Policy brief 61 / September 2017 MONEY AND POLITICS the links between public procurement and political parties Authors
Romania Septimius Pârvu Cezara Grama Sorin Ioniță (editor) Prof. Dr. Dacian Dragoș
Croatia Munir Podumljak
Research assistants
Vladimir Costache Ioana Ene Victor Rouă
Databases
Septimius Pârvu & Alexandru Popescu
Cover graphics
Sorina Vazelina
Our thanks go to all the individuals and public institutions that helped us publish this report, either with advice or with technical assistance. We thank all the institutions that agreed to meet with us: Permanent Electoral Authority, Audit Authority, National Anticoruption Directorate, National Integrity Agency, Fight Against Fraud Department and National Agency for Public Procurement. Also, we thank termene.ro for their important contribution; without the data provided by the platform the research would be much poorer. Our gratitude also go to all the IT specialists who helped us work with the databases, to wholi.com for the database on political donations and to the journalists who provided information.
The translation and printing of this report has been co-funded through a project supported by the Rule of Law Programme South East Europe, Konrad-Adenauer-Stiftung. KAS RLPSEE assumes no responsibility for the contents of this publication, which belongs entirely to the author.
© Expert Forum, 2017 The content of this report and other materials can be read on www.expertforum.ro B. Gathering votes for the second voting round in the CHAPTER I. ROMANIA ...... 3 Presidential elections ...... 86 Introduction: “The first million” and C. Illegal financing of a what happens when e-government campaign involving a former Prime doesn’t really work ...... 3 minister: Quality in Construction I. METHOLODOLOGY ...... 4 Trophy ...... 89 I.A. The data ...... 4 VI. RISKS AND VULNERABILITIES - I.B. Unusable data in procurement: CONCLUSIONS ...... 92 by mistake or by design? ...... 5 I.C. The institutional framework ....6 CHAPTER II. CROATIA ...... 98 I.D. The Transposition of the EU Procurement Directives in Romania 7 An overview of integrity eco-system in the area of political party financing I.E. The EU funds and the ...... 98 dimension of the procurement market ...... 14 The public procurement landscape ...... 100 II...... COMPANIES AND POLITICAL DONATIONS ...... 17 Legal framework ...... 101 III.THE EU FUNDS ...... 33 Institutional framework ...... 102 III.A. The winners ...... 34 Overview of key public procurement corruption risk indicators ...... 103 III.B. Irregularities and fraud in EU funds...... 46 Evidence of politicization, corruption and clientelism in Public Procurement III.C. The expertise pays well...... 53 tied to European financial assistance in Publicity and services ...... 53 Croatia ...... 106 Consultancy and expertise ...... 59 Cohesion and Structural funds in Croatia ...... 107 III.D. Who got the EU funds for agriculture (PNDR)? ...... 63 EU funded public procurement .. 108 IV...... THE NATIONAL FUNDS FOR Detailed analysis of the top 10 INFRASTRUCTURE, AN EASY CATCH 74 Public Procurement contracts by value that derive from the EU Funds IV.A. National Investments 109 Company (CNI) ...... 74 Conclusions and recommendations IV.B. The National Program for ...... 112 Local Development (PNDL) ...... 81 V.CASE STUDIES ...... 83 1. Court decisions on fraud with EU Funds – art. 181 ...... 83 2. Using the influence or authority of a leadership position in a political party to gain benefits .. 85 A. Grilled chicken for the political campaign ...... 85 Policy Brief No. 61
Short list of relevant institutions Parties
MFE - Ministerul Fondurilor Europene / DA – Dreptate si Adevar Alliance (PD Ministry of European Funds + PNL) MDRAP(FE) - Ministerul Dezvoltarii Regionale, Administratiei Publice si ALDE – Alliance of European Liberals Fondurilor Europene / Ministry of and Democrats Regional Development, Public Administration and European Funds PC – Conservative Party
CE/EC - Comisia Europeană / PDL / PD – Democrat (Liberal) Party European Commission PMP – Popular Movement Party UE - Uniunea Europeană / European Union PNL – National Liberal Party
AM - Autoritate de Management / PSD – Social Democrat Party Management Authority UDMR – Democratic Alliance of SMIS - Sistemul Unic de Management Hungarians in Romania al Informaţiei UNPR – National Union for Romania’s POS M - Programul Operaţional Progress Sectorial Mediu USL – Social Liberal Union (PSD+PNL) POR - Programul Operaţional Regional
POS T - Programul Operaţional Sectorial Transport
DLAF - Departamentul pentru lupta antifrauda /The Fight against Fraud Department
DNA – Direcția Națională Anticorupție / National Anticorruption Directorate
ANAP - Autoritatea Naţională pentru Achiziţii Publice
ANI - Agenţia Naţională de Integritate / National Integrity Agency
AEP – Autoritatea Electorală www.expertforum.ro Permenantă / Permanent Electoral Authority
CNI – National Investments Company
2
Money and politics: the links between public procurement and political parties
CHAPTER I. ROMANIA databases are poorly designed, incomplete and do not match each Introduction: “The first million” other. Contracting authorities, in and what happens when e- particular local governments, do not government doesn’t really work report all their transactions online, or at least they do not follow consistently This report has a twofold goal: to all the stages of the procurement explore with data if there are indeed cycle. consistent connections between the beneficiaries of public funds on one Monitoring authorities have largely hand, and the political parties and failed to ensure the discipline in electoral campaigns on the other reporting and, as it turned out in this hand; and to show how much this research, cannot respond to our legal phenomenon, if real, has in impact on request for public information simply the procurement system in Romania, because they themselves do not have especially as far as the EU funds are it, or not in meaningful format. Where concerned. in principle everything should be available at the click, weeks of Such connections have often been forensic work were needed to compile postulated in mass media or during data about the same public contract, political disputes over the years, but which may appear under different producing robust statistics to back the titles, or with a different spelling of the allegations is another matter. The contracting authority’s name, or with task is difficult because, naturally, the missing county to which a rural when illicit collusions or clientelism do commune belongs which has a very indeed occur, the perpetrators do common name, and so on. their utmost to keep things hidden from public view. Social network All these remind one of a conclusion analysis on company ownerships anticipated by many others before us: requires diligence, access to e-government works well if there is a information and instruments which reasonably clean and functional public sometimes resemble the techniques of administration to start with, operating big data analysis. What is more, the with traditional instruments. If learning process has worked as well: government was disorganized before actors engaging in clientelistic computers, all you have is offline transactions have grown more dysfunctions and partiality are sophisticated over time. Gone is the transferred online. gilded age of the beginnings, when company founders made their And still, once such obstacles were proverbial first million by crudely overcome, patterns and trends did bullying or buying their way into emerge which confirmed our initial business, leaving a lot of traces assumptions: clientelism is around. Today more attention is widespread, sometimes benefiting needed to detect trends and patterns party organizations, other times trans- of action of economic actors who partisan local networks. Probably the already have a foothold in the disorganization in the system is not www.expertforum.r industry. entirely unintended, but encouraged in order to make things harder to Second, e-government in Romania is monitor. Otherwise it is hard to more of a myth – and a costly one, for explain such the gaps and flaws in the that matter – than reality, at least in reporting systems as those presented o the area of public procurement: in detail in the Methodology section 3
Policy Brief No. 61
below and which, had we not been within the report. All the restricted by space, would read like a shareholders schemes and visual policier. procurement calculations are taken from the same website One final note: our research is not www.data.gov.ro – procurement meant to investigate and document data – contracts and direct criminal cases, but rather to show procurement exported from the how political connected companies official procurement platform, create the circumstances to win www.e-licitatie.ro – procurement procurement procedures. We do this starting from public data, interviews procedures and coverage in mass media. We only www.fonduri-ue.ro - projects and followed existing criminal cases contracts exported from MYSMIS related to illegal financing of political for the programming period 2007- parties and frauds related to EU 2013 funding in order to illustrate and wholi.com/who/ro-contributors and explain the mechanisms the politicians the Official Gazzette – information use to get money. We have also met about political donations with several relevant institutions in www.afir.info – data for PNDR order to get a better picture of the www.pna.ro, www.integritate.eu - phenomenon. The major scope of this data on investigations, assets, report is to map clientelistic and conflicts of interests and political network that have the capacity to influence the procurement incompatibilities market in their own purpose or for the www.cni.com.ro/proiecte/ - benefit of their supporting party. projects financed by the National Those who want a definitive proof that Investments Company a person or company broke the law, Data on elections from should use the appropriate legal www.roaep.ro, the website of the channels instead. Central Electoral Bureaux 2004- 2012, Map of Migration published I. METHOLODOLOGY by EFOR, www.expertforum.ro/primari- I. A. The data clientelari Data requested from public The following data sources were used institutions through law 544/2001 for compiling the databases, charts (FOIA) – AFIR, MADR, courts, DNA, and in the analysis: DLAF, AEP Annual reports of several www.termene.ro – data about institutions – DNA, Court of companies and procurement. A Accounts, OLAF, DLAF part of the information about the Interviews with several public companies has been provided by institutions – DNA, DLAF, AA, ANI; RECOM. All the names written in www.expertforum.ro interviews with specialists in public capitals are taken from procurement1 and party financing termene.ro. We have also used the Media coverage and information procurement module of termene.ro from individual journalists. It is for general statistics, reproduced important to note that the cited
1 We interviewed more than 20 public procurement https://docs.google.com/forms/d/e/1FAIpQLSf1OJllG 4 experts during a meeting in Cluj Napoca, 9-10 June M4oDWZVmxwd9VRGm9UgdQf3GyAAMwJ4947oDq_u 2017. The questionnaire can be consulted here: iQ/viewform
Money and politics: the links between public procurement and political parties
sources were selected carefully; create statistics related to number of many of those consulted who did offers or CPVs; we had to create not offer credible information or shortcuts in order to produce some could not have been verified from statistics. multiple sources were ignored. We have also factored in the reality of For the same contract, different data and numbers appears in various a highly politicized mass media, official databases. For example, when including at the local levels, and trying to match them using the value therefore did not take at face value of the contract, the timing and the articles providing untrustworthy winning company, only about 10-15% information or bearing the marks of the rows could be matched; this or slander or blackmail. means that the value of the contract is not the same in both databases. I.B. Unusable data in procurement: by mistake or by We tried to combine the number of the design? contract and the date in both databases, but the number of contract One of the major setbacks in is not provided by all the contracting analyzing the procurement procedures authorities posting in SEAP. Another was due to the poor quality of data. attempt was to compare the sums We used mostly .csv and .xls with the winners of the procedures, databases, as the information from but this led to a percentage lower than www.e-licitatie.ro cannot offer a 20% of compatibility. format usable for statistical analysis; it can only be consulted for individual The database containing information cases. on EU funds lacks important information such as the CPV code of The data published by several the procurement (showing the type of institutions, under the supervision of product of service that has been the Government / OGP, represent a provided) or the registration number very important step forward in order of the contracting authority (CUI). The to link different activities and to name of the contract is not always generate investigations. Still, the clear, as there are contracts named quality of this data needs to be such as CTR NR 9146/05.05.2011, improved significantly, both at the CTR NR 4604/28.04.2011, CTR NR level of those who provide it (the 6622/12.10.2011 or CTR NR beneficiaries / contracting authorities) 8656/06.09.2010 that do not indicate and the exporting institutions what is the object of the contract. themselves. Partial information could be obtained from expected results or objectives, but not specific for each contract. It took us more than 6 months and the time of several IT specialists (to whom we thank for the patience) to The lack of interconnectivity is a major get to the conclusion that two issue, not just for watchdogs or
