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Six mentally-disabled people have died of unknown causes over one year and a half in an illegal centre in the small Romanian town of Breaza in Prahova county, 63.4 miles north of capital city Bucharest.

They had been left in the care of Bucharest’s fourth district authorities, who sent them to Breaza in 2012 and have since paid the centre roughly 250,000 euros in public funds, even though it was not legally authorized to function.

The company in charge of the “Casa Sfantul Toma” in Breaza was awarded a contract without a tender in 2012 by the General Department for Social Assistance and Child Protection (DGASPC) from Bucharest’s fourth district. The department, subordinated to the fourth district’s local council, has been paying at least 2,000 lei a month for each of the roughly 30 patients housed at the centre since October 2012.

Although all six have died at the centre according to the National Agency for Payments and Social Inspection (ANPIS), and two of them were listed as local residents, the Breaza town hall only issued a death certificate for one patient. The remaining certificates list Bucharest’s fourth district as the place of death.

The certificates should have been issued in Breaza in the presence of a doctor and the police, said ANPIS general manager Adrian Toader. Deputy Labour Minister Codrin Scutaru said authorities should have been notified. Instead, the owner of the company that runs the centre let a local funeral home deal with the dead, four of whom were aged 21-24.

Earlier this year, after two patients died and the Center for Legal Resources (CRJ), a non-governmental organization that acts as a legal watchdog, found several irregularities, Bucharest fourth district mayor Cristian Popescu Piedone visited the unauthorized centre, a large house with beige outdoor walls and red shingle roof flanked by tall trees. Television footage showed him discarding a frying pan with sausages and criticizing a rusty jar lid without an expiration date.

"There are no serious issues, but there are issues that could become serious," Piedone said before leaving the house at 153 Ocinei Street in Breaza.

At the time, the centre still operated without proper authorization. More than 30 people are still housed there.

(Investigative piece in collaboration with the Center for Legal Resources.)

On October 1, 2012, Bucharest fourth district’s DGASPC, subordinated to the district council, signed a collaboration agreement with SC Casa de Odihna Sfantul Toma SRL, headquartered in Mogosoaia, a small town in Ilfov county.

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The agreement, released by DGASPC under the Romanian freedom of information act, states that “SC Casa de Odihna Sfantul Toma SRL is to provide services specific to its activity to young people institutionalized within DGASPC District 4, who are over the age of 18 and can no longer benefit from special protection, to prevent their social exclusion, as well as to District 4 residents who suffer from neuropsychological disorders whose families cannot provide basic care, and disabled adults in difficulty".

The fourth district’s DGASPC agreed to pay 2,000 lei a month for each beneficiary institutionalized in Breaza, a cost that could be adjusted under certain circumstances.

Even though the agreement’s thirteenth article, regarding reasons for termination, mentions "withdrawal or cancellation of functioning authorization" and "suspension or withdrawal of credentials", the company lacked the credentials to provide social services to begin with. This means the centre was functioning illegally, said ANPIS head Adrian Toader.

"It (SC Casa de odihna Sfantul Toma SRL) is not functioning legally, we checked following your notification (…) and found, besides several irregularities, that it was not operating legally and lacked the proper credentials," Toader told the Media Investigation Center in an interview.

Adrian Toader:

(No English translation available)

At the time, the only way for a commercial company to be accredited as a social services provider was "only through their own foundations created for this specific purpose", according to the law that regulated social services in October 2012, ordinance 63/2003, article 11. Accreditation was also mandatory, and the company did not have it.

DGASPC’s top three officials have signed the agreement with the unauthorized center – general manager Mircea Horatiu Nicolaidis, deputy general manager Luminita Negoita and social assistance department manager Marius Adrian Pascu. It was also verified by someone in charge of preventive financial control (Ancuta Mirela Constandache) and a legal adviser (Ortansa Marilena Georgescu).

An annex to the agreement lists the services the centre was to provide, including accommodation, meals and care and medical services, which the company was not authorized to provide.

Trade registry data shows SC Casa de Odihna Sfantul Toma SRL is currently owned by Cezar Alexandru Dumitrescu and Anca Coanda. It was founded by Valentin Iliescu, initially associated with a company held by Cezar Dumitrescu.

mof infiintare sc casa sfantul toma srl

Dumitrescu and Iliescu had, at one point, a conflict that was settled in court and Iliescu left the company. 

Prior knowledge?

Casa de Odihna Sfantul Toma SRL knew they would get the DGASPC contract at least one week before. On Sept. 24, 2012, it hired another private firm, Endemedica SRL in Popesti-Leordeni, to provide psychiatric medical services to the Breaza patients for 400 a month, plus "additional services", which are paid separately, according to a note by ANPIS obtained under the freedom of access to information of public interest law. The tariff for Endemica SRL’s psychiatric services is mentioned in the first annex to contract no. 54/24.09.2012.

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The second annex of the contract shows the two private firms agreed that two specialists from Endemedica will accompany "a group of 30 people to be picked up in Aldeni commune, Buzau county, and transported to the working point in Breaza, 153 Ocinei street", for a total price of 200 lei. This shows that everything was previously planned.

endemedica anexa 1

Although undated, the second annex could not have been drawn up later than the date of the contract, Sept. 24, 2012, which states that "during Sept. 24-28, 2012, the beneficiary shall make available to the provider a list of the people concerned, complete with their medical disorders and medication".

endemedica anexa 2 

Money

The documents presented above and other documents studied during the research phase of this investigation show SC Casa de Odihna Sfantul Toma SRL received RON 60,000 a month from DGASPC Distrcit 4 from Oct. 1, 2012 until May 2014. This translates into roughly 160,000 euros a year, and a total of around 250,000 euros to this day.

The six dead people

On Oct. 1, 2012, Bucharest fourth district’s DGASPC moved 30 mentally-disabled people to the centre in Breaza from another centre in the town of Aldeni in central Romania, notorious for horrific conditions brought to attention by the Center for Legal Resources (here and here).

Six of the beneficiaries, or a fifth of the people institutionalized moved to Breaza from Aldeni have died there between Oct. 1, 2012 and April 1, 2014, according to a list provided by DGASPC following a request under the Freedom of Information Act in Romania.

lista pacienti sf toma

DGASPC did not reveal the patients’ names, citing the law regarding protection of personal information. It also declined to provide copies of death certificates issued for the six beneficiaries who died in the illegal center in Breaza, providing instead an edited document listing their medical conditions and causes leading to their deaths.

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According to data and documents obtained unofficially, four of the six deceased were between 21 and 24 years of age: Corina Alina Ruhn (21), Nicusor Ionut Vasile (22), Nicoleta Ioana Croitoru (22) and Raluca Gabriela Nicolae (24). The other two were Sabin Raica and Adrian Oprisan Dragnea, 39 and 54, respectively.

Based on these data, the Media Investigation Center and the Center for Legal Resources notified the National Agency for Payments and Social Inspection (ANPIS), which conducted an investigation. ANPIS inspectors barely managed to obtain the death certificates of the six patients from the centre's administrators.

The administrators initially told ANPIS inspectors no one had ever died at the centre.

Breaza’s town hall issued a death certificate for just one of the deceased, while the other five certificates were issued by Bucharest fourth district authorities, according to a preliminary ANPIS note about their investigation obtained by the Media Investigation Center.

The five death certificates contain false information as in all five cases, the place of death is "Bucharest, District 4" instead of Breaza. The situation is even more serious since two of the deceased, Nicusor Ionut Vasile and Gabriela Raluca Nicolae, have had their official residency at the address of the center in Breaza since December 2012.

The centre’s representatives were unable to produce certificates ascertaining death, a pre-requisite for death certificates, ANPIS inspectors said.

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ANPIS general manager Adrian Toader says these ascertaining certificates "should have been issued at the place of death, namely SC Casa de Odihna Sfantul Toma SRL in Breaza, in the presence of a physician and police".

Adrian Toader:

(No English translation.)

The owner

Cezar Dumitrescu, the owner of the company that runs the Breaza centre, told the Media Investigation Center during a long interview over the telephone recorded with his consent that all he did was outsource medical services to Endemedica and funeral services to a funeral home. He added he didn’t know what happened to the bodies of the patients who died in his centre but were registered as having died in Bucharest.

Asked why the centre for mentally-disabled people functioned without authorization, Dumitrescu said his company operated based on its object of activity, namely "NACE 8730: Residential care activities for the elderly and disabled".

Regarding the deaths, he was more interested in how we got hold of the information. He also complained that a reporter from the Media Investigation Center visited the centre by claiming to be a relative of a fictitious prospective patient. The visit happened early during research for this story. Previously, the Center for Legal Resources which is accredited by Romania’s labor ministry to make monitoring visits to such centres said it was denied access by gatekeepers.

