Romania faces $100m corruption suit
Romania faces $100m corruption suit
A British company is suing the Romanian state for $100m in a high-
level corruption case involving a former prime minister, airport and
airline duty-free concession contracts and an audio tape recording of
alleged demands for a $2.5m bribe.
The case, expected to be heard at an international tribunal in
Washington this year, will cast a rare light on the sometimes murky
world of Romania's public sector contracts and judicial institutions.
It comes at a time when Romania, which joined the European Union last
year, faces heavy criticism from Brussels over its record in fighting
corruption and implementing judicial reform.
Like neighbouring Bulgaria, which faces additional accusations over
organised crime, Romania could lose EU aid if it fails to take
effective action.
"As highlighted by this and other cases, high political corruption is
still present in Romania and the anti-corruption prosecutors are
under strong pressure from the current political class," said Monica
Macovei, who was Romania's minister of justice from 2005 to 2007.
In the EU's doghouse
Romania, and neighbouring Bulgaria, are on the rack in the European
Union over their alleged failure to fight corruption and implement
judicial reforms. Bulgaria faces further complaints over its record
in dealing with rampant organised crime.
The European Commission is due next month to deliver its latest
progress report on both countries and it is unlikely to make happy
reading in either Bucharest or Sofia. Under rules agreed when Romania
and Bulgaria joined the EU in January 2007, the two states are being
watched by Brussels in line with "safeguard" clauses that run until
the end of 2009.
The Commission could next month recommend sanctions, which might
include delaying EU aid or permitting other EU states to stop
recognising Romanian and Bulgarian court judgments. However, some
member states doubt whether such measures would work.
Bucharest has created a new National Integrity Agency, with powers to
punish civil servants for financial wrong-doing. But its
effectiveness has yet to be tested.
The case involves Eastern Duty Free (EDF), a UK-based duty-free
operator with other operations in Laos, Vietnam and the Philippines,
which is taking legal action at the World Bank's International Centre
for the Settlement of Investment Disputes (ICSID).
It is claiming $100m (€75m, £51m) in damages for the loss of two
contracts for duty-free sales at Bucharest Otopeni airport and on
Tarom, Romania's national airline.
EDF alleges that in 2001-02 it was approached by officials working
for Adrian Nastase, prime minister in 2000-04, demanding a $2.5m
bribe to retain contracts it had originally won in 1992 and 1996.
When the company refused to pay, it claims it was forced out of the
business. Mr Nastase's government passed an emergency ordinance,
which can override contracts, temporarily banning duty-free retail
and later gave EDF's contracts to a number of Romanian companies.
Rick Weil, EDF's managing director, says he went to Bucharest in
August 2001 to meet Sorin Tesu, Mr Nastase's chief of staff. Mr Tesu
chose the novel venue of the Hilton hotel car park for their meeting.
In Mr Weil's statement to the DNA, Romania's anti-corruption agency,
in 2006 he says: "[Tesu] told me he was meeting with me in the name
of his `chef' or chief.
"He explained that he had good news on how I could ensure the
continuation of EDF's venture in Romania. He said that others had
contributed $2.5m to Prime Minister Nastase's campaign, for which
they had been promised the duty-free business at Otopeni airport.
"However, this money could be refunded to them if I paid $2.5m to Mr
Tesu on behalf of his `chief'.''
EDF refused to pay, creating an impasse.
Two months later, on October 20, Marco Katz, then an EDF director,
says he visited Mr Nastase's counsellor Liana Iacob searching for
ways to resolve the problem.
On a tape-recording that EDF will assert was made at that meeting and
which has recently come to light, she tells Mr Katz in Romanian: "I
was at the government, it was a government meeting and I had with him
[Sorin Tesu] a discussion and I asked him to stay away from this
issue and I told him: `Well. Do you let me solve this issue? I
promise you that I will give also money to you but not in the manner
you want to proceed. The money will go directly to the premier [prime
minister] in the proportion of 95 per cent and from those [remaining]
5 per cent I will give to you those five. But it is not possible to
do how you want, with these kind of things. You know, they don't want
to give money. They don't want to give.' And I asked him to let me
resolve this issue, to not interfere in any way in this matter, that
I will discuss [missing words] that I will ... "
At the end of the tape she again solicits the bribe as the solution
to EDF's problems: "I know very clearly that without money this will
not be done. OK? Because I told you from the beginning and I repeat
to you that they took some money."