www.expertforum.r databases exported by public journalists, but presumably for the institutions (SEAP and MFE), which public institutions themselves which should have included similar generate and use them. The information, cannot in fact be databases cannot be linked because matched. The general procurement they have different structure and data and the EU funds databases therefore there is difficult to put them o together in order to make sense. could not be put together in order to 5
Policy Brief No. 61
As we have shown before2, the RON) in the sectors of Regional contracting authorities do not publish Development, Environment, the data in the procurement portal in Transport; a separate database an orderly form. The result is that containing 86,787 entries was used for nobody can generate relevant PNDR (5 bln RON). statistics since the contracting authorities do not include in SEAP the I.C. The institutional framework type of financing or the program. For example, 28,769 entries out of more In the report we used information almost 900.000 are marked as related to several institutions, related FonduriComunitare. Separately, just to party financing, EU funds, audit, 12,438 entries could be found in criminal investigations, wealth or FondEuropean. By comparison, the conflicts of interests. You can find exports published by MFE in 2016 below a list of relevant institutions for include more than 150,000 contracts the research and their main roles: (including taxes, expropriations and other similar operations). Therefore, it The electoral authorities was difficult to identify from which European fund the procurement was The Permanent Electoral Authority it is financed (see more explanations in an administrative autonomous agency the section dedicated to PNDR). ensuring the enforcement of the legislation regarding the funding of Our research would have been very political parties and electoral expensive and less productive without campaigns. tools such as those provided by the private operator www.termene.ro, an The Court of Accounts controls the excellent resource and analytic tool; reimbursement processed and we are grateful for their disinterested approved by PEA to the political help. Minimal data about a company’s parties. It also performs control and shareholders bought from RECOM audit actions regarding the costs 8 lei (1.7 Euro) per company; transparency, legality and opportunity each new search involves extra of the expenses done by the public payments. Therefore, in order to get administration. all the information included in this report we would have needed to The EU funds management authorities spend thousands of EUR; www.termene.ro kindly spared us this They have the role to evaluate, ensure cost. the implementation and monitoring of projects and the management of funds Out of the whole portfolio financed for the specific operational programs. from European funds, our analysis They are AM POS MEDIU, POS included just the projects connected Transport, POS REGIO or the Agency to infrastructure (programming period for Payments and Intervention in 2007-2013), represent almost 60% of Agriculture (APIA), for PNDR.
www.expertforum.ro the total funds spent between 2007 and 20163. Out of a total number of Integrity and control agencies procurement contracts of 148,002, we looked at 26,488 entries (81.6 bln.
2 See the report related to the procurement ue.ro/images/files/transparenta/date- procedures from PNDL, deschise/Contracte_anonimizate_Septembrie_2016.c http://expertforum.ro/en/clientelism-2016/ sv 6 3 Reported to the export in September 2016, http://www.fonduri-
Money and politics: the links between public procurement and political parties
The Fight against Fraud Department the entire accountancy with expenses (DLAF) controls the use of EU funds declared for the EC. and is the national coordinator of the anti-fraud fight. The institution carries Procurement authorities out operative controls starting from the clues received from OLAF, from The National Public Procurement national authorities having Agency has been set up through OUG competencies in managing the 13/2015 and centralized the work of Community financial assistance or ex the former National Authority for officio. If possible fraud is discovered Regulating and Monitoring of Public by other institutions that manage EU Procurement (ANRMAP) and the Unit funds, the case is send to DLAF for for Coordination and Verification of further investigation. DLAF can send Public Procurement (UCVAP/CVAP) the case to DNA. within the Ministry of Finances. ANAP elaborates and implements the The National Anticorruption procurement policies and monitors the Directorate (DNA) is the prosecutor's efficiency of the functioning of the office specialized in combating high procurement system. Through HG and medium level corruption. It was 398/2015 ANAP supports the activities set up as a necessary tool in of the AMs in order to ensure that the discovering, investigating and EU and national provisions are put into indicting such cases. All the frauds practice. with EU funds are under the jurisdiction of DNA. I.D. The Transposition of the EU Procurement Directives in The National Integrity Agency ensures Romania the public integrity and prevents corruption by assessing wealth, In public procurement, the incompatibilities and conflicts of development of the legal regime took interests. place in the context of Romania’s accession to the EU and of the The audit authorities legislative harmonization required as part of this process. The old The Audit Authority was set-up to regulation, Governmental Emergency conduct external public audit for non- Ordinance (GEO/OUG) 34/2006, in reimbursable EU funds, including pre- place with subsequent amendments accession, structural and cohesion until 2016, transposed the then EU funds, European Agricultural Directives on public procurement using Guarantee Fund, European Fishery almost the same wording and Fund and post-accession funds. expanding their realm beyond the thresholds established in the At the national level there is only one Directives. As a result, contracts below Certification and Payment Authority the EU thresholds and above the (ACP) within the Ministry of Public national threshold for direct Finances that works according to EC procurement were subject to an
www.expertforum.r Regulation no 1083/2006. The almost identical regime as the ones Authority verifies certifies that the above the EU thresholds. The law did declared expenses are conform to the not make a distinction based on the legal provision, send to the EC the value of the contract with regard to certified expenses declarations and the drafting of the award the payment requests and centralizes o
documentation, abnormally low tender, quantification of contract 7
Policy Brief No. 61
value, remedies, etc. Certain 394/2016 for the implementation of distinctions did exist based on the Law no. 99 / 2016, Government value of the contract and they Decision no. 395/2016 for Law no. regarded the applicable procedure 98/2016 and Government Decision no. (type of procedure, publicity rules, 867/2016 for Law no. 100/2016). and time limits). The transposition process was not The Romanian legislature has chosen without major challenges. The process to implement the new Public had started initially in a very Procurement Directives through a promising manner and it seemed for a legislative package that includes four while that Romania would be among new laws: (i) Law no. 98/2016 on the first countries to complete the public procurement; (ii) Law no. transposition if not ahead of time at 99/2016 on sector procurement; (iii) least on time. In 2015 the Law no. 100/2016 on works Government adopted the first National concessions and services concessions; Strategy on Public Procurement, a and (iv) Law no. 101/2016 regarding framework document meant to include remedies and appeals concerning the not only the national response to the award of public procurement contracts changes brought by the new directive and concession agreements and for but also some of the strategic the organization and functioning of objectives of the government in this the National Council for Solving area – creation of a threefold Complaints. hierarchy of legal rules in public procurement (will be discussed The legislative package implements below), including primary legislation, the new Directives and repeals secondary legislation but also a Government Emergency Ordinance significant body of guidelines and no. 34/2006 on the award of public instructions coming from the National procurement contracts, works Agency for Public Procurement concession contracts and service (ANAP); involvement of ANAP in all concession contracts. The four laws the phases of the public procurement were published in the Official Gazette process (including at the stage of the of Romania on 23 May 2016 and execution of the contract, where in the entered into force within 3 days from past numerous illegalities by their publication. The decision to contracting authorities took place); transpose the Directives through four and the organization of the ex-ante separate laws was harshly criticized control based on a sample of by practitioners due to the sheer procedures (currently all procurement volume of the new legislative procedures are checked). framework (more than 300 pages of primary legislation instead of 130) In 2016 Romania had general and the increased number of sources elections at both local and national of law that need to be consulted, level (for Parliament) and this although this time Romania just determined the transposition process
www.expertforum.ro replicated the approach at EU level to to stagnate. Shortly after the have different pieces of legislation. Parliament adopted the new laws in May 2016, it became clear that the Shortly after the approval of the laws, entire system of public procurement the government also issued was not ready for the transition. One application rules (implementation of the most cited problems was the
norms) in the form of Government temporary suspension of the electronic 8 Decisions (Government Decision no. portal (SEAP) for more than 3 weeks,
Money and politics: the links between public procurement and political parties which determined a general blockage which form the primary legislation. At of all procedures. Also the new law for the same level in terms of their effects remedies required the creation of are also the Government Emergency specialized teams of judges at the Ordinances. Governmental decisions, level of tribunals and appellate courts, forming the secondary legislation, and the government decision needed come next, followed by Orders of the for the creation of extra positions ANAP President. Other authorities are came also late. feeling also entitled to add to the rules of procurement: the Competition Lengthy legislative procedures have council has its own procedure of determined in the past the investigating procurement contracts, government to regulate in the area of the Structural funds Management public procurement (but not only) via authorities have their own rules Government Emergency Ordinances. imposed usually on private companies, These are regulatory acts issued by and the Court of auditors has a 100 the Government under extraordinary pages operational manual that often circumstances (at least in theory) contradicts the instructions of ANAP. which enter into force immediately This complex web of legal rules and upon adoption (publication). They soft law is the major source of stress need however to be later approved by for contracting authorities. the Parliament, which can bring changes to the initial regulation. In the Romanian context it is Though the initial transposition was important to discuss the complicated done through law, subsequent relationship between primary and changes will take place through secondary legislation. Very often Government Emergency Ordinances. primary legislation merely transposes This manner of regulating via the European Directives. The emergency ordinances is highly Governmental Decisions very often criticized in Romania because it is add to the law by restricting the seen as a way of by-passing the interpretation of the provisions of the Parliament and avoiding legislative law. The same practice was common scrutiny and discussions of under the 2006 regulations. For governmental proposals. On the example, one area where the other hand, the specter of weak implementation norms heavily add to quality of Parliament amendments the primary legislation is the area of and the lack of correlation between procurement below thresholds– the them make this practice a resilient implementation norm impose one. contracting authorities to use a simplified procedure that resembles In addition to the new four laws and the open procedure, and below the their implementation norms, another national thresholds a procedure that significant source of law is implies the use of electronic catalogue represented by the Orders of the available online in SEAP (the online ANAP president and other soft law procurement system). materials issued by ANAP (National