The owner of Endemedica, Theodor Lazar, confirmed over the telephone that some of the ascertaining certificates had been signed by his wife, Dr. Nadia Lazar, a general physician for the Breaza patients. Lazar was unable to say how many such certificates his wife signed, but said authorities were not notified because "there were no suspicious deaths".

Lazar said he took offense to some of the questions the Media Investigation Center asked and he threatened to sue over the fact that journalists had obtained a copy of the contract his company signed with SC Casa de Odihna Sfantul Toma SRL.

The Media Investigation Center was unable to reach representatives of the funeral home hired by SC Casa de Odihna Sfantul Toma SRL to discuss the deaths in Breaza and clear up the reason why five of the death certificates contained false information regarding the place of death.

Piedone

On April 11, 2014, Bucharest fourth district mayor Cristian Popescu Piedone visited the unauthorized centre. Although Sabin Raica and Adrian Oprisan Dragnea had died there the previous month and the centre lacked authorizatio to provide social services, Piedone didn't find any major irregularities, according to a news story broadcast by national TV station Antena 3.

(Copyright Antena 3)

"We took them out of there, from the problem center (Aldeni, e.n.), we'll take them out of here as well unless you fix things,” the mayor told centre administrators during his visit. "There are no serious issues, but there are issues that could become serious."

Piedone told the Media Investigation Center that the fourth district’s DGASPC is not under his authority but that of the local council. He promised to discuss the matter after conducting his own investigation of the Breaza centre, through his subordinated institutions.

Authorized at last

The same owners of SC Casa de Odihna Sfantul Toma SRL, who had also set up a foundation in 2012, obtained authorization to provide social services on behalf of the foundation on May 5, 2014, nearly two months since the first attempt to visit the centre and one month since the first official steps taken by the Center for Legal Resources and the Media Investigation Center to notify authorities.

acreditare sf toma

Asociatia Sfantul Toma, whose founding members are Cezar Dumitrescu, Alexandra Dumitrescu and Anca Coanda, was accredited to provide social services by decision no. 520 of May 5, 2014, issued by the office of Labor Minister Rovana Plumb. The accreditation application was submitted to the ministry on April 22, a reasonable term for a simple check-up of a few documents, said Carmen Manu, manager of the ministry's Department for Social Services and Social Inclusion.

Although the decision appears to be signed by Labor Minister Rovana Plumb, it was in fact  signed by deputy minister Codrin Scutaru. Contacted by the Media Investigation Center, Scutaru confirmed he had signed the decision, but explained the document is just a phase in the accreditation process, under the new law, and not the final step.

"The decision I signed doesn’t represent anything, it is just a decision of principle, it accredits the provider from the point of view of its documents. To be able to provide those services, the law requires the provider to obtain further authorizations and credentials, depending on specific services targeted," Scutaru said.

He added the Breaza case, if confirmed, is "very serious".

"If people really died there and judicial authorities were not informed of their deaths, then the matter is very serious and an investigation is required," said Scutaru, adding he would personally see to the situation.

The Media Investigation Center also contacted Labor Minister Rovana Plumb, who also promised a detailed investigation in this case and a check-up campaign targeting all social assistance centers in the country.

The Media Investigation Center and the Center for Legal resources will notify the proper judicial authorities of the findings of this investigation.

(Investigative piece written in collaboration with the Center for Legal Resources. A detailed report regarding the situation in the center in Breaza, published by the Center for Legal Resources, can be found here.)

With thousands of hectares of land confiscated as the communists came to power, in 2001 the Romanian Academy, maybe the wealthiest entity in Romania, after the Orthodox Church, set out to retrieve its once vast patrimony. Among its valuable assets were 452 hectares of land in Constanta county.

Apparently sabotaged from within by the president of a foundation set up to ease the profitable administration of its patrimony, the Academy has yet to become the legal owner of the land, although the plots are clearly listed in an issue of Romania’s Official Journal from 1948.

At first, the Academy received a property deed for its 452 hectares but it was given land in Topalu, the worst area in Constanta county in terms of property value.

Hundreds of hectares from the 452 to which the Romanian Academy was entitled according to the Official Journal were lost following a series of shady transactions the Academy official made with local authorities in Constanta, particularly with the City Hall run by Radu Mazare. The transactions had the Academy renounce 300 hectares it owned in Topalu, according to the property deed, in exchange for property deeds for land in better areas in Constanta, which were supposed to be “reconstituted with urgency”. Since 2009, the Constanta City Hall gave the Academy only approximately 2,000 square meters of land. The Academy received another 14,000 square meters from the Ministry of National Defense, meaning the Academy received a total of 16,000 square meters in exchange for 245 hectares.

Another 117 hectares were leased, at the end of a shady paper trail, to a company owned by Grivco, a group owned by the Voiculescu family, which planned to develop a wind turbine park. The investment, which the company said was to be covered with EU funding, never materialized.

The 2010 statement of interests of Grivco founder Dan Voiculescu contained no mention of the contract with the Romanian Academy, although it does mention other deals between Grivco and the Patrimony Foundation of the Romanian Academy.

Today, the Academy only owns the few thousand square meters of land in Constanta and a few thousand others in Ovidiu, out of a total of 452 hectares to which it was entitled, and the property deed it was granted for land in Topalu is currently the object of a petition for annulment in court.

According to the Official Journal no. 260 of November 8, 1948, several assets that had been donated to the Romanian Academy by old rich families were nationalized by the communist government of Gheorghe Gheorghiu Dej. The list of dozens of properties, some of which consist of hundreds of hectares of land, is published in that issue of the Official Journal. Among these are 452 hectares of land in Constanta county.

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Following the issuance of Law 752/2001, the Romanian Academy set out to recover its assets. The law states the entire patrimony is to be managed and utilized through the Academy’s Patrimony Foundation, an NGO the Academy set up for this very purpose.

On the basis of the Official Journal no. 260, representatives of this foundation take stapes toward recovering land nationalized by the communists.

On December 23, 2004, during the final days of the Nastase Cabinet, the committee for the establishment of property rights over land under the authority of the Constanta prefect at the time, Gheorghe Martin, validates a document. The document stated several plots of land totaling 452 hectares were taken from the State Domain Agency and transferred into the possession of the Romanian Academy, to compensate for the property it had lost in Constanta, during the nationalization process in 1948.

hotarare 316

Six days later, on December 29, 2004, two days before New Year’s, the Constanta prefect issues a property deed in favor of the Romanian Academy.

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Although the communist regime had deprived the Academy of valuable land, such as the Murfatlar vineyards and considerable areas in the heart of the city of Constanta and the town of Mangalia, the county committee gives the Romanian Academy 452 hectares of land in the cheapest part of the county at that time: in Topalu, located in the north-western part of the county, an area where one hectare of land sold for a few hundred lei at the time.

Strangely enough, the representatives of the Patrimony Foundation waited nearly two years before picking up their property deed, according to documents perused by the Media Investigation Center at the Topalu Town Hall.

In 2006, representatives of the foundation picked up the property deed and, unsatisfied with the land the foundation was attributed, they sued local authorities in Constanta. Three civil lawsuits were open and were to be tried by the Constanta Court. In the files, numbered  11477, 11478 and 11479, the foundation, on behalf of the Romanian Academy,  claimed back lands on the sites noted in the Official Journal no. 260/November 8, 1948 or rightful compensation.

Academy land starts vanishing

On March 14, 2007, at the headquarters of the Constanta City Hall, the executive president of the Patrimony Foundation, Academy member Alexandru Bogdan, draws up a memorandum  together with two employees subordinated to mayor Radu Mazare. The document, obtained by the Media Investigation Center, states the Academy renounces its claim on 103 out of its due 452 hectares of land, citing the lack of a property deed for the respective surface.

The 103 hectares in question account for a large chunk of the land now located in the city of Constanta, that once belonged to the Romanian Academy, according to the 1948 Official Journal. Although the data regarding this surface are mentioned in the 1948 Official Journal, the official reason stated for the Academy's renunciation on its claim is that "documents submitted do not constitute evidence of rightful ownership".

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Academy member Alexandru Bogdan then makes three transactions with the Constanta City Hall, the Topalu Town Hall and the representatives of the County Committee for the establishment of private property rights on the respective land, one for each lawsuit file, in a bid to halt the litigations. One of these three transactions includes the renunciation of claims over the 103 hectares for which the Academy allegedly lacked a property deed.

In total, through these three transactions, the Academy's foundation renounces approximately 245 hectares of farmland and in-city land it was entitled to according to the 1948 Official Journal and which it had received in Topalu. In exchange for the elimination of this land in Topalu from the property deed, local authorities in Constanta undertake to reconstitute the property deed for this land "with urgency", through restitutions in kind and, where restitution in kind is not possible, through compensatory land or stock in Fondul Proprietatea, an investment fund set up by the Romanian state to compensate Romanians whose nationalized property could not be returned in kind.

