’s historical debts by impounding part of his fortune. This episode, known as the “Becali-Bodu war” (Sebastian Bodu was the head of the Revenue Service at the time), culminated in a victory for Becali, as the Revenue Service lost the eventual trial against him due to procedural failures. In parallel to the dispute Becali transferred all of his shares in Steaua to his nephews and since 2006 no longer holds any of the club’s shares. This case is paradigmatic for post-communist privatisation processes, where remaining debts of the privatised entities to the state commonly resulted in lost resources for the public administration, as the weakness of the justice system leaves the state unable to enforce a recovery of owned assets and to punish abuses and mismanagement.

Becali’s recent convictions, however, were not related to the dodgy deals while taking over Steaua. In February 2013, Becali was sentenced to three years in jail by the High Court of Cassation and Justice, under the accusation of, together with his bodyguards, unlawfully seizing several persons who had stolen his car. In another case, Becali was also sentenced by the same Court on May 20, 2013 to two years of detention, under charges of complicity to abusing one’s official capacity, in a case of land exchange with the Ministry of Defence where he largely profited from exchanging land plots he owned for others of much higher value, which were owned by the state and managed by the Defence Ministry. The exchanges took place between 1996 and 1999 and this helped Becali start his fortune. The representatives of the Ministry, former Minister of Defence Victor Babiuc and former Chief of General Staff Dumitru Cioflina, were also sentenced to two years imprisonment for abusing their official capacity in continued and aggravated form. The three were also ordered to pay 421.280 USD plus interest for the damaged caused to the state. Overall, Becali caused the Romanian state a damage of USD 890,000 in this land deal.

The latest conviction on June 4th was in a case remanded for trial by the prosecutors of the National Anti-Corruption Directorate (DNA) in December 2008. Becalli was investigated together with several other accused, such as the coach of the national football team, Victor Piturca, Becali’s deputy Teia Sponte and one of Becali’s lawyers, Alina Ciul. The DNA accused Becali for two cases of bribery, and the charges against the other defendants included aiding a felon and forging private documents. According to the accusations, in 2006 and 2008 Becali bribed players of other teams to win matches whose results then favoured Steaua’s position in the championship and helped leading it to win the title. The case included charges of forgery, related to documents used in an attempt to hide the real destination of the cash offered to “Universitatea Cluj”, one of the teams bribed. Becali admitted to forging the date of a contract through which he was purchasing land in Cluj and to convincing Victor Piturca to sign as a witness. He apologized and claimed that the bribes were a bonus for the players to “do their job right” and to actually prevent match fixing by influence of other parties.

He was originally acquitted by the three-judge panel of the High Court of Cassation and Justice in April 2012, based on the understanding by two of the judges that he had no personal gain from incentivising a team which was not directly playing against his own. Alternatively, the dissenting opinion argued that a direct material benefit would come to Steaua and Becali himself from the team winning the league title. The conviction then came after the prosecution succeeded in getting the acquittal overturned by the five judge panel of the same Court. This case illustrates an important discussion related to the very definition of corruption. The debate around the lack of public actors’ involvement and the defence’s argument that Becali did not personally profit from the bribery of teams not playing against Steaua refute an important principle that private games free of manipulation by individual actors through financial means are also in the public interest.

Becali is currently in jail serving the sentences established in the previous two convictions, and the recent sentence has to be merged by the competent court (the Bucharest District 5 Court) with the other jail terms received and might result in an extension of the time served. Meanwhile, the business tycoon has waged an aggressive media campaign to convince the general public that he should be released, arguing that his arrest was politically driven. The case has received broad media coverage, with many TV stations asking for his release. According to media reports, some even initiated “Free Gigi” petitions. These media campaigns have managed to influence people’s perception in his favour. According to a recent survey carried out in the capital city, more than half of the people consider he should be released from jail, and only 25% were against his release. Among the most popular reasons for freeing him were: too much time has passed since he committed the crimes (55%); he did charitable acts (13%); he is innocent (12%) and because he is funny (1%), reports RealitateaTV.

(The picture featured above is from www.ziarulatac.ro.)

 

FOIA as an Anti-Corruption Tool

This paper tests, explores and exemplifies the role of freedom of information legislation as an anti-corruption tool. In the first part, its tests freedom of information separately and in comparison with other more popular anti-corruption tools, such as an anti-corruption agency. In the second part, it proposes a more elaborated model explaining control of corruption and argues that transparency legislation is intermediated by the existence of civil society and does not work in its absence. In its last and final part it exemplifies with a project in Romania how freedom of information can be used as an integrity building tool.

Romania: 37 Medical Professionals Investigated for Embezzlement of Insurance Funds

In many countries that struggle with systemic corruption, basic public services such as education and health care are commonly affected by fraud schemes that siphon millions away from already underfunded services. A recent scandal in Romania illustrates how such schemes may take place, involving large criminal organisations of dozens of people seeking to divert public funds.