Agency for Public Procurement). They It is important to note that the www.expertforum.r offer detailed information, often with drafting of the primary legislation was examples for contracting authorities. done by a legal firm contracted by the National Agency for Public Summarizing the sources of law, at Procurement – regulatory body the top of the legal hierarchy are the restructured recently. There are o laws adopted by the Government numerous voices who claim that the 9
Policy Brief No. 61
government missed an important and stakeholders’ involvement into the moment to make decisions and to regulatory process; absence of a well- publicly discuss strategic issues in established legal regime prior to de public procurement, although the transposition of the Directives; lack of government is not sure either what expertise of small and medium policies should pursue through public contracting authorities; fear of procurement. corruption and therefore little willingness to allow for the discretion The transposition process of the of the contracting authorities in how Directives in Romanian can be they apply public procurement norms. characterized by gold plating and The latter reason is worth commenting confusion in control. upon. Gold plating is not perceived as a negative phenomenon or something Gold plating. The term gold-plating that needs to be limited mostly as such is not used in the Romanian because it is seen as a means to fight legal literature. There are comments corruption. Stricter rules applied to a on the limitations of the copy and majority of contracts mean, as paste approach to the transposition of mentioned before, less discretion for EU Directives into the national legal contracting authorities. Subsequently, regime. It has been noted that very less discretion also translates into often there is no real debate and more limited opportunities for corrupt reflection on how these Directives practices. should be transposed, especially when they offer some discretion to the Consequently, following the same Member States regarding how certain path, as a result of gold plating, aims/principles can be achieved. contracts above the national threshold Another similar concept to gold for direct procurement (currently plating used in Romania is that of 30,000 Euros) but below the European over-regulation and this mostly apply ones are mostly governed by a regime to the case of EU structural funds. similar to the one provided for in the Often the limited absorption of these Directives. Similar to the previous funds is blamed upon over-regulation legislation, the award procedure is and stricter national rules compared slightly simplified but other than this to the requirements of EU institutions the applicable rules are similar. and to those from other Member States. Below we are describing three distinct situations which could be considered The copy-pats used for the 2004 examples of gold plating under the Directives was maintained in the Romanian public procurement legal transposition of the 2014 Directives. regime: There are several reasons why the legislator chose (again) to transpose - Stricter rules applicable to the public procurement Directives into public procurement contracts the national legal regime almost financed from EU money.
www.expertforum.ro identically and to extend this regime Corruption and constant fear of to the contracts below the European irregularities in public procurement thresholds and above direct has determined decision-makers to procurement. Some of these reasons scrutinize even more closely public include: lack of regulatory experience procurement procedures involving EU especially with regard to highly money. While regulators claim that
technical policy fields such as public this is a precautionary approach, 10 procurement; limited public debates justified by past mistakes, other claim
Money and politics: the links between public procurement and political parties that there is no reason to treat these award of the contract. Despite the fact contracts differently, irrespective of that Member States have discretion their value. with regard to how they set up these participation guarantees, our claim is - Direct procurement. It is a that mandatory guarantees represent very interesting example of over- an example of over-regulation, with regulation. The secondary legislation potential effects on competition and details a procedure which allows direct exclusion of SMEs from certain purchasing to be commonly made procedures. The participation and the from an electronic catalogue available performance guarantees required from in SEAP. The law allows contracting SMEs. Law no. 98/2016 (and the authorities to buy outside the norms adopted for its application) catalogue when the needed products initially stated that the maximum and services from the catalogue do guarantee thresholds which not meet the needs of the contracting contracting authorities may set for authority, provided that a justificatory SMEs could not overpass half of those note is drafted. Contracting set for bigger tenderers. The European authorities ranging from local Commission argued that it unjustly administrations to universities all have favors SMEs to the detriment of all their own internal regulations on how other types of companies. The direct procurement should be Romanian responded by adopting GEO conducted outside of the electronic no. 58/2016 in order to avoid a catalogue. Some of these internal possible infringement. rules range from banning altogether buying outside the catalogue to Monitoring. The primary aim set by bringing very sophisticated proofs that article 83 from the new Public the catalogue cannot cover the needs Procurement Directive (monitoring of of the contracting authority. So public procurement) is developed in- basically the Romanian legislator took depth in the national primary and a provision from the Directive, secondary legislation. Due to the applicable mainly to above the EU corruption problems faced by Romania thresholds, and implemented it for in public procurement, the attention direct procurement. It is important to given to monitoring is understandable. say that electronic catalogues are not Over the years, the government has used in Romania for other contracts struggled to come up with the best although the law allows this institutional structure to provide possibility. adequate monitoring without creating additional problems, such as delays, - Participation guarantees (bid for the public procurement process. deposits) – EU public procurement The general reform of the public Directives do not regulate this aspect. procurement system from 2015 seems Directive 2014/24 states only that to have concentrated the majority of economic and technical conditions, the monitoring responsibilities in the financial guarantees and information hands of one agency, required from economic operators created/restructured with this occasion needs to be included in contract – National Agency for Public www.expertforum.r notices. The participation guarantees Procurement (ANAP). are usually deposits that contracting authorities require from tenderers in According to the new national order to ensure the validity of their provisions, ANAP is currently
offers during a given period of time responsible both for ex-ante o after their submission and prior to the monitoring (similar to the old 11
Policy Brief No. 61
regulation) as well as for ex-post fact that easy access is offered to monitoring (recent responsibility). synthetic information documenting the way in which the contract was The secondary legislation provides executed. that ANAP, before the publication of the participation invitation, reviews If as a result of the monitoring process the tender documentation (with the irregularities are discovered, ANAP exception of the technical notifies are bodies which are specifications or descriptive responsible in this area. One clear documentations) in order to example concerns the conflict of determine the conformity of the said interests. ANAP inspectors during the documentation with the applicable ex-ante control, if they find any public procurement legal rules. The situations described in the law as monitoring takes place for all public generating conflicts of interests, notify procurement contracts above certain the contracting authority. If the thresholds (approx. 50,000 EUR for contracting authority decides to ignore goods and services contracts and the recommendation of the ANAP 500,000 Euros for works contracts) inspectors and to approve the award and for all contracts financed from EU of the contract regardless of these money, irrespective of their value. For recommendations, ANAP will notify the contracts below the thresholds, the National Agency for Integrity. The monitoring is done based on a latter will also receive the entire sample, which is generated by SEAP documentation from ANAP concerning both randomly and by taking into that procedure. account some risk factors. Despite a relatively straight forward ANAP monitors ex-post the regulation of the monitoring process, compliance of the award procedures in practice numerous problems occur with the applicable legal framework mainly with the control performed by either as follow-up to complaint the Court of Accounts. The Court very lodged by a natural or legal person or often fines contracting authorities for on its own motion. The latter situation using for example award criteria other occurs with regard to award than the price (the use of qualitative procedures for contracts financed award criteria is considered a waste of from EU money (ANAP president public money). The interaction and drafts the methodology for the perhaps even hierarchy of the bodies monitoring of these award performing monitoring and control will procedures) and as part of thematic need to be fine-tuned in the future actions undertaken by ANAP. The because otherwise some of the secondary legislation also contains innovative provisions of the new laws detailed provisions regarding the will remain only on paper as long as obligation of the contracting authority contracting authorities fear the Court to issue a document which contains of Accounts. detailed information regarding the
www.expertforum.ro execution of the contract and, if According to the national legislation applicable, breaches of clauses by the (GEO no. 13/2015 for the economic operator. These documents, establishment, organization and which need to be issued in compliance functioning of ANAP), ANAP is with strict deadlines after the responsible for providing support to completion of the execution of the contracting authorities and economic
contract, will be made available online operators, especially SMEs, in order to 12 in SEAP. These provisions ensure the
Money and politics: the links between public procurement and political parties run and respectively take part in Corruption prosecutors is constantly public procurement procedures. scoring new and new successful convictions of high level officials The aim included under article 83 (6) starting their investigations from from the Directive – the keeping of public procurement procedures. the procurement documentation - was regulated stricter under the national A coherence of control is the first and legislation (primary and secondary). foremost measure needed in order to Contracting authorities are requested reestablish the proper functioning of to keep the dossier of the tender, the procurement system in Romania, irrespective of the value of the alongside with a flexibility in assessing contract, for as long as the contract the discretion exercised in good faith generates effects but no less than 5 by contracting authorities. Only then years since the completion of the the flexible tools provided by the contract. General public will have Directives might be of interest for access to this dossier in accordance Romanian contracting authorities. with the provisions of the national FOIA. At least according to the law access to these documents cannot be restricted unless the information is confidential, classified or protected by intellectual property rights.