The logic is unclear but the parties agreed through these transactions to "partially annul" the property deed issued for the Academy in December 2004 and subtract the 245 hectares that constituted the object of these agreements from the total surface of 452 hectares in Topalu.

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The definitive and irrevocable court rulings resulting following the transactions made in 2007 become executory only on January 27, 2009.

Three days later, on January 30, 2009, the Academy Foundation, led by the same Alexandru Bogdan, petitions the Constanta Court to order the county's Land Fund Committee to issue a new property deed for the land in Topalu "for the surface that was not the object of the partial annulment in the aforementioned three civil lawsuit rulings".

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In the same document, the Foundation petitions the Constanta Court to ensure the remaining surface the Academy owns in Topalu "obligatorily includes the following plots: A119, A154, A169, A224, A204, A206, A399, A400, A789, A793, A745, A798 and A804.

"It is absolutely necessary that we are in possession of these plots in view of applied scientific research for sustainable development and technological innovation, substantiated by environmental and economic factors," Alexandru Bogdan argued the special interest in those plots of land.

The beneficiary of the land was, however, Grivco

On December 4, 2009, Alexandru Bogdan sends a letter to the Topalu Town Hall informing the local authorities the Romanian Academy renounces claims on 300 of the 452 hectares it received according to the property deed issued December 29, 2004 and enclosing a table listing the exact locations of 117.4 hectares of the remaining 152 hectares. Most of the plots of land explicitly petitioned to the Constanta Court are listed in this table.

"We request that you agree that out of the 452 hectares, according to the property deed no. 1281/29.12.2004 (…), 152 hectares remain in possession of the Romanian Academy for agricultural crops and activities introducing technical progress in view of sustainable rural development, and 300 hectares be immediately transferred into the property of the Topalu Town Hall, to be utilized in accordance with legislation in force," Alexandru Bogdan wrote in the document addressed to the mayor of Topalu, Gheorghe Murat.

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The document ends with a mention of a certain Ion Bebi, a "collaborator" of Academy member Alexandru Bogdan, indicated as the person to be contacted for details pertaining to cadastre for the 152 hectares of land remaining in the property of the Academy according to the deed issued in 2004.

According to the Official Journal of Romania no. 5175/September 19, 2008, Part Four, Ion Bebi is the administrator appointed by Grivco SA in the board of EVN Windpower Development & Construction SRL, where the firm controlled by the Voiculescu family owned 50% of the stock at that time, while the other 50% was owned by Austrian group EVN.

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 The secretary of the Topalu Town Hall told the Media Investigation Center that, before the town hall received the letter, the Academy official had sent a table listing plots of land and expressly required that their availability be checked.

"We checked together, over the phone, the availability of the plots of land of interest to Mr. Bogdan from Bucharest and based on our discussion he sent us the table enclosed in the letter, which contains the plots in which he was particularly interested. He didn't say exactly what he needed them for, I know it was something to do with wind turbines," said the town hall secretary.

She showed us the first table received for checking purposes, which contains her notes.

Academie 26

 The document represents and annex to a "Partnership contract regarding the exploitation of certain plots of land located on the administrative jurisdiction of Topalu commune, Constanta county”.

The contract, obtained by the Media Investigation Center, was concluded between the Romanian Academy, duly represented by the Patrimony Foundation, and SC EVN Windpower Development & Construction SRL. The Academy is represented by Alexandru Bogdan, president of the Patrimony Foundation, and the private company is represented by Lazar Mihai, the current president and CEO of Grivco.

The annex to this contract, which explicitly lists the land plots the Academy is leasing to EVN Windpower Development & Construction SRL, contains the exact same plots of land the Academy claimed from the Topalu Town hall in December 2009.

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It is a very good deal for the firm half-owned by Grivco: the annual rent it pays for 117.4 hectares of the Academy's land in Topalu is just EUR18,000. The lease contract has a duration of 25 years, the life span of the wind power project as "estimated" by the two parties.

The project was supposed to host 18 to 25 wind turbines and the "annual tax for the utilization of land" was set at EUR1,000 per turbine.

The statements of interests submitted over the years by senator Dan Voiculescu, founder of Grivco, contain no mention of EVN Windpower Development & Construction SRL or any contract between this firm and the Romanian Academy. The contract signed in September 2009 should have been mentioned in the statement of interests of 2010, which does mention several other deals Grivco SA made with state institutions, including some contracts concluded with the Patrimony Foundation of the Romanian Academy, but not the contract concluded by EVN Windpower Development & Construction SRL, which is half-owned by Grivco.

The National Integrity Agency (ANI) law does not state explicitly one's statement of interests must list only contracts with state institutions concluded directly by firms in which one is a shareholder.

The Media Investigation Center contacted ANI president Horia Georgescu for an opinion on this matter but the official requested more time for the institution to formulate an official stance. ANI had not responded by the time we published this investigation but Mr. Georgescu has assured a statement would follow shortly. We shall publish that statement as soon as it is received.

——————————————————————————————————————-

LATER EDIT: It is ANI's opinion that Grivco founder Dan Voiculescu has breached the law regarding the submission of statements of interests.

The National Integrity Agency has issued an official stance, which the institution registered under no. 10376/08.07.2014.

According to the cited document, Dan Voiculescu should have listed the contract concluded between EVN Windpower Development & Construction and the Romanian Academy in his statement of interests.

"Based on your findings and the systematic interpretation of relevant legal provisions, it is our opinion that a public official who owns a commercial company which in turn owns 50% in a commercial company that concludes contracts with state institutions is legally obliged to mention in the wealth statement the revenues his company made as a result of owning stock in another company, and the statement of interests must contain, in chapter 1, the number of shares owned in other commercial companies and in chapter 5 must mention the contracts the said company concluded with state institutions, within the terms and conditions stipulated by the law. We note that the opinion stated herein represents a point of view and is not a general and obligatory interpretation of the mentioned legal texts," the Integrity Agency said.

——————————————————————————————————————

The wind park Grivco and EVN planned to build in Topalu never materialized, probably because the initial intention was for the project to be financed with EU funds. So far, the Topalu Town Hall has not issued any urban planing certificate for such a project and there is no mention of the EVN wins park in Topalu in the databases of temporary authorizations for connections to the national power grid.

Meanwhile, Grivco is no longer a shareholder in EVN Windpower Development & Construction SRL, which is currently almost fully owned by PNE Romania Wind Energy Holding, which is in turn owned by PNE Wind Ausland GMBH, the German firm that owns 80% of the company, while the remaining stake is owned by Wind Energy Investment SRL, controlled by two individual shareholders: Dinca-Carjan Maria Cristina si Dinescu Daniela.

Reactions

In a press conference on Sunday, July 6, we attempted to ask Dan Voiculescu about Grivco's business in Topalu, but the organizers of the conference were very clear laying the ground rules: Dan Voiculescu would only answer questions relating to politics and maybe "strategy" and questions regarding Grivco would be answered by a Mrs. Radulescu, one of his collaborators.

When Dan Voiculescu finished, we asked his collaborator about the partnership between EVN Windpower Development & Construction SRL, the firm in which Grivco had owned 50%, and the Romanian Academy. She replied that although the question was not related to the topic of the press conference, she would reply at the end of the conference. When the conference ended, Dan Voiculescu's bodyguard relayed Mrs. Radulescu's message: there would be no talk , the press conference is over.

The mayor in Topalu, Gheorghe Murat, is upset with the representative of the Romanian Academy.

"This man from the Academy, Mr. Bogdan, caused us all sorts of trouble! We petitioned the court to annul a property deed for the Academy's 452 hectares and to issue a new one for the surface remaining after the closing of all the lawsuits it [the Academy] had in Constanta. We have petitioned for annulment, we're now waiting for a court ruling and meanwhile we can't do anything with that and," Murat.

The Media Investigation Center asked Academy member Alexandru Bogdan, who represented the Romanian Academy throughout this saga, for an interview to give him an opportunity to explain all the land transactions he made in Constanta on behalf of the Academy. In a long discussion, Professor Alexandru Bogdan underlined the land "is nowhere near lost".

 At first, he said the property deed for the land in Topalu had been issued without his knowledge in his capacity of petitioner for the recovery of the Academy's patrimony in Constanta, as relayed in the 1948 Official Journal.

"We didn't pick up the property deed until 2006 and then, obviously dissatisfied that we had been given land with zero economic potential, we sued the local authorities and claimed our rightful assets ," said Alexandru Bogdan.

He also explained the three transactions following which more than half of a total 452 hectares received in Topalu was lost.