On March 30th, Romanian Prosecutors requested the detention of 37 persons accused of participating in a network of organised crime responsible for embezzling funds from the budget of the National Health Insurance Authority by requesting reimbursement for false medical tests. The Bucharest Tribunal placed 22 persons in preventive detention for 29 days. Ten of them are medical physicians. Among those arrested are also directors of two medical laboratories, as well as nurses and other employees. Other 15 persons under investigation in the case are not being held in detention, but have been forbidden to leave the country.

Prosecutors stated that the criminal activity primarily consisted of fraud. A number of physicians and other employees of medical laboratories are suspected of having requested reimbursement for medical tests which were never performed. In this way, they caused damages of more than 500,000 euros. Physicians are being accused of releasing approximately 14,000 false requests for medical tests, half of them on the name of around 800 patients, reported the Agence France-Presse (AFP). They allegedly received 10% of the total value as bribe.

According to the investigation, physicians often did not inform the patients, but only used their identity in drafting the false documents. “Oftentimes, they invented a fictional medical condition or one which was already present in the people’s records. In other cases, the patients were consulted and given a diagnosis, but medical employees also requested false medical investigations in addition to the ones which were actually carried out”, declared the prosecutors for Mediafax.

Sorin Paveliu, an expert of the Romanian Academic Society (SAR), explains that the Romanian health system includes hundreds of small laboratories. Meanwhile, he points out to the example of Germany where “A city like Cologne, the ‘homeland’ of the Bismark security system, has only one central laboratory, located in a skyscraper, which caters to the needs of the entire city within a 40 kilometres radius.” Paveliu underlines the efficiency of this system: “Results are sent within 2 hours by e-mail. Laboratory efficiency is consistent with the number of tests that are carried out daily”. Tens of thousands of some type of test, performed with high-technology machines, have a much smaller cost per analysis, than small-scale laboratories. There are no high costs associated with a monopoly, all costs of ‘production’ are transparent, Paveliu explains. “By contrast, in Romania, the insurers – both state and private companies – have signed contracts with hundreds of smaller and medium-size laboratories. Each of these entities is ready to bribe anyone who would ensure them a contract!”

As mentioned by Mr. Paveliu, this fraud case shows how the Romanian health care system is prone to certain corruption risks in the health sector that have been pointed out by recent studies. The British Department for International Development (DFID) has highlighted in a practice paper that a large number of dispersed actors contributes to increase the system’s vulnerabilities to corruption. In a larger network of providers, suppliers and policy makers, conflict of interests are difficult to identify and new opportunities for corruption emerge. Moreover, in systems where the public sector finances health care but provision is in part offered by private actors, overbilling the public insurance system is a common avenue for corruption, as illustrated by the recent case in Romania. Such systems require more efficient monitoring and oversight mechanisms, in order for similar cases of corruption to be successfully prevented.

 

(The picture featured above is from legalmarketing.ro.)

 

SAR Assesses Integrity of Candidates for Romanian Parliament

The Romanian Academic Society (SAR) and the Alliance for Clean Romania (ACR) have launched a new database containing all the relevant information about the integrity of candidates for the parliamentary elections to take place on 9 December 2012. The portal was inaugurated during a press conference held on 25 November.  The motto of the initiative is “Click on the name of the candidate and find out who is the person seeking your vote”.

The purpose of this initiative is to expose politicians seeking (re)election while failing to respect the integrity criteria. Candidates who face either an investigation or a conviction for corrupt practices should be known to voters, journalists, and to civil society in general. The project, entitled “Check the integrity of your candidate”, will show the percentage of candidates endorsed by each political party for the parliamentary election who fulfil the selected integrity criteria, as well as their names.

By checking the integrity of a candidate, every citizen will be in a position to evaluate him/her according to the following monitoring criteria:

  1. collaboration with the secret police of the former regime (“the Securitate”)
  2. positions held in the Communist apparatus, prior to ’89
  3. political and administrative positions held since ’89
  4. migration from one political party to another;
  5. nepotism: the degree of kinship between the candidate and other members of the same political party
  6. the wealth of the candidate
  7. business and contracts with state
  8. the debt of the candidate’s firms to state
  9. conflicts of interest and incompatibilities
  10. arrests and convictions
  11. sponsorship to political parties
  12. racist and discriminatory public statements

 

This is the first database which allows citizens to access a centralised record of the activity of elected representatives and government officials throughout their mandate. In the long term, the information can be used to evaluate the evolution of the Romanian Parliament in terms of integrity. This database will be open for subsequent modifications in the status of the investigation and in case of political migration. It will also serve as a tool for monitoring future corruption cases involving state officials.

The picture featured above is from romaniacurata.ro.