The general copy-out approach in transposition is the defining characteristic for Romanian procurement legislation. The other one is gold plating – expanding the remit of Directives down to a national threshold of 30,000 EUR and complicating even the direct procurement.
The transposition of the 2014 Directives in Romania was done (almost) in time but many practicalities are impeding the full effect of the novelties from the Directives to have the envisaged impact. The various sources of law – laws, governmental ordinances, governmental decisions, orders of the ANAP, soft law or even guidelines issued by institutions that are not primarily responsible with public procurement policies such as www.expertforum.r Competition council, Structural funds management authorities, complicate the existence of contracting authorities which do not know who’s rules to follow. The fear of making o mistakes is generalized, as the Anti- 13
Policy Brief No. 61
I.E. The EU funds and the (8682 mln. EUR) were organized from dimension of the procurement EU funds and out of these, 1831 from market structural funds. In 2015, 3251 procedures (out of 22227) with EU
EU Allocations Advanced Statements of Reimbursments Amount operational 2007 - 2013 sums from expenditure sent to the from the EC of EC programs, EC 2007- EC (current absorption (effective sums 2007-2013 2013 rate) absorption rate) received (+ advance)
Value % Value % % POSCCE 2,536,646,054 229,879,990 2,283,562,481 90.02 1,962,614,800 77.37 86.43
POS 4,412,470,138 520,775,940 3,417,382,439 77.45 3,302,536,830 74.85 86.65 MEDIU POR 3,966,021,762 335,341,959 3,327,818,732 83.91 3,091,031,528 77.94 86.39
POSDRU 3,476,144,996 451,898,849 2,264,197,862 65.14 2,231,696,605 64.20 77.20
POS 4,288,134,778 525,615,535 2,950,099,444 68.80 2,770,996,174 64.62 76.88 Transport
Dimension of EU funds for 2007-2013, funds were organized summing up 31st July 2016, EUR, cohesion and 2324 mln. EUR. Out of this 1889 structural funds4 procedures counting up 1611 mln. EUR were organized from structural funds. Between 2007 and 2013 Romania recevied financial allocations of 17.25 bln. EUR from the Structural and Cohesion funds and up to 37 bln. EUR in total (of which 2.7 bln. EUR pre- accesing funds), including rural development funds – 7.7 bln5.
The platform www.e-licitatie.ro (named SEAP within the report) is the official website for public procurement. At the beginning of August 2017, the system registered 18,871 contracting authorities and a number of 111,869 bidders. The statistics show that the total sum of procurement procedures that were assigned through the system since its beginnings is 30,808,075,373,607 6 www.expertforum.ro RON (approx. 6,8 trillion EUR).
The data from ANAP7 shows that in 2014 out of 18367 procedures, 3384
4 http://www.fonduri- 6 http://www.e- ue.ro/images/files/comunicate/2016/22.08/raport_1 licitatie.ro/Public/PublicReport/Statistics.aspx 14 00_de_zile_final_plus_coperti_2.pdf 7 http://anap.gov.ro/web/category/analize-si- 5 www.hotnews.ro/stire/21508543 rapoarte-statistice/
Money and politics: the links between public procurement and political parties
% of % of No of No of Total estimated Total estimated total / total / procedures procedures value EUR / 2014 value EUR / 2015 value value / 2014 / 2015 /2014 /2015 Attribution procedure 18367 22227 20638086097 14440717165 1 1 Competitive 3 2 2,334,844.05 4,604,296.96 0.01% 0.03% dialogue Open 6,812 8,171 13,828,693,936.79 9,529,738,228.01 67.01% 65.99% procedure Restricted 59 41 2,648,706,525.40 293,905,847.99 12.83% 2.04% procedure Accelerated restricted 8 15 104,941,781.38 111,744,754.72 0.51% 0.77% procedure
Negotiation 292 313 663,783,904.24 961,718,024.15 3.22% 6.66%
Accelerated 7 16 6,679,863.19 7,179,008.11 0.03% 0.05% negotiation
Offers 11,186 13,669 3,382,945,242.03 3,531,827,004.96 16.39% 24.46% request
The situation of initiated procurement procedures 2014-2015, by type8
% of Total estimated Total estimated % of total Interest Procedures Procedures total / value value / value criteria / 2014 / 2015 value EUR/2014 EUR/2015 /2015 /2014 Financing 18,367 22,227 20,638,086,097 14,440,717,165 100.00% type NO 14,983 18,715 11,955,854,914 12,116,437,109 57.93% 83.90%
Other funds 7,400 8,694 5,237,958,081 4,412,888,767
Co-financing 178 193 510,974,247 346,953,726 Budgetary 7,404 9,828 6,204,317,367 7,356,594,616 funds Program / 1 2,605,219 Project YES 3,384 3,512 8,682,231,183 2,324,280,056 42.07% 16.10% Program / 3,378 3,510 8,589,873,213 2,318,172,266 Project Structural 1,831 1,889 7,743,709,861 1,611,428,635 37.52% 11.16% instruments
PNDR+Other 1,547 1,621 846,163,352 706,743,631 4.10% 4.89%
External credits with 6 2 92,357,969 6,107,790 state guarantee
www.expertforum.r The situation of initiated procurement procedures 2014-2015, by funds
8 http://anap.gov.ro/web/analiza-procedurilor-de- o atribuire-a-contractelor-de-achizitie-publica-initiate- in-perioada-2014-2015/ 15
Policy Brief No. 61
In 2014, 95.14% of the contracts contracts is 132.2 bln RON (approx. were attributed, while in 2015 just 29 bln Euro). Out of the entire 81.18%. database we selected 26,488 contracts, worth of 81.6 bln RON –
General procurement data 2007-2016, www.termene.ro
Procurement data EU funds, period 2007- representing 61% of the value. Even 2013, October 2016, source: termene.ro. the data might be incoherent in In green – value of contracts, in black the relation to the total amount of EU no of contracts funds, please be advised that all the information comprised within this According to the data published on report is official data. www.fonduri-ue.ro, until September 9 2016 , a number of 151,348 contracts have been signed in 16,056 projects. www.expertforum.ro This data includes contracts for taxes on services or approvals (for example with the State Inspectorate in
Constructions), as well as expropriations. The total value of the
9 http://www.fonduri- csv, http://www.fonduri- 16 ue.ro/images/files/transparenta/date- ue.ro/images/files/transparenta/date- deschise/Contracte_anonimizate_Septembrie_2016. deschise/Financing_contracts_Septembrie_2016.csv