"We did not lose that land. We have a promise in writing that the Constanta City Hall will reconstitute with urgency our property deed for land where it was originally located. A promise doesn't mean the land is lost. Obviously, as the promise was made, we requested to subtract those surfaces from the deed for land in Topalu," said Bogdan.

Asked what was received in exchange for the elimination of 245 hectares from the property deed received in 2004, Bogdan said those transactions, now the object of definitive court rulings, "consecrate the Academy's ownership of those lands".

"The Academy may claim rent from anyone who built anything on those plots," Bogdan says in theory.

In fact, however, he concedes that, in exchange for the 245 hectares in Constanta, the Academy received two plots totaling around 2,000 square meters from Mazare's City Hall and another 14,000 square meters from the Ministry of National Defense, left over after the disbanding of a military base. Therefore a grand total of 16,000 square meters in Constanta in exchange for 245 hectares in Topalu.

Professor Bogdan also said he observed in 2009 that the land in Topalu had wind power potential and thus partnered up with Voiculescu's people. He did emphasize that he did not know the company was connected to Grivco.

Asked how he knew which plots had wind power potential, the Academy member was unable to reply. He was unable to explained on what studies he had based his claims when he petitioned the Constanta Court for specific plots of land, especially since the partnership with EVN/Grivco had not been signed at that time.

At first Bogdan said the project was experimental and not commercial but, contradicted by clear statements in the contract he himself had signed, he requested more time to do more research. The Academy official was also unable to state whether the Academy received any money following the partnership contract for the wind turbine park.

Due to technical issues, the second part of the interview is only available in audio format, at a lower quality. We apologize for the inconvenience. Also, no translation of the interview is currently available.

(This story is part of the project "Public Funds in Romania - corrupt tenders, mismanagement and theft ", carried out by the Media Investigation Center in partnership with Freedom House Romania and Expert Forum Romania within a grant of the U.S. Department of State, through the United States Embassy in Bucharest. The Media Investigation Center is solely responsible for the content of this story, which does not necessarily reflect the opinions of the U.S. Department of State or the United States Government. The partners and sponsors of this grant are in no way liable for this story.)

Yesterday, the Media Investigation Center brought you the story of the 452 hectares of land in Constanta that should have been returned to the Romanain Academy but were lost, with the apparent complicity of the executive president of the Academy's Patrimony Foundation. Professor Alexandru Bogdan. Also under the signature of Academy member Bogdan, part of the land in Constanta county, namely 117.4 hectares in the Topalu area, were leased for just EUR18,000 a year to a company that planned to develop a wind turbine park there. This company was half-owned by Grivco SA, a group of firms owned by the Voiculescu family.

Today we bring you documents that prove, beyond any doubt, the business connection between Professor Alexandru Bogdan, the former executive president of the Romanian Academy's Patrimony Foundation, and companies owned by Dan Voiculescu.

Through the note no. 5/22.03.2006, sent by the commercial company Centrul Pilot de Calificare si Consultanta Profesionala SRL to BRD, the company administrator gives power of attorney to Mrs. Ana Ichim for a series of banking operations on behalf of the company.

The company in question, SC Centrul Pilot de Calificare si Consultanta Profesionala SRL, is headquartered in Bucharest, 1 Garlei street, and its administrator is Professor Alexandru Bogdan.

Adresa BRD anonimizata

Based on the document above, a person named Ana Ichim withdrew money from the company's bank account several times. The Media Investigation Center obtained one of the leaflets that confirm one of the transactions made by Ana Ichim from the bank accounts administered by Prof. Alexandru Bogdan, dated March 27 2006.

ridicare numerar anonimizat Copy

The company no longer exists at the Trade Registry under the name SC Centrul Pilot de Calificare si Consultanta Profesionala SRL, but has been turned into a software company called EastSoft IT SRL, with the same unique serial number (CUI) 17293142 and the same registration number J40/3842/2005.

The current shareholders of this company are two other companies: Ginza Invest SRL, headquartered in Bucharest, Calea Floreasca, which owns 75.9% of the shares, and SAP Serv SRL, headquartered in Brasov, which owns the remainder.

Under "Power of attorney" in the form the Trade Registry utilizes to present company information, EastSoft IT SRL appoints ICS Administrare to serve as company administrator. ICS Administrare is headquartered in Bucharest sector 1, 22A Nicolae G. Caranfil street. Its representative is none other than the former minister of economy during the Tariceanu Cabinet, former presidential candidate on behalf of the Romanian Humanist Party founded by Dan Voiculescu: Ioan Codrut Seres.

EastSoft IT 2 Copy

We phoned former minister Seres and he confirmed that he currently owns EastSoft IT SRL.

“Yes, it is a company that used to be part of the Grivco group and which I bought in 2011, when it was undergoing conservation and its activity had been frozen. I can confirm that, as the website reads, starting 2011 and up to the present the company was exclusively in the software business and no longer had anything to do with Grivco,” said Codrut Seres.

Asked about this company’s previous shareholders, Seres confirmed Grivco SA was among the company shareholders when he bought it in 2011.

“Yes, I can confirm, the company was part of Grivco, Grivco was one of its shareholders. I don't recall who the other shareholders were, I think Benefica (another company part of Grivco group, e.n.),” said Seres.

According to the statements of interests submitted by Dan Voiculescu over the years, the Patrimony Foundation, whose executive president was professor Alexandru Bogdan, signed two 20-year land leases in 2007 with Grivco SA. According to documents we are now publishing, in 2006 Alexandru Bogdan was the administrator of a company that, according to Seres, was owned by Grivco.

We attempted to phone Professor Bogdan for further questions regarding the documents we present in this story and to ask him about his activity as administrator for a firm owned by Grivco SA while at the same time he was the executive president of the Patrimony Foundation. We also wanted to ask Professor Bogdan who is Ana Ichim, the person mandated to take out money on his behalf from the account of Voiculescu's company.

However, he no longer answered our calls.

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LATER EDIT: Professor Alexandru Bogdan did call us back later. He said he doesn’t remember any activity as administrator in any company part of Grivco.

“No, no, who knows, I tried, I had no activity, I never signed anything in this capacity,” he said.

We told Mr. Bogdan we were in possession of a document he had signed in that very capacity.

“No, certainly not, I need to see that (document, e.n.). You're asking me about 2006. It's 2014. I didn't receive any money, I didn't have a salary for this kind of thing, it was just as you can see, that we were allowed to have some kind of activity, we were trying to… a plan to train people, that's what's I’m good at, I'm a teacher, i train people," said Alexandru Bogdan.

When we insisted, Professor Bogdan continued: “I can't have been involved, I repeat, I don't recall any such activity”.

“I didn't sign for it to be held by Grivco, I definitely don't remember anything concerning this topic but I'll try to get more information, give me some time to see what this is all about,” said Bogdan when asked about Grivco being a shareholder in this company.

“I did not have any involvement in this matter," said Bogdan.

We also asked him about one Ana Ichim, whom he gave the power of attorney to get money from the account of the firm for which he served as administrator.

“Ana Ichim, Ana Ichim… There was a… Ana Ichim, in 2005-2006 or when did you say? I don't remember her so I can't tell you where she might be now … it's been years, but there was a lady who was an economist or… a chemist! There, I remember, she was a chemist!” said Bogdan, adding he did not remember where she worked.

He denied any family tie or any other personal connection with said Ana Ichim.

“Certainly not! No way,” said Bogdan.

However, he did not deny having granted Ana Ichim the power of attorney to withdraw money from the accounts of the firm he administered.

“Yes, it's possible, who knows, maybe there was a time when… But whether she did anything, I don't believe that. I don't think so, I don't think she did anything illegal, I remember her, she was a gentle woman," said Professor Bogdan.

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The Media Investigation Center will submit all these documents, as well as documents presented in the investigative story regarding the land in Constanta, to the Romanian Academy and judicial authorities.

(This story is part of the project "Public Funds in Romania - corrupt tenders, mismanagement and theft ", carried out by the Media Investigation Center in partnership with Freedom House Romania and Expert Forum Romania within a grant of the U.S. Department of State, through the United States Embassy in Bucharest. The Media Investigation Center is solely responsible for the content of this story, which does not necessarily reflect the opinions of the U.S. Department of State or the United States Government. The partners and sponsors of this grant are in no way liable for this story.)

On October 15, 2008, the prefect of Calarasi county, conservative Jenel Serban, resigned from office to run in the parliamentary elections on the list of the Liberal Party. In his capacity as prefect and head of the County Land Fund Committee, he signed the property deeds for the lands returned to the Romanian Academy in Calarasi county. Part of these lands ended up being leased to the Vociulescu family's group, on the basis of a protocol concluded in 2006 between the Romanian Academy and Grivco SA.