EDF says this refers to the supposed need for the $2.5m to reimburse
a campaign contributor who has paid that amount in order to take over
EDF's contracts. This campaign contributor was not among the
companies that eventually took over EDF's contracts.
The tape will be submitted to the Washington tribunal.
In a statement to the DNA in 2006, Ms Iacob accepted that she had met
Mr Katz at her home in autumn 2001, but disputed his account of their
conversation.
"Mr Katz came to my house uninvited, without me having given my
address, which displeased me ... I have never requested money from Mr
Katz, nor have I received anything from him ... " she said.
The Financial Times asked both Mr Nastase and Ms Iacob to comment on
the tape.
Mr Nastase said: "No comment." Ms Iacob said: "We've got nothing to
talk [about] on this matter, the media have already covered this
issue in an exaggerated manner.
"There are prosecutors' decisions that show I'm innocent. Goodbye."
As Ms Iacob said, the DNA did indeed look at the case in 2002 but
decided not to pursue criminal investigations, citing lack of
evidence of criminal behaviour. After EDF appealed against this
decision, it was upheld on the same grounds in 2006.
EDF's lawyers last week deposited the new audio evidence with the DNA
and again requested the reopening of the file in light of this
evidence. The DNA said it was mandatory policy not to comment on
evidence.
In an affidavit signed with EDF on Wednesday, Mr Katz confirmed: "The
voice on the audio recording is his voice [and] the audio recording
is a recording of a meeting held with Ms Liana Iacob on October 19
2001 at her private residence."
Darryl Lew, of White & Case, a Washington law firm that is Romania's
international counsel in the case, said: "The only appropriate forum
for us to discuss issues related to this case is before the ICSID
arbitration tribunal."
Christoph Liebscher, of Wolf Theiss, EDF's lawyers, said: "We have
submitted this new evidence [to ICSID] as it fully supports the
claimant's claim and confirms the content of the other evidence we
have submitted so far." Mr Liebscher added: "The visitor [on the tape
recording] is Marco Katz and EDF confirms that it is in fact Mr
Katz's voice on the recording."
Mr Nastase has been subject to a number of DNA investigations and
indictments. In November 2006 he was sent for trial on bribery
charges relating to the unlawful importation of 12 containers of
Chinese consumer goods. In May 2007 he was again sent to trial, for
bribing an official from the National Office for Preventing and
Combating Money Laundering. In September, a third case was opened
involving alleged bribery and trafficking in influence.
The three cases have been shelved pending parliamentary debates on
the extent of legal immunity enjoyed by MPs, including Mr Nastase.
His spokeswoman said: "At this stage, Mr Nastase has no penal case
with DNA."
Ms Macovei blames political interference in cases involving senior
politicians, saying: "The DNA prosecutors were never afraid to
investigate. But the constitutional and supreme court were appointed
mostly by PSD [Mr Nastase's party], so I believe they acted
outrageously, gave clearly political decisions and lack independence.
They want to protect the political powers that put them in their
positions."
While ICSID's judgments will not change the face of Romanian justice,
the verdicts could make embarrassing reading for Bucharest at a time
when it is under Brussels' microscope.
By Neil Barnett and Stefan Wagstyl in London
Additional reporting by Catalin Prisacariu in Bucharest
see: http://www.novinite.com/view_news.php?id=92796
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BACKGROUND INFORMATION:
http://en.wikipedia.org/wiki/Accession_of_Romania_to_the_European_Union
http://en.wikipedia.org/wiki/Romania
http://www.iht.com/articles/ap/2007/05/09/europe/EU-GEN-Romania-Corrupti...
http://en.wikipedia.org/wiki/Adrian_N%C4%83stase (About Adrian Nastase former prime minister of Romania-one of the most corrupt politicians Romania got rid of)
DISCUSSION IDEAS:
Do you think this case should be heard in US?
Do you think your country is corrupt? How?
Why do you think Romania is under a microscope and not other countries as well? Do they have more subtle corruption methods?********