Money and politics: the links between public procurement and political parties
II. COMPANIES AND POLITICAL otherwise than under the conditions DONATIONS established by the electoral laws.
Moreover, Law 334/2006 covers the rules on Art. 25. - (1) It is forbidden to finance in any 10 financing political parties in way the electoral campaign of a party, of their Romania. The legislation was modified alliance or of an independent candidate by a several times during its existence and public authority, public institution, autonomous it has been republished twice, once in administration, national company, company or banking company, to which the state or 2010 and once in 2015, when a wave administrative-territorial units are majority of changes affected the entire shareholders, or by companies that carry out legislation regarding the elections. activities financed by public funds. The ban applies to commercial companies that have carried out activities funded by public funds 12 In the original version, the parties months before the beginning of the election could receive donations up to 0.025% campaign. of the revenues set in the budget for the respective year. In electoral Donations from religious cults, unions years, the limit goes up to 0.050%. or foreign citizens and organizations An individual could donate up to 200 are forbidden. minimum wages per year, while a legal person could donate up to 500 The logic of the law was that the salaries. These values also include electoral campaign should be financed goods, buildings etc. mostly from private sources and not the public budget. The state The identity of the donor remains subsidized the parties that acceded to confidential if the donation is under 10 the Parliament or were elected at the salaries per year. If the donation goes local level and distributed funds over this sum, the name and the according to a certain algorithm. sums are published in the Official st Gazette until 31 of March next year. Still, in 2015 a major paradigm The total of confidential donations change took place. The financing cannot go over 0.006% of the switched from private to public. The revenues established in the state state reimburses the expenses for the budget for that certain year. campaign if the party gets more than 3% of the votes at central or local The law stated that it was forbidden level, in certain conditions. The to accept in a direct or indirect unofficial explanations from political manner donations or services that are parties was that the drastic made visibly in exchange for modification was operated especially economic or political advantage. Also, because private financing would have art. 10 stated that: also drawn risks of corruption as both candidates and donors were seeking It is forbidden to use the financial, human and for money and influence. The parties technical resources belonging to public still have to raise money for the institutions, autonomous administrations, national companies, commercial companies or campaign, but they know that they
www.expertforum.r banking companies to which the state or will be able to get the money back. administrative-territorial units are majority shareholders in order to support the activity of The new system may involve high political parties or of their electoral campaign, costs from the state budget, but all
10 o http://www.cdep.ro/pls/legis/legis_pck.htp_act?ida= 65995 17
Policy Brief No. 61
the stakeholders consulted regarded it participate in the elections; no clear as more stable and transparent, rules apply to this initial period and especially since the refunding process would-be competitors can use their is subject to two filters: first by the own funds to create promotion Permanent Electoral Authority (the campaigns with banners or other institutions that manages the materials. reimbursements); and second by the Court of Accounts that checks the On the other hand, the rules during decisions of the PEA. Moreover, the the campaign period proper have temptation to get illegal financing may become stricter, as the competitors decrease. can only use a certain type of electoral poster, on-line campaigning, offline In the new law, the limits of the meetings, press advertising or other donations stayed unchanged, but the printed materials. No banners are parties can now borrow money from allowed during this interval. If the individuals or legal persons up to 200 effects were important and visible or 500 salaries and the total sum when it comes to financing, there is no cannot be more than 0.025% of the clear conclusion about the impact on revenues from the state budget for voters: did it change in any way their that certain year. The loans can be trust in parties and the political obtained only through documents that process in general, as the campaign are certified by a notary, and these became less expansive and flashy? Are must be repaid in three years at they better informed? Etc. most; they can become donations if both parties agree and within the On the downside, the reporting specified limits. The loans can only be procedures have become a more transferred through a bank account; if bureaucratic. For example, the they represent more than 100 salaries campaign managers have to report the transactions must be published in physical data such as the number of the Official Gazette. This modification materials, by type, and what was criticized11 for the risk of allowing contractor produced them. We masked donations through this requested such information from the mechanism. PEA and cross-referenced it with other procurement information. Even if it is Parties must published in the Gazette not a very clear proof that a company until 30 April next year the list of is political connected, as it may work individuals and legal persons who with several parties and have donated in the previous year a sum substantial political connections with bigger than 10 salaries; the list of none, in some cases it gives a clue loans bigger than 100 salaries; and the value of confidential donations and loans with a value less than 100 salaries.
www.expertforum.ro The law also changed substantially the means and tactics allowed in electoral campaigns. First, the competitors have to raise signatures in order to
11 One of the major civil society coalitions that details in the monitoring report of the 2016 criticized the measure is Politica fara Bariere/ parliamentary elections, published by EFOR and 18 Politics without Barriers, Fiecare Vot coalition, http://expertforum.ro/raportul- https://politicafarabariere.wordpress.com. Also read de-monitorizare-a-alegerilor-parlamentare-din-2016/
Money and politics: the links between public procurement and political parties related to the political leaning of a covered by the legislation, or by other certain business group or individual. imaginative means such as the
Total sum of donations, all donors, all parties
300
250 Millions
200
150
100 92.273502 67.89107424 50 50.78772 5.108034778 15.365521 14.148127 6.1867815.456839 0 4.553283 1.930229 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Donations per year, companies
25 22.66 - top year for donations
20 Millions 17.08 15
10
6.35 5 2.31 2.75 1.57 1.86 1.40 0 0.24 0.54 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
The information is available just for wedding gifts which cannot be traced the 2016 local and parliamentary through the assets declarations elections; for the previous years such subject of verification by ANI. In 2016, data do not exist. ANI found that 108 ml. EUR is the sum identified in 141 cases of unjustified12 According to people we spoke with, differences between the personal donations and gifts (including political wealth and revenues; no case related donations) are in many cases hidden to political donations has been www.expertforum.r from the scrutiny of the monitoring identified so far. and regulatory bodies. This can be done by using relatives who are not Based on data from the Official Gazzette we could identify the
o 12 2016 annual activity report, oad.aspx?File=%2FFiles%2FFiles%2FNoutati%2FRap https://www.integritate.eu/Admin/Public/DWSDownl ort_Activitate_Anual_ANI_2016.pdf 19
Policy Brief No. 61
Donations per party, legal entities
Alianţa Dreptate şi Adevãr 0.00 Alianța Politică Partidul Social Democrat + Partidul Conservator 2.60 Asociația Partida Romilor "pro-Europa" 0.07 Forumul Democrat Al Germanilor Din România 0.21 Partidul Civic Maghiar-Magyar Polgari Part 0.27 Partidul Conservator 3.11 Partidul Democrat 0.07 Partidul Democrat Liberal Partidul Iniţiativa Naţionalã 0.02 21.42, meaning Partidul Mișcarea Populară 0.30 Partidul Naţional Democrat Creştin 0.01 37.75% 4.00, meaning Partidul Național Liberal 7.75% Partidul National Taranesc Crestin Si Democrat 2.40 Partidul Poporului Dan Diaconescu 0.16 Partidul Popular Maghiar din Transilvania 0.02 Partidul România Mare 0.00 12.38, meaning Partidul Social Democrat 21.82% Sorin Mircea Oprescu 4.17 Uniunea Croaților Din România 0.02 Uniunea Democrată Maghiară Din România 2.30 Uniunea Națională Pentru Progresul României 0.47 Uniunea Sârbilor Din România 0.08 Uniunea Social Liberală 2.67 0 10 20 Millions
Percentage of donations / year / 2015 2013 2006 companies 1% 0% 3% 2014 2007 5% 4%
2012 2011 11% 3%
2010 3% 2008 40% 2009 30%
companies and individuals who made cannot know to which branch of the the most important donations to the party the donations went). The total political parties. In turns out that the sum of political donations during the most fortunate beneficiary during the interval 2006-2015, made by both www.expertforum.ro interval analyzed was the Democrat individuals and legal entities, is Liberal Party (PDL), under its different 263.701.111 RON. names and local umbrella-alliances. Almost 40% of the funds have been given to them. (Of course, in 2014 the democrat liberals and the liberals joined under the name of National 20Liberal Party, so after this date we
Money and politics: the links between public procurement and political parties
Total donations for parties, PNTCD companies and individuals, 2006 -2015 Partidul Mișcarea 1% Populară, 1% UNPR Partidul Sorin Mircea 1% Conservator, 2% Oprescu, 3% Uniunea Democrată Maghiară Din Partidul România, 4% Alianța Politică Democrat Liberal, 36% Partidul Social Democrat + Partidul Conservator, 5%
Partidul Noua Generație-Creștin Democrat, 5%
Uniunea Social Liberală, 7% Partidul Național Liberal, Partidul Social 9% Democrat, 22%
All donations / years * PNL does not contain info for some years
45 40
35 Millions 30 25 20 15 10 5 0 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
www.expertforum.r
PD + PDL + DA PNL PSD + USL + PSD/PC
o
21
Policy Brief No. 61
parties. Some of them donated in
PDL + PD + DA PSD + USL PNL UDMR Mircea Florin Andrei 492900 Daniel Neagoe 498000 Crin Halaicu 512360 Attila Verestoy 677224 Theodor Stolojan 401926 Robert Negoita 497098 Ştefan Jicol 292240 Istvan-Lorant Antal 138800 Dumitru Ion Ivascu 368300 Valentin Ghita 495000 Cristian Busoi 275400 Istvan Antal 115908.5 Silviu Vaduva 322600 Viorica Dancila 424082 Stefan Jicol 273980 Gyorgy Frunda 108500 Jean Marian Aristotel Marinescu 281890 Marian Fiscuci 344000 Căncescu 247506 Iuliu Winkler 98920 Mihai Adrian Iosif Matula 281263 Campurean 342300 Adina Valean 226600 Attila Kovacs 64547 Octavia Daciana Victor-Viorel Petru Luhan 258758 Sarbu 318654 Olaru 200000 Francisc Arpad Marton 61900 Dan Carlan 238698 Valentin Calcan 311950 Liviu Ciocoiu 200000 Laszlo Borbely 58277 Cristian Constantin Coman Dan Poteras 205000 Şova 299530 Mihail Bălăşescu 200000 Istvan D. Erdei 47741 Ion Tudor 203571 Ion Toma 283702 Maria Stajcic 200000 Karoly Tanczos 45000 TRANSILVANIA MODUL Forumul Fundaţia Culturalã Dr. CONSTRUCTII 435000 PROIECT SA 518000 Academic Român 300000 Bernady Gyorgy 215000 SC ELITE LUKOIL ROMANIA 429750 CENTER SRL 500000 PICMENT SERV 250000 Sc Lotus Market Sa 183625 GRUP SALUBRIZARE INTERNATIONAL URBANA SA 360000 SC SIMCA SA 500000 - S.A. 166000 Sc Plaza Invest Sa 160000 SC AGROTRUST S.C. - Bilga Prest S.C. UMR S.A 300000 SRL 500000 - S.R.L. 150000 Asociatia Claudiopolis 159100 Victor Construct - Viewpedia Soft - S.C. ROMAYUA GROUP S.R.L. 255000 S.R.L. 450000 TEALI EDIL 150000 - S.A. 115000 TRANSILVANIA C- SC INTERFRIGO SC Green Energy TII 250000 LOGISTICS SRL 400000 SRL 141994 SC Marconst SRL 109500 OPRIA Aramis Invest - LIBERTATEA S.A 250000 INTERNATIONAL 400000 S.R.L. 138000 Fundaţia Progress 100000 S.C. SIMULTAN - SC PROSERV SRL 234045 SC DANIN SRL 300000 S.R.L. 100000 Sc Tc Print Srl 93452 SC GRANSILOZ S.C. ISOPLUS TRG DEVELOPMENT 225000 SRL 300000 LEVIROM 100000 ROMANIA - S.R.L. 60000 ECOLACT PROD PICMENT MULTI PROD IMPEX - TRANSGHIMB IMOB 225000 SRL 300000 COMPANY 100000 S.R.L. 56900
Top 10 donors / party / RON multiple years and to multiple parties.