In 2009, Jenel Serban became a manager with Grivco SA.

Jenel Serban is currently the head of OJPDRP Calarasi (County Office for Payments for Rural Development and Fishing), a position in which he manages European-funded projects within the National Rural Development Program. One of the beneficiaries of these funds is Agro Seed Muntenia, formerly Grivco Agro, which exploited and still does 2,000 hectares of land in Perisoru, Calarasi county, and which, according to AgroSeed Muntenia manager Ion Mihai, accessed EUR1 million in EU funds for investments in its irrigation installation in Perisoru.

Jenel Serban and Ion Mihai used to be associates in a firm, Art Media SRL, which is currently owned by Ion Mihai and his wife, Liliana Mihai. Ion Mihai, the current manager of AgroSeed Muntenia, formerly Grivco Agro, is the brother of Lazar Mihai, CEO of Grivco SA and the representative of the Voiculescu family on the boards of most companies in the group.

According to Ion Mihai, AgroSeed Muntenia, concluded several services contracts over the past years with AgroCristi SRL Calarasi, in which Jenel Serban is a shareholder.

In his capacity as prefect, Jenel Serban (pictured) is the one who signed the property deeds for the lands returned to the Romanian Academy in 2007-2008. According to a story by Agerpres, he resigned from the position of prefect on October 15, 2008 to run for a seat in Parliament.

According to a document obtained by the Media Investigation Center, all property deeds issued to the Romanian Academy in Calarasi were signed by Conservative Party member Jenel Serban, prefect, in his capacity as head of the county land fund committee.

Academie titluri

(The notes on the documents do not belong to the Media Investigation Center)

Based on a convention concluded in 2006 between the Romanian Academy and Grivco SA, the Academy's land is currently exploited by a firm part of the Voiculescu family's holding, Grivco Agro, renamed AgroSeed Muntenia in 2013. The agreement between the Romanian Academy and Grivco SA was published by TV journalist Robert Turcescu on his blog. Under this agreement, Grivco SA was to help the Romanian Academy recover a few thousand hectares of land in Calarasi county, which would be leased to Grivco afterward.

In 2007-2008, as is apparent in the above document, the Academy received its property deed with the signature of prefect Jenel Serban and, according to the agreement, leased it to Grivco SA.

Jenel Serban is currently the head of OJPDRP Calarasi. His CV, available on the website of the institution he runs, states he was a manager with Grivco SA in 2009-2010, where he was employed as a "specialist in agriculture".

Therefore, after returning land to the Romanian Academy for the benefit of Grivco SA, prefect Jenel Serban was employed in the Voiculescu family's group.

In the same capacity as head of the county land fund committee, Jenel Serban was indicted by the National Anticorruption Department for a series of irregularities in land restitution.

As head of OJPDRP, Jenel Serban, still a member of the Conservative Party, is the one who manages European projects through the National Rural Development Program. One of the beneficiaries of this funding is Grivco Agro, renamed AgroSeed Muntenia SRL in 2013, according to Trade Registry data obtained by the Media Investigation Center.

Schimbare nume Grivco Agro

According to the local media, less than one month ago, Jenel Serban visited the successful project AgroSeed Muntenia SRL implemented in Perisoru, a project for the upgrade of irrigation networks on the land the company leased from the Romanian Academy, a project achieved through the institution he runs.

Contacted by the Media Investigation Center, AgroSeed Muntenia manager Ion Mihai said the company’s investments in the irrigation network on the nearly 2,000 hectares of land in Perisoru, leased from the Academy, amount to EUR1 million in EU funds and half a million lei.

“One million euros came from European funding and the rest, around half a million lei was the company’s own investment, all this just for the irrigation system. To say nothing of other investments. Like I said, we're not playing, we are farming and we're trying to be productive, we're among the top farming companies, we're turning a profit. This is my job in this company, to make a profit, this is what i was hired for and this is what I’m paid to do," said Ion Mihai.

He insisted he is a simple employee of AgroSeed Muntenia, although he did concede to the fact that he is the brother of Lazar Mihai, the CEO of Grivco SA and the person who represents the holding within the boards of most companies in the group.

There are further connections between Jenel Serban and Ion Mihai.

Art Media SRL

According to the statement of interests submitted by Jenel Serban in 2010, he was the majority shareholder of Art Media SRL. Ion Mihai stated, in 2008, that he was a shareholder in the same company, which is currently owned by Mihai and his wife.

AgroCristi SRL

The agreement concluded with the Romanian Academy for the lease of lands in Calarasi notes that Grivco SA has "experience in agricultural activities (…) as well as the required tools, farming equipment and financial resources" for this type of business. However, manager Ion Mihai said that, when time is short, Agro Seed Muntenia, which exploits the land leased from the Academy, sometimes concludes services contracts with various companies in the area to help with equipment and workforce in certain works such as sowing and harvesting.

"Yes, we do have such contracts. No one has all the equipment required for a certain agricultural campaign, it wouldn't be financially sustainable, so we do sometimes conclude this type of contracts," said Ion Mihai.

We asked Ion Mihai, over the phone, whether AgroCristi SRL in Calarasi was among these companies that provided services to AgroSeed during agricultural campaigns in Perisoru.

"Yes, we have had contracts with this company, but not in the past three-four years, I think. I can't say for sure, I'd have to check, but I think I recall we did have contracts with this company. Ask the administrator in Bucharest for them, i don't think there should be any problem if you asked to see them," said Ion Mihai.

We insisted and asked the AgroSeed Muntenia manager to show us the contracts but he said he needed approval from the company administrator. Later on he said we could receive copies of the documents we requested but only following a written request sent by mail to the company's headquarters in Bucharest.

"Not by e-mail, by traditional mail. In writing. You can send the request by e-mail if you like but you also have to send it by traditional mail. That's what I was told, that's what I’m telling you," said Ion Mihai.

The Media Investigation Center will send the respective request by mail tomorrow and we will update this story when a reply is received.

The manager of AgroSeed Muntenia, Ion Mihai, is the brother of Grivco SA's CEO, Lazar Mihai, a key-person in most of oligarch Dan Voiculescu's businesses.

Mihai Ion PC Calarasi

Ion Mihai said he worked for the Court of Accounts - Calarasi Chamber of Accounts between  1993 and 2007. In 2008, he became the manager of Grivco Agro, a company founded by his brother Lazar Mihai, according to the company records requested by the Media Investigation Center from the Trade Registry.

RECOM LAZAR MIHAI

Also in 2008, Ion Mihai opens SC Antena 1 Calarasi SRL, where he is the sole associate and administrator and which he still owns, according to Trade Registry data. SC Antena 1 Calarasi SRL operates the local Antena 1 TV station, affiliated to Antena Group, owned in turn by Grivco SA. We have tried to contact the Intact Group by phone to ask for clarifications regarding the formal affiliation of Antena 1 Calarasi to the group but no one there was able to give us the required clarifications.

Also in 2008, Ion Mihai becomes a county councilor in Calarasi, on behalf of the Conservative Party (PC), and soon becomes the interim president of the county branch of the party founded by Dan Voiculescu. In 2010,Ion Mihai becomes vice-president of the Conservative Party.

Although he is currently a county councilor from PC in Calarasi, the AgroSeed Muntenia manager Ion Mihai said he was very concerned with the financial results of AgroSeed Muntenia in Calarasi.

"I'm here to make a profit, I'm an employee. If i don't make a profit, I'm out. And this is bad year, we've had a rodent infestation that decimated the crops. That's my main concern right now, not the contracts you're talking about (with AgroCristi SRL, e.n.)," said Ion Mihai, adding all the company's affairs are perfectly legal.

He also said the price paid to the Romanian Academy for the lease of the land in Perisoru "is not at all low".

"The lease price is fair, we pay 800 kilos of wheat to the hectare, it's a fair price, especially since we pay with money, at a cost that includes transport, so the Romanian Academy is receiving a fair amount. We've invested money here, we're not playing, we're farming and we pay all our taxes in time, including the lease. We have nothing to reproach ourselves," added Ion Mihai.

We talked to Jenel Serban yesterday and he said all his company's contracts with AgroSeed Muntenia have expired.

"Each company works the land it has, whether it's leased or owned or whatever. The company in which I am a shareholder is not working Mr. Voiculescu's land, I don't know what kind of information you may have but we currently have no contract in this respect," Jenel Serban said yesterday.

We tried calling Mr. Serban again today for further questions but he could no longer be reached.

(This story is part of the project "Public Funds in Romania - corrupt tenders, mismanagement and theft ", carried out by the Media Investigation Center in partnership with Freedom House Romania and Expert Forum Romania within a grant of the U.S. Department of State, through the United States Embassy in Bucharest. The Media Investigation Center is solely responsible for the content of this story, which does not necessarily reflect the opinions of the U.S. Department of State or the United States Government. The partners and sponsors of this grant are in no way liable for this story.)