The years with peak donations were A gross calculation shows that almost 2008, 2009 and 2012, electoral years. 10% of the companies13 that In 2008 we had local and donated have the object of activity Parliamentary elections, in 2009 residential and non-residential Romania organized elections for the activities (CAEN – 4120), including European Parliament and the schools, hospitals, sports halls, President and in 2012 for the local airports etc. 2% represent donations administration and the Parliament. from companies that built roads and
www.expertforum.ro highways and other 2% consultancy We have identified 1724 companies companies. and legal entities (persoana fizica autorizata) that donated to political
22 13 Reported to the financial year 2009 and just EU funds
Money and politics: the links between public procurement and political parties
The most important 15 donor From the analysis of the database and companies to the political parties are: combined with the information on ownership, there are some types of relations that can be drawn:
Company + CUI Value - The companies that donate to 1569870 727000 multiple parties so that they can GRIVCO - SA gain according to who’s in 199044 685000 power TRANSILVANIA CONSTRUCTII - The shareholders that have 12992050 657444 S.C. Prefab Invest - S.A. worked in relevant public Bucureşti institutions and may use their 1916198 609772 network to get contracts S.C. Prefab – S.A. - The companies that have 23438108 600000 SC BETA TRADING AND shareholders or administrators INVESTM that are in relation to officials in 25719304 600000 power SC RHINO GROUP There are companies that have TECHNOLOGY - a political influence behind them 16452789 598080 SC DACRIS CONSULT that is not visibly connected to 4013062 575000 the shareholders S.C. VICTOR CONSTRUCT - - There are companies who have S.R.L. shareholders, managers or 5205481 557929 S.C. Romerica International – censor who occupy public S.R.L. positions and are responsible for 2696473 518000 granting contracts MODUL PROIECT SA
24705343 500000 Below you can find a selection of SC AGROTRUST SRL typologies of companies starting from 13271230 500000 the conclusions from above that SC ELITE CENTER SRL donated to parties and have EU 1382316 500000 funded contracts. SC SIMCA SA 27905630 450000 Viewpedia Soft - S.R.L. VICTOR CONSTRUCT 10547022 429750 MIHALACHI VICTOR LUKOIL ROMANIA The company donated to PSD, PDL, Out of the total number of companies PNL, USL starting with 2007 the total that donated, 303 also received sum of 475,000 RON, almost half to contracts from public institutions, PDL and half to PSD. Victor Construct from European funds14, while 616 of is one of the most important all funds (without direct construction companies in Botoșani. procurement). Donating money to The press wrote that he is close to PNL political parties is not illegal, but may president of CJ, Florin Turcanu, www.expertforum.r show a certain connection to political investigated by DNA. parties.
14 The statistics refer to the entire EU contracts o database. From the selected database the number is 142. 23
Policy Brief No. 61
Judicial sources told MEDIAFAX that, after under the PDL government and is taking office as president of CJ Botosani, Florin close to the party15. Ţurcanu discussed with Victor Mihalachi, managing director of Victor Construct SRL Botoşani, how to "collaborate" so that the Gheorghe Fătăcean also holds shares payments for the executed works to be made at CITADIN ZALAU. According to ANI, by CJ Botosani according to the contracts; the President of the CJ would have receive during the exercise of the local councilor's 100,000 lei. mandate, S.C. "WATER COMPANY SOMEŞ" S.A. - The Zalău Branch, a state-owned company The agreement envisaged the execution of two (capital owned by territorial administrative contracts with European financing worth over units, including Zalău Municipality), where POP 55,000,000 lei, namely "Restoration and EUGEN holds the position of branch director, sustainable valorization of the cultural heritage concluded and carried out works contracts with and modernization of the related infrastructure S.C. "CITADIN ZALĂU" S.R.L., a trading in the area of Ventura", amounting to company established by the Zalău County Council16. Pop was member of PNL and
was declared incompatible by ANI.
12,624,033 lei, And "Rehabilitation of Emergency County Hospital Mavromati" in Botosani, in value of 44,936,701 lei. CONREC A significant part of the contracts the company signed came from Nova BĂRBOȘELU LIVIU-ALEXANDRU, FILIP Apaserv Botosani (33 of the IULICĂ, GĂZDAC IOAN, HUȘTIUC contracts), ANL and National DOINA, VRĂJITORIU MIHAI, AMARIEI Investments Company. NICOLETA-MIHAELA, ANANIESEI IOAN etc. TRANSILVANIA CONSTRUCȚII Conrec donated to PDL in 2010 the TRANSILVANIA CONSTRUCTII SA, sum of 20,000 RON and won 3 LEGEAN VIOREL, FĂTĂCEAN contracts in sum of 44,413,636.15 lei GHEORGHE, TIMOFTE ANDREI IANCU, from EU funds. The press wrote about TIMOFTE MIRCEA Mihai Vrăjitoriu, one of the administrators of the company that is The company donated to PDL in 2008 the related to the former PNL mayor of and 2009 685,000 RON. According to Botosani Cătălin Flutur; currently the press, the company prospered indicted for abuse in office. He is the www.expertforum.ro godfather of the former mayor17.
15 http://gazetadecluj.ro/blatul-psd-pdl-andronescu- 16 psd-acorda-o-licitatie-apropriatilor-pdl-transilvania- https://www.integritate.eu/Comunicate.aspx?Action constructii/, http://evz.ro/un-sponsor-pdl-are-cea- =1&NewsId=2181&M=NewsV2&PID=20 mai-buna-oferta-pentru-stadion-855101.html 17 http://www.jurnalulbtd.ro/articol-Flutur-este- 24 acuzat-ca-a-dat-lucrari-nasului-Vrajitoru-14- 1616.html
Money and politics: the links between public procurement and political parties
NITECH
DUMITRU NICOLAE, STANCU ASESOFT INTERNATIONAL NICOLAE, BUMBES MIMI LILIANA ANASTASESCU CRISTIAN, MINASEE Nitech donated both to PDL and PSD HOLDINGS LTD, JUNIUS-CONT SRL, in 2009. The company got several CITR FILIALA BUCUREȘTI SPRL contracts from EU funding summing up 5,744,389.59 RON. Nicolae was Sebastian Ghiță was the manager of deputy secretary general of UNPR and the company between 2001 and 2012. is the owner of a significant group of He became a member of the companies. He was arrested for Romanian Parliament, coming from trafficking in influence in the Microsoft Social Democrat Party. He is currently case. According to the press he investigated in several cases of DNA declared: and ran to Serbia; the Romanian authorities have requested for his When he receives a public office, the politician extradition. The company got invested is involved in recovering the amount 92,206,312.23 RON out of 20 of money he and his party or others have paid in the electoral campaign. Some of them contracts from EU funds; 2 were manage their own recovery mechanisms. More contracted from the infrastructure specifically, some of the ministers organize the funds. The best time for company was auction, negotiate the commissions and 2009-2012l during that period Ghiță determine how they will be rolled over. For was deputy. The company donated to others, as is my case, there are always those willing who manage these levers18 PDL in 2009. Team International,
www.expertforum.r another company where Ghiță had
18 https://www.antena3.ro/actualitate/greii-din- dumitru-retinut-de-dna-in-dosarul-microsoft- dosarul-microsoft-se-toarna-la-dna-o-parte-din- legaturile-pe-care-le-are-cu-elena-udrea-si-gabriel- o spaga-ajungea-la-pdl-legatura-dintre-280682.html, oprea-13474985, http://www.gandul.info/stiri/cine-este-nicolae- http://www.pna.ro/comunicat.xhtml?id=5444 25
Policy Brief No. 61
interests also donated to PDL in 2009. CCCF was a shareholder of Societatea In 2010 PDL was in power. de Constructii In Transporturi
SC CCCF DRUMURI ȘI PODURI, Bucuresti SA19. This company had 16 FILIALA ROMÂNIA (bankrupt) contracts between 2007 and 2015 with the Roads Company. Icleanu is also ANDRICI ADRIAN, DO-ROM shareholder at SC Constructii BETEILIGUNGS GMBH, TĂTĂRĂȘANU Feroviare Iasi that has 30 contracts LIDIA (a), ELEVAT CONT with CNADNR. The company donated CONSULTING SRL (a), BNS 20,000 RON in 2008 to PDL. INSOLVENCY IPURL (a), ICLEANU VIRGIL (a)
The company received 249,004,010 INSTITUTUL DE STUDII SI RON from 3 contracts (EU funds). PROIECTARI ENERGETICE SA / Andrici is the sponsor of CS ROMELECTRO Universitatea Craiova since 2013 and he is investigated in the illegal GHEORGHIU IOAN DAN, ROMELECTRO restitution case for obtaining gains SA, PAVEL MIHAI (a), CRISTIAN from certain ANRP decisions. Virgil NICOLAE SECOSAN (a), GÂRDAN Icleanu is a former director in the DUMITRU (a), CHIȚESCU ION EDUARD www.expertforum.ro National Roads Company (CNADNR) (a) and managed the Bechtel contract.
19 http://adevarul.ro/locale/craiova/cine-adrian- calitatii-de-la-bechtel-sef-la-autostrazi-317284, andrici-finantatorul-cs-universitatea-craiova-incasat- http://evz.ro/cine-sunt-persoanele-care-au-vazut- 4-milioane-euro-ilegal-retrocedari- contractul-bechtel-original-el-a-disparut-de-mai- 26 1_5470457f0d133766a822738f/index.html, bine-de-un-an.html http://www.gandul.info/stiri/fost-controlor-al-
Money and politics: the links between public procurement and political parties
ISPE donated 15.000 to PDL in 2008. 11 of them are with the Local Council Dan Ioan Gheorghiu is the former of the 3rd District. Romelectro got 2 councillor on energy issues for the contracts summing up 82,626,923.04 former PSD Prime Minister Victor RON. Ponta, personal councillor to former PDL minister Adriean Videanu and Romelectro also donated to PDL in former PSD Minister of Industry, Dan 2008 65,000 RON. The press wrote Ioan Popescu. Romelectro was part of that Romelectro got most of the the exterior commerce network before contracts in the period when Popescu 1989 (the communist age). Viorel was minister (2001-2004) and Gafița is the president of Romelectro Gheorghiu his councillor20. and shareholder to companies such as SOLAR ENERGY CONSTRUCTION SRL SOLAR FACTORY SRL or SUN PARK, where he is co-shareholder with Marian Anton, member of PDL/PNL and UNPR.
ISPE received from EU funds the sum of 1,100,681 RON out of 19 contracts;
www.expertforum.r
20 http://ziuadecj.realitatea.net/eveniment/baieti- cu-cine-si-a-petrecut-vacanta-omul-cheie-din- destepti-din-energie-si-afaceristi-intrati-in-vizorul- preajma-lui-ponta-fost-consilier-al-lui-videanu-si- o dna-vor-sa-construiasca-centrul-de-deseuri-de-la- dip-2/ cluj--147640.html, https://www.flux24.ro/unde-si- 27
Policy Brief No. 61
CONBAC S.A. Reabilitare si modernizare insula de agrement Bacau. CHIRAPLEȘ AUREL, a: ZAHARIA I. IONUȚ, PARAU I. VIOREL, LEONTE 18 out of 42 contracts are signed with GENIȚA, HARABA EMILIAN, the National Investments Company, COROCĂESCU M. ȘTEFAN mostly in 2008-2010, when PDL was holding the Ministry of Regional Mihai Șlic, local councilor (PDL) and Development. vicemayor of Bacau (PNL) was shareholder until 201521. He lost his PAULUS mandate due to incompatibility, as CONBAC and Profinstal got contracts IONIȚĂ TOMA, FUSEA PAUL DRAGOS, from the Municipality. Also, his wife, NEDELCU LUCIAN IUSTIN Slic Mariana was shareholder to the same company. The company donated Paulus22 received 13 contracts totalling 15,000 RON to PDL in 2012. 71,724,620.98 RON from EU funds. In
Conbac received from EU funds 5 2011, Toma Ioniță was PSD county contracts summing up 65.414.073,24 council in Prahova and was under RON. In 2015 the company signed a investigation by the National Integrity contract with Bacau Municipality worth Agency for conflict of interests. In of 40,862,792.45 for the project 2011 he owned shares in 12 23
www.expertforum.ro companies , while now he owns
21 http://www.zf.ro/companii/cum-a-reusit-o-firma- ile-puterea-constructorii-pe-bani-publici-si-relatiile- din-bacau-sa-obtina-un-contract-de-10-mil-de-la- lor-politice-xxiii-prahova-2-partenerii-clanului- olandezii-de-la-damen-6228680 cosma-131724.html 22 http://www.mediafax.ro/social/afacerile- 23 http://www.zf.ro/special/caracatita-politica-si- consilierilor-judeteni-prahova-un-consilier-psd-are- risipa-banului-public-una-din-zece-firme-unde-sunt- prin-cele-12-firme-ale-sale-18-contracte-cu-bani- administratori-consilieri-judeteni-are-contracte-cu- 28 publici-8859423, autoritatile-locale-cel-putin-8860734 http://www.puterea.ro/campaniile_puterea/campani
Money and politics: the links between public procurement and political parties shares or manages other 19 almost 12% of the contracts (the companies. highest percentage) were signed with CJ Dâmbovița, most of them between MAGUAY IMPEX 2009 and 2012, when the president was Florin Popescu, PDL; he was later PUGHIN CORVIN GABRIEL, PUGHIN sentenced to jail for electoral bribe. PAVEL (see the report)
The company donated to PDL in 2009. Gabriel Pughin was convicted in a
case investigated by DNA, in connection to EU funding24. Maguay received the contract due to the fact CONSMIN (insolvency) that the evaluation committee did not follow the legal procurement BÎRLAD CORINA TIBERIA, TUTUNARU procedures for the project Platforma EMIL, NOVA CONSTRUCT SRL, de e-learning la Universitatea de AUTORITATEA PENTRU Medicină și Farmacie 'Gr.T.Popa' ADMINISTRAREA ACTIVELOR Iași25. The company is forbidden to STATULUI, HERAL CONSULT IPURL participate to procurement procedures (a), MANIŢIU DAN (a), CONTAUDIT for 3 years. EVALEX S.R.L. (a)
Almost 40% of the company’s profit The company donated to PNL in 2012. comes from contracts with military Marius Botoroagă was administrator of units in Bucharest (02415, 2096 etc). the company. His name appeared in www.expertforum.r In terms of number of contracts,
24 25 http://www.pna.ro/faces/comunicat.xhtml?id=2865, https://www.agerpres.ro/justitie/2017/07/28/vasile- https://www.agerpres.ro/justitie/2017/07/28/vasile- astarastoae-fost-presedinte-al-colegiului-medicilor- astarastoae-fost-presedinte-al-colegiului-medicilor- condamnat-la-doi-ani-inchisoare-cu-suspendare-18- o condamnat-la-doi-ani-inchisoare-cu-suspendare-18- 01-16 01-16 29
Policy Brief No. 61
the Bute Gala case26. The prosecutors SELINA S.R.L. (insolvency) have stated the former PDL Minister Elena Udrea and the head of the RUS BENEAMIN, CITR FILIALA BIHOR National Investments Company (CNI), SPRL(a) Ana Maria Topoliceanu received 300,000 lei from Botoroagă in order Selina donated in 2012 the sum of to ensure the payment for the works 10,000 RON to PDL. Beneamin Rus the company executed for CNI. When has been indicted for money the payment from CNI was done, laundering28 and instigation to abuse Botoroagă paid 10% to another in office. He paid a bribe to Alexandru company as fictive consultancy that Iosif Francisc (UDMR) that was the transferred the money to another president of CJ Bihor in order to favour company that sent the funds forward Selina for buying terrain in Oradea and to the politicians. According to DNA a to facilitate the urbanism part of the money were used to cover documentation. expenses for the Bucharest branch of a party. Selina is administrator at Drumuri Bihor SA and so is Rus. Drumuri Bihor According to the press, Botoroagă is also owned by CJ Bihor. The most admitted the bribes and asked for important contractors for Selina are simplified trial procedure. He declared the Municipality of Oradea (36), CJ that he needed money for the salaries Bihor (17) and CNADNR (10). 50% of and agreed to return 10% of the the income of the company comes contracts27. from CJ Bihor and Oradea Municipality; 25% comes from Almost 45% of the revenues of the CNADNR. Trameco SA is another company came from CNI. Almost 50% company owned by Rus that has of the contract were signed with Apa contracts with CNADNR and CJ Bihor. Serv Valea Jiului S.A (105 contracts).