The document obtained by the Investigative Media Center, available below, states clearly that employees of state-owned Eximbank and "structures of the Ministry of Transport" are to blame for the state's loss of EUR10 million by failure to execute the letter of guarantee.

"In conclusion, it is the opinion of the control team that, first and foremost, Eximbank SA, an entity specialized in the field and with specific obligations to the Ministry of Transport, is at fault for the non-execution of the letter in a timely manner.

However, this reality does not exclude the concurring fault of structures of the Ministry of Transport empowered to fulfill the letter execution procedure, which should have sent appropriate payment instructions in a timely manner," the report notes on page 28, under "conclusions".

A close reading of the course of events, as described by the two authors of the report, shows how, not always directly, ministry employees requested opinions from one another multiple times, opinions that had already been expressed and were known by all parties involved. The document reveals considerable delays and false information sent by Eximbank to the Ministry, for instance, that look like attempts to buy time for Gruia Stoica.

The clear legal grounds for the execution of the letter of guarantee is given on March 5, when the Legal Department draws up a reasoned opinion in this respect. The Ministry's legal experts state clearly that GFR should lose the EUR10 million Raiffeisen Bank Austria had guaranteed for the company. All the Ministry of Transport, led by Dan Sova until today, had to do was make sure a piece of paper bearing the Ministry's official stamp and signatures of ministry officials reached Raiffeisen, in Austria, by March 21. The content of this paper was stipulated in the letter of guarantee: the Ministry was to inform the bank that GFR was in one of the situations indicated in the privatization contract as grounds for termination at the fault of the buyer, therefore the Ministry was notifying the execution of the letter of guarantee.

However, employees of the Ministry of Transport failed to draw up that letter and send it to Austria sometime between March 5 and March 21, therefore the state was unable to execute the guarantee pledged by Gruia Stoica's company.

During the last two days in which the letter is still valid, ministry employees and Eximbank officials seem to seek new pretexts not to execute GFR's guarantee. What other explanation is there for the fact that, at the ministry's request, Eximbank notifies Raiffeisen Austria via a SWIFT message instead of an original written notification, as required in the letter of guarantee.

In typical Romanian fashion, the letter was sent to Austria the day the guarantee was set to expire, through DHL, but not using the company's special same day delivery service, which costs just EUR18 extra for this type of correspondence.

As it was sent on a Friday, the original letter doesn’t reach Vienna until Monday, when the Austrian bank announces the guarantee has expired and the Romanian state may not come into possession of the money with which Gruia Stoica guaranteed his intention to purchase CFR Marfa.

Below is the report drawn up by the Control Body of the Ministry of Transport regarding the EUR10 million letter of guarantee: 

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(The document is only available in Romanian.)

(This story is part of the project “Public Funds in Romania – corrupt tenders, mismanagement and theft “, carried out by the Media Investigation Center in partnership with Freedom House Romania and Expert Forum Romania within a grant of the U.S. Department of State, through the United States Embassy in Bucharest. The Media Investigation Center is solely responsible for the content of this story, which does not necessarily reflect the opinions of the U.S. Department of State or the United States Government. The partners and sponsors of this grant are in no way liable for this story.)

Less than a month before resigning form the position of Transport Minister, Dan Sova reported his subordinates to the Anticorruption Department (DNA) on suspicion of fixing an auction for coal transport services bought by state-owned energy holding CE Oltenia. In the complaint Sova sent the chief anticorruption prosecutor, Laura Codruta Kovesi, the former Transport Minister said he suspected the management of state-owned railway freight carrier CFR Marfa of participating in a concerted action meant to financially destabilize the freight carrier.

In the complaint Sova sent the DNA the former minister states officials of CFR Marfa,  his subordinates within the Ministry of Transport, had drawn up six different financial bids. Sova calls on anticorruption prosecutors to investigate who decided to submit the envelope with the lowest bid, of RON256,484,282, and why. The bid was nearly RON1 million higher than the price asked by Gruia Stoica’s Grup Feroviar Roman, which was declared the winner, on the lowest bid criterion.

In the same document, obtained by the Investigative Media Center, Sova also  says Gruia Stoica’s company won this auction using assets of Rolling Stock Company SA, train cars that come from CFR Marfa and which were used in the auction to compete against the state company due to a document signed by CFR Marfa officials.

The contract, vital for CFR Marfa’s survival, was won in May by a hair by a consortium led by Stoica’s Grup Feroviar Roman (GFR). CE Oltenia was seeking a contractor to ensure the railway transport of the coal needed to keep its divisions running for the next three years.

The coal transport contract, initially estimated at EUR100 million, was awarded to the private carrier to the detriment of the state owned carrier, and the difference between the bids submitted by the two competitors was minuscule. This suspiciously small difference triggered a scandal that led to the arrest and current indictment of Stoica and attorney Doru Bostina on auction fixing suspicions.

 

The complaint submitted by former minister Dan Sova left the Ministry of Transport on May 27, 2014, five days after the opening of the bids CE Oltenia had received from CFR Marfa and GFR. Sova calls on prosecutors to investigate potential abuse of office regarding the auction for the contract proposed by CE Oltenia.

CE Oltenia had announced the auction on May 9, 2014. The state owned energy holding was seeking a railway freight carrier to transport coal for its Turceni, Craiova and Isalnita power plants for three years. Bids would be open on May 22, 2014.

This auction was in fact resuming a procedure from January 2014, when CFR Marfa bid approximately RON357 million fro the same services. For this reason, Sova states in his complaint to the DNA, “(…) we cannot explain such a large difference between the two financial offers in such a short period”.

“Even if we were to disregard the fact that CFR Marfa’s financial bid was much lower compared to its initial bid, it is worth noting CFR Marfa submitted a bid that is suspiciously close in value to that of the association led by Grup Feroviar Roman SA,” former minister Sova wrote in his complaint.

Noting the small difference between the two bids, Sova also draws attention to the confidentiality of CFR Marfa’s bid, reminding prosecutors that three days after the company was invited to bid for the CE Oltenia contract, its manager Dan Valentin Belcea resigned and his successor Pavel Barculet, appointed on May 19, did not require full confidentiality regarding the bid until May 20.

CFR Marfa’s bid: six envelopes with different financial offers

All this complicated story, with resignations, bribery, influence peddling and arrests, becomes even more complicated when, on May 22, when CFR marfa and GFR were to submit their bids in sealed envelopes, the CFR Marfa official goes to the auction bearing six envelopes containing different bids, the largest of which being the value estimated by CE Oltenia, namely RON467 million, and the lowest the one ultimately submitted, of RON256 million.

The information regarding the six bids appears in Sova’s complaint, which may be consulted below, on page 3.

On the other hand, according to the document, GFR submitted its bid of RON255 million at 12:42, while CFR Marfa submitted its bid of RON256 million at 12:56.

Sova asks, DNA must answer

The small difference between the two bids made Sova send the DNA several questions to which “The Ministry of Transport has no answer at this time”.

The first question: why six envelopes and not two at most (one for the price estimated by CE Oltenia in case there was no other contender and one with the lowest price to beat a contender – e.n.).

Second question: why was the price calculation method not confidential before the start of the procedure?

Third and, judging by the hypothesis that contains exact data, the essential question: who did CFR Marfa officials speak to during the contract award procedure, between 12:42 and 12:56, and who decided to submit the envelope with the lowest price?

The Investigative Media Center has attempted to contact Mr. Bercea and Mr. Barculet but they were not found at the known phone numbers.

Conclusion: Sova accuses CFR and GFR of rigging the auction

Despite acknowledging he lacks important data regarding this auction, Dan Sova makes a clear, albeit general, accusation.

“We suspect the price offered by CFR Marfa is not a profit-oriented price but a concerted action of several persons (including from among CFR Marfa staff) and Grup Feroviar Roman SA meant to economically destabilize and challenge the viability of CFR Marfa, in view of forcing privatization at a much lower market value than at present,” the former minister wrote on page 4 of the document presented here exclusively.

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Another accusation: Rolling Stock Company

Sova makes another veiled accusation in his complaint, targeting a non-combat situation if not another self-sabotaging action by CFR Marfa, regarding the assets of Rolling Stock Company. Following the negligence or complicity of CFR Marfa officials, the consortium led by Gruia Stoica underbid the state company at this auction using assets belonging to CFR Marfa.

The details, available on page 2 of the document, can be summarized simply: Rolling Stock Company, a company controlled by GFR but to which CFR Marfa contributed several thousand train cars and a few dozen locomotives, signs a lease contract with one of Stoica’s companies fir 650 train cars for the exact period CE Oltenia required coal transports.

Stoica’s company leased CFR Marfa train cars and then won the auction to its detriment because it had these train cars available. Meanwhile, CFR Marfa did nothing to secure its position and counter its future competitor.

Context

Sova himself said, in the document sent to the DNA and registered by prosecutors on May 28, that this contract is of major importance to CFR Marfa.

Experts interviewed by the Investigative Media Center also consider the contract was very important to the state-owned railway carrier.

“This contract is vital to CFR Marfa. The company lost half its turnover between 2008, when it made EUR465.6 million and posted losses of EUR45 million, and 2013, when its turnover barely reached EUR200 million and losses had gone up one third to EUR60 million. This contract’s total value is half of CFR Marfa’s annual turnover and losing this contract could be the end of the company, even though winning the contract doesn’t solve everything,” Razvan Zamfir, managing editor of Business Cover, the Investigative Media Center in an interview.

Zamfir believes the story of the CE Oltenia auction should be understood considering CFR Marfa’s erosion of the past 25 years.

“There was always someone one step ahead and often that someone was GFR, which, alongside other companies in this sector, gradually climbed onto CFR Marfa’s shoulders, probably with the complicity of managers of the state company and that of authorities,” said Zamfir.

Although it was awarded the CE Oltenia contract, GFR has not started work on it as CFR Marfa challenged the outcome at the National Settlement Board (CNSC).

Five days ago, the board rejected CFR Marfa’s contest but the decision may be appealed at the Bucharest Court of Appeals within ten days.

Former Transport Minister Dan Sova announced the submission of his criminal complaint on June 10 but gave no further details at the time.

On June 10, Şova told MEDIAFAX news agency that he filed an in rem criminal complaint regarding this auction where the difference between bids was small and the procedure should be resumed because only two bids had been submitted.

“A winner cannot be declared, one condition specified in the task book was that three bids were required and there were only two. They’ll have to do it again,” the former minister said at that time.

A day later, GFR responded, saying there was no reason to cancel the auction and its result benefits CE Oltenia, which is currently paying a lot more than it would under the new conditions.

(This story is part of the project “Public Funds in Romania – corrupt tenders, mismanagement and theft “, carried out by the Media Investigation Center in partnership with Freedom House Romania and Expert Forum Romania within a grant of the U.S. Department of State, through the United States Embassy in Bucharest. The Media Investigation Center is solely responsible for the content of this story, which does not necessarily reflect the opinions of the U.S. Department of State or the United States Government. The partners and sponsors of this grant are in no way liable for this story.)

Grup Feroviar Roman, a railway company owned by Gruia Stoica, competed against state-owned CFR Marfa using 49% of the train cars and locomotives belonging to the state company.

This information is revealed in a document drawn up less than a month before by officials of CFR Marfa in response to an audit conducted by KPMG regarding the activity of a paradoxical association: Rolling Stock Company, a joint-venture between CFR Marfa and GFR, its main competitor on the local railway freight transport market.

The KPMG report and a series of other documents of the Ministry of Transport and CFR Marfa, obtained by the Investigative Media Center, show how companies in Stoica's group used Rolling Stock Company to get hold of dozens of train cars and a few thousand locomotives belonging to CFR Marfa. The initial plan was to upgrade them and lease them out, particularly to foreign operators.

According to KPMG auditors, seven years after it was set up, Rolling Stock Company came to be fully controlled by GFR and was "integrated with repair units part of GFR group and clients part of GFR group".

Add to this the fact that CFR Marfa did not cash any dividends for seven years as part of the joint-venture, KPMG auditors pose the question whether the very existence of Rolling Stock Company constitutes "potential state aid CFR Marfa indirectly granted GFR".

In 2011, CFR Marfa, the former owner of the train cars now managed by Rolling Stock Company, leases 40 "UAGPS series" train cars from GFR.

The Investigative Media Center presents today an example of defective management that has brought CFR Marfa in just a few years close to a resounding bankruptcy.

Rolling Stock Company (RSCO) was set up in 2007, following a feasibility study that was very optimistic for CFR Marfa but which was never observed, as shown in the KPMG audit report.

The feasibility study auditors analyzed stated CFR Marfa was to recover its investment in full in seven years, with dividends of EUR5 million a year, and the partnership was to have no impact on the state company's privatization process and not endanger its previously held market share. Moreover, CFR Marfa explicitly targeted not to lose partial ownership of the new company.

Instead, seven years later, CFR Marfa had received no dividends, had lost a big market share to its associate in Rolling Stock and, most importantly, lost decision-making control in the joint venture.

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What is Rolling Stock Company?

Rolling Stock Company was initially set up with the intention of capitalizing on some of CFR Marfa's assets that were unusable due to degradation. Initially, the Rolling Stock Company joint venture sounded good: CFR Marfa would be a majority shareholder in a commercial company alongside private partners, bringing to the deal a number of locomotives and old, defective, unusable train cars, to be repaired at the partners' expense and then leased out by the new company, to the benefit of all shareholders.

From a note sent by former Transport Minster Dan Sova to his colleague, Finance Minister Ioana Petrescu, we learn that Rolling Stock Company was a partnership between CFR Marfa (42% of the shares), Gruia Stoica's Grup Feroviar Roman (40%) and Raiffeisen Bank Romania SA (18%).

On November 21, 2007, through the minute of proceedings 224/21.11.2007, CFR gave the newly founded company 30 locomotives and 1,402 train cars, a first part of the capital contribution agreed in the company set-up by-laws.

One year later, on November 26, 2008, CFR transferred an additional 49 locomotives and 2,762 train cars to RSCO, and had still to transfer 2,236 train cars.

The document Sova sent the Finance Ministry - requesting a tax control over the activity of Rolling Stock Company – shows the remaining 2,236 train cars CFR was to transfer to the joint-venture had been deemed unsuitable for international traffic and replaced by 1,667 train cars, with an equal value to those deemed unsuitable. CFR transferred both the suitable and the unsuitable train cars to the joint-venture.

The same document states "all the 6,500 locomotives and train cars underwent technical inspection in just four days, one year before Rolling Stock Company was set up de facto".

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The first key move in the process of turning Rolling Stock Company in what may be CFR Marfa's biggest parasite company occurred on November 24, 2008, when Raiffeisen Bank notified CFR of its intention to sell its shares to GFR, requiring CFR Marfa to state whether it wished to exercise its preemption right on the offered stock.

"The CFR Marfa General Shareholders Assembly decided, through Decision no. 43/03.12.2008, not to exercise its preemption right on the stake of 7,156 shares," Sova wrote in the note to the finance minister.

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This is when GFR takes control of the joint-venture and comes to own more than 50% of the shares and basically gets to call shots regarding the assets CFR Marfa had brought in as capital.

Even in these circumstances, the complicity of those who should have protected the interests of state-owned CFR Marfa in the association with GFR went so far that, according to KPMG's conclusions, CFR Marfa representatives in Rolling Stock's General Shareholders Assembly and management board "always voted unanimously" on the decisions the majority shareholder subjected for approval.

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The apocalyptic picture is completed by information in another document – a summary of the KPMG Report presented in CFR Marfa's General Shareholders Assembly and management board. In this document, signed by the current manager of CFR Marfa, George Buruiana, CFR Marfa officials wrote that "in the interval 2007-2013, CFR Marfa, through its representatives on the General Shareholders Assembly and management board of Rolling Stock, adopted contradictory decisions that weakened its position" within the joint-venture.

The "contradictory" decisions are listed: CFR Marfa renounced its preemption right on the shares sold by Raiffeisen Bank, accepted that GFR become the majority shareholder including by lowering the capital following’s the bank's exit, renounced veto rights over decisions made by the General Shareholders Assembly and management board of Rolling Stock, "a right established in the by-laws, upon the set-up of the joint-venture", and, finally, accepted the changing of quorum requirements for General Shareholders Assembly and management board meetings from 80% attendance to 25% attendance, "allowing the shareholder GFR, which owns 51%, to hold meetings with just its own representatives".

Maybe the biggest help CFR Marfa gave Gruia Stoica's group to let it have full control of Rolling Stock Company was that, according to the same document, the state company accepted to delegate competencies of the General Shareholders Assembly and management board to the general manager of RSCO over commercial contracts of up to 50% of the company value, meaning up to around EUR40 million per contract.

"Considering the type of contracts concluded by RSCO, the delegation of competencies was practically accepted for all commercial contracts. The role and importance of the General Shareholders Assembly and management board became insignificant in managing the company and protecting the interests of shareholders (CFR Marfa in particular)," notes the summarized KPMG report signed by CFR Marfa general manager George Buruiana.

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The robbery begins

With full control over Rolling Stock Company, Gruia Stoica's firms started working to recover the financial contribution GFR had made to the capital of Rolling Stock.

In a first stage, under suspicious conditions, GFR recovered RON56.8 million of its contribution, by lowering the share capital of Rolling Stock Company, while still retaining more than 51% of the company and control over decisions.

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Repair works on train cars and locomotives contributed by CFR Marfa were made for at least double the regular price, according to KPMG auditors. For instance, in 2008, CFR Marfa had an average repair cost per train car of EUR3,314, while Rolling Stock paid an average EUR8,767 in the interval 2008-2014.

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The audit report shows that most of the firms that provided maintenance and repair services to  Rolling Stock Company are owned by Stoica's Grup Feroviar Roman. The bulk of the money paid for train car repairs went to Reva Simeria and Remar Pascani, while locomotive repairs brought good money to Reloc SA. All these companies are connected to GFR, according to KPMG.

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According to KPMG, by December 31, 2013, only 4,235 of the total of 5,874 train cars and locomotives brought in by CFR Marfa to the Rolling Stock Company had been repaired using GFR's money. It is not clear from the documents obtained by the Investigative Media Center whether the remaining assets are still defective or are in good condition and have not required any repairs.

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Rolling Stock Company leased train cars and locomotives, largely to firms part of Stoica's Grup Feroviar Romana, at half the price CFR Marfa charged for the same service.

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Rental conditions for Rolling Stock Company customers are also permissive, as shown in the audit report: there are "contracts reserving rolling stock that include no penalty clauses in the event said rolling stock is not leased".

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On page 37 of the audit report, auditors note the duration for the collection of receivable by Rolling Stock Company routinely exceeds the 30 days specified in lease contracts and suspect Rolling Stock Company, which manages CFR Marfa assets, was financing entities part of GFR at zero cost.

"We have not been informed whether the company has billed any penalties for payment delays. In the event that no penalties are perceived, this may constitute the financing of acquisitions by GFR group entities and affiliated entities at zero cost," the report notes.

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Moreover, according to KPMG, the majority of contracts concluded in these conditions are valid until 2020, as stated in the feasibility study.

Conclusion: Rolling Stock Company overpays GFR for repairs and then leases for low prices the assets brought into the joint-venture by CFR Marfa to companies part of Gruia Stoica's group, blocking these assets through reservation contracts with no penalties and thus disposing of these assets until 2020.

The summarized audit report signed by CFR Marfa general manager Buruiana on August 21, 2014 is explicit. At no. 3, the authors of the document state the following: "The consequences of CFR Marfa's successive releases of control over the management of RSCO's activity have, in time, led to: a) practicing train car and locomotive lease tariffs way below the market price to the advantage of the entities leasing these assets (…). These entities were, 90%, companies connected to GFR or GFR itself; b) practicing of train car and locomotive repair tariffs approximately 100% higher than the market price or the price of such services contracted by CFR Marfa directly, tariffs that have been collected by repair units of which 90% are part of GFR (Pascani, Simeria, Darc etc.)”.

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In these conditions,KPMG auditors note CFR Marfa's asset investment in Rolling Stock Company, estimated at EUR47.2 million, has proven completely unfeasible, producing zero revenues for CFR Marfa and becoming, instead, "a business fully controlled by GFR, integrated among the GFR group's repair units and clients part of the GFR group".

On the page listing conclusions and recommendations, auditors noted: "We do not understand the reasons why the CFR Marfa General Shareholders Assembly adopted, on December 23, 2008, the decision to lower GFR's cash contribution by RON56,780,000," drawing attention to further irregularities.

Moreover, in the conclusions regarding the economic performance of Rolling Stock Company, auditors noted "the business plan (of Rolling Stock Company - e.n.) seems to be drafted by GFR and contains no estimates of profitability indicators".

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Who is responsible?

On August 12, 2014, CFR Marfa's internal audit service verified CFR Marfa's activity within Rolling Stock Company and showed the circuit of documents regarding business decisions made by the joint-venture.

According to this internal audit report, CFR Marfa had not received General Shareholders Assembly decisions and minutes of proceedings from the management board of Rolling Stock Company in view of archiving. CFR Marfa representatives on the board of Rolling Stock Company said the documents were not archives because "CFR Marfa did not have a detailed  internal procedure" for this.

In other words, the representatives of CFR Marfa on the board of Rolling Stock Company did not find it necessary to inform CFR Marfa of the decisions made even though said decisions directly regarded assets of more than EUR40 million belonging to the state company.

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The people who were unable to find a procedure obliging them to inform the state company of their activity in Rolling Stock Company and protect the state's interests in this joint-venture, according to the report of August 12, are the following:

- members of the General Shareholders Assembly of Rolling Stock Company: Calin Gratian George (2007 – August 31, 2009), Frasinoi Mihai (August 31, 2009 – May 27, 2010), Micu George (May 27, 2010 – August 14, 2012), Zaharia Constantin (August 14, 2012 – January 2013), Draghici Dragos Alexandru (February 2013 – February 2014) and Barculet Pavel (February 2014 – May 28, 2014);

- members of the Management Board of Rolling Stock Company: Micu George (2007 – May 27, 2010), Ion Constantinescu (May 27, 2010 – August 14, 2012), Adrian Taban (August 14, 2012 – November 21, 2012), Ionel Voicu (November 21, 2012 – November 14, 2013), Enache Florin (November 14, 2013 – May 28, 2014) and Ionescu Violeta (May 28, 2014 – present).

People in the "system"

All CFR Marfa representatives who served as members of the General Shareholders Assembly of Rolling Stock Company are former managers of the state railway company, which makes the explanation about lack of reporting procedures even more ludicrous.

Gratian George Calin was the first representative of CFR Marfa on the General Shareholders Assembly of Rolling Stock Company. During his term, CFR Marfa renounced its preemption right on the purchase of stock ceded by Raiffeisen Bank. Also during his term, Rolling Stock Company decided the lowering of GFR's financial contribution to the company’s capital.

For a few months, January to August 2009, Gratian Calin was both general manager of CFR Marfa and the state company's representative on the General Shareholders Assembly of Rolling Stock.

According to adocumentsent to the Bucharest Stock Exchange on June 10, 2011, Gratian George Calin had been appointed on the management board of REVA SA Simeria the day before. Since 2001, REVA SA Simeria is part of the Grampet group, controlled by Gruia Stoica.

After leaving CFR Marfa, Calin worked for an Austrian railway operator and two years later returned to Gruia Stoica's group, as vice-president of Grampet, according to Ziarul Financiar.

Mihai Frasinoi was also general manager of CFR Marfa and manager of CFR Marfa Craiova.

George Micu was general manager of CFR Marfa for a while. There were media reports saying he was close to Anca Boagiu and was dismissed by Ramona Manescu after he was praised by Relu Fenechiu. He has also held other positions in state railway companies.

Constantin Zaharia, also a former manager of CFR Marfa, there have been reports that he allegedly attempted to favor GFR through Rolling Stock Company. He was also an adviser to minister Ramona Manescu.

Dragos Alexandru Draghici was general manager of CFR Marfa, after previously working in several national and multinational companies. Draghici died in February 2014, at a hospital in Bucharest, following a stroke.

Pavel Barculet was an economic manager of CFR Marfa and interim general manager following  Draghici's death. Barculet' name appears in the criminal complaint over the coal transport contract of CE Oltenia, sent by former Transport Minister Dan Sova to anticorruption prosecutors in May 2014, a document the Investigative Media Center presented here.

The aforementioned George Micu was also the first CFR Marfa representative on the Management Board of Rolling Stock Company. His successor, Ion Constantinescu, was also a member of the CFR Marfa Management Board but was dismissed together with the rest of the board by minister Sova, who said he wanted to take CFR Marfa out from the incidence of corporate governance .

Adrian Taban held various positions in the management of CFR Marfa, Ionel Voicu was general manager of CFR SA and was accused of participating in the attempted fraud orchestrated by Constantin Zaharia in favor of GFR, Florin Enache is currently manager of CFR Marfa train car division and Ionescu Violeta is the CFR Marfa's current representative on the Rolling Stock management board.

The Investigative Media Center will put all the documents obtained during this journalistic investigation at the disposal of proper judicial authorities.

(This story is part of the project “Public Funds in Romania – corrupt tenders, mismanagement and theft “, carried out by the Media Investigation Center in partnership with Freedom House Romania and Expert Forum Romania within a grant of the U.S. Department of State, through the United States Embassy in Bucharest. The Media Investigation Center is solely responsible for the content of this story, which does not necessarily reflect the opinions of the U.S. Department of State or the United States Government. The partners and sponsors of this grant are in no way liable for this story.)

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