www.expertforum.ro
26 intereselor-la-contracte-de-zeci-de-milioane-de- http://www.pna.ro/faces/comunicat.xhtml?id=6217 euro/ 30 27 http://zhd.ro/eveniment/dragos-botoroaga-de-la- 28 omul-de-afaceri-marunt-prins-in-vartejul- http://www.pna.ro/faces/comunicat.xhtml?id=4833
Money and politics: the links between public procurement and political parties
Selina received 11 contracts of total The company donated to PDL in 2009 EU funds worth of 405,806,687 RON; the sum of 100,000 RON and it is three of them are signed with the owned by ASOCIATIA CONSTRUCTII Water Company in Oradea, one with UNU P.A.S. The PSD deputy Anghel CNADNR, one with CJ Bihor, two with Stanciu owned shares in the company Oradea Municipality. Trameco also got in 2012. a contract of 1,417,585.54 RON from Oradea Municipality. CONPROIECT AKY
Kiss also donated to UDMR 31,561 SĂNĂUȚANU EUGEN DOREL RON in 2007, 2010, 2012, 2013 and 2014. He is also one of the richest The company was founded and had as officials in the county. shareholder Cristian Achitei, counselor
SC ENERGOCONSTRUCȚIA FILIALA in CJ Botosani from PDL. Achitei has BUCUREȘTI also worked as an inspector at the Ministry of Regional Development and VASILACHE ELENA, MITARCĂ TIBERIU Tourism. The company won 2 EU funded contracts - 62,000 lei with CJ The company is in bankruptcy. One of Botosani in 2012 and 2014, when he the censors of the institution is was county councilor, respectively the MARICHESCU ELISAVETA, which is President of the CJ29. The company censor to other few companies: SC donated to PDL in 2008. ENERGO BETON SA, SC ENERGO BET SA and SC ENERGOPLAST GROUP SA. CONSIZO SERV - S.R.L. All four companies donated to PSD and PDL in 2008 and 2009. AVRAM P. CONSTANTIN
www.expertforum.r
CONSTRUCTII UNU S.A IASI Constantin AVRAM was County councilor, sub-prefect, parliamentary
29 http://www.ziaruldeiasi.ro/botosani/afaceri-cu-bani- o http://www.botosaneanul.ro/administratie/drumuri- publici-dirijate-prin-marionete~ni5fdn proiectate-de-la-distanta/ , 31
Policy Brief No. 61
for PC in the 2012-2016 mandate. The Bridges Administration (15 of 41)
company had more than 30 contracts Another company of Dinulescu, DINU with Bacau City Hall during 2007- INSTAL SRL has concluded several 2009, when Avram was county companies with Municipality of councilor and shareholder30. 45 % of Timisoara. The company donated to the incomes of the company come PNL in 2011. from Bacău Municipality. ROMO AQUA OMA GRUP INSTAL S.R.L. BALOGH SOOS EVA ANDREA
AVRAM IANCU IOAN, HAȚEGAN The company is shareholder of RONO MARIUS NICOLAE, MURESAN OVIDIU URBAN CONSULTING AND DOREL MANAGEMENT CONSULTING GROUP S.R.L., where the husband of Eva Marius Nicolae Haţegan was PDL Andrea Balogh, Balogh Soos Csaba is county councilor, secretary of the also a shareholder. Soos was partner commission for landscaping, with Dorin Debuceanu, former head of investments and tourism of CJ Alba, CNADNR at Rono Urban. Debucean PNL secretary; according to the press was sentenced to jail for the is close to CJ Alba's president Ion undervalued sale of land in the Dumitrel31. The company donated to company's patrimony, but also by PDL in 2008 and 2012. illegal payments to a company in Budapest. Csaba Soos was the director GROUP DCM - S.R.L. of the Oradea Water Company. The company would be "in the sphere of DINULESCU DUMITRU, GHEORGHE interest of former UDMR Environment ION DOREL Minister Laszlo Borbely," according to local media33. The company donated Dinulescu is the local PNL treasurer to UDMR in 2009. and close to Nicolae Robu, mayor of Timisoara32; Dinulescu was vice- president of PNL. A major part of the contracts won by the company are signed with Timis County Roads and
www.expertforum.ro
30 33 http://gazetadecluj.ro/primaria-clujeana-si-abast- http://www.cdep.ro/pls/parlam/structura2015.mp?i s-au-facut-ca-monteaza-pe-somesul-mic-un-baraj- dm=17&leg=2012&cam=2&pag=0 pentru-gunoaie/, 31 http://opiniatransilvana.ro/incompatibilitatile-si- http://www.ebihoreanul.ro/stiri/ultima-or-31- coruptia-avanseaza-alarmant-in-consiliul-judetean- 1/fostul-sef-al-cnadnr-bihoreanul-dorin-debucean- alba/ condamnat-cu-executare-la-3-ani-si-6-luni-de- 32 http://ph-online.ro/politica/item/45567-ce-grei- inchisoare-112860.html 32 ai-pnl-sunt-implicati-in-afaceri-dubioase-cu- milioane-de-euro-din-banii-publici
Money and politics: the links between public procurement and political parties
III. THE EU FUNDS
As mentioned before, we have worked on a database of approximately 25,000 of procurement procedures. Out of these, a high percentage of the sums went to works, while the largest numbers of the contracts are connected to services.
No of contracts / type / from selected database
18 15.714 16
14 Thousands 12
10
8
6 3.521 3.616 3.636 4
2
0
Supply contract Works Services Other (taxes, expropriations etc)
Total sums / type of contract / selected database
80 71.97529027
70 Billions 60
50
40
30
20
10 4.511993739 3.204033087 1.974214695 0
Supply contract Works Services Other (taxes, expropriations etc) www.expertforum.r
o
33
Policy Brief No. 61
III.A. The winners
This section includes the analysis of the most prolific companies in terms of funds and number of contracts.
Company Sum % of total* ASTALDI SPA ITALIA SUC: ROMANIA BUCURESTI 2602506316 3.19% HIDROCONSTRUCTIA SA 2444055208 2.99% ALSTOM TRANSPORT SA 2196672214 2.69% ASOCIEREA FCC CONSTRUCCION S.A./ASTALDI S.p.A JV 1911307154 2.34% FCC Construccion SA 1796379190 2.20% TIRRENA SCAVI SPA ITALIA SUCURSALA CLUJ 1718970392 2.10% AKTOR S.A. 1455059038 1.78% IMPRESA PIZZAROTTI & C S.p.A 1438681359 1.76% SWIETELSKY BAUGESELLSCHAFT M.B.H. LINZ SUCURSALA 1350523774 1.65% BUCURESTI VEGA 93 SRL GALATI 1024400620 1.25% S.C. CONFORT S.A. 958817259 1.17% PORR CONSTRUCT S.R.L. 955764101 1.17% STRABAG SRL 937933250 1.15% VAN OORD DREDGING AND MARINE CONTRACTORS BV 895358248 1.10% ROMSTRADE SRL 827343070 1.01% DELTA ANTREPRIZA DE CONSTRUCTII SI MONTAJ 93 SRL 821513280 1.01% ROMENERGO S.A 808748919 0.99% CONSTRUCCIONES Y AUXILIAR DE FERROCARRILES SA 787109012 0.96% TANCRAD SRL 783198170 0.96% STRACO GRUP SRL 726415215 0.89%
Top 20 winners – value of contracts * of selected contracts
www.expertforum.ro
34
Money and politics: the links between public procurement and political parties
Company Sum VEGA 93 SRL GALATI 1024400620 CONFORT SA 958817259.3
ROMSTRADE SRL 827343070.1
DELTA ANTREPRIZA DE CONSTRUCTII SI MONTAJ 93 SRL 821513279.7 ROMENERGO S.A 808748919.4 TANCRAD SRL 783198170 STRACO GRUP SRL 726415214.7 CONSTRUCTII ERBASU 688239039.1 SPEDITION UMB SRL 658371421.6
Coral SRL 581922176
TEHNOSTRADE SRL 523313401.4 ELSACO ELECTRONIC SRL 513750445.6 DIMAR SRL 502077175.7 IASICON S.A. 447954412.1 IRIDEX GROUP CONSTRUCTII 432666271.8 ROTARY CONSTRUCTII SRL 402578655.3
SELINA SRL 392961737.5 TEHNOLOGICA RADION S.R.L. 392361689.7 UTI GRUP S.A. 380297595.1 TEHNIC-ASIST S.R.L. 369824595.9 TEL DRUM S.A. 354348726 VEOLIA WATER SOLUTIONS & TECHNOLOGIES ROMANIA SRL 325003999.8 VICTOR CONSTRUCT S.R.L. 307514148.1
AZVI SA 297103362.1 S.C. T.M.U.C. Bucuresti S.A. 294155114
Top 25 Romanian companies – values
Top 10 winners – number of contracts
AVENSA CONSULTING SRL 104 HIDROCONSTRUCTIA SA 77 PRIM AUDIT SRL 65 Romexpo SA 65 EXPERT PROIECT 2002 SRL 57 FLAROM ADVERTISING S.R.L. 50 Proiect SA Galati 49 BILANCIA EXIM S.R.L. 45 ETA2U SRL 44 PROJECT EXPERT ASSOCIATION S.R.L. 44 ROMAIR CONSULTING SRL 44 RAMBOLL SOUTH EAST EUROPE S.R.L. 43 ROMCONTEXPERT S.R.L. 43 www.expertforum.r TITAN TRACO SA 42 ELSACO ELECTRONIC SRL 41 IRIMAT CONS SRL 41 RENAISSANCE MANAGEMENT & CONSULTANCY COMPANY… 41 GHE STUBEANU 2000 40 LUCA WAY SRL 40
SC PROMO MEDIA SRL 40 o
0 20 40 60 80 100 120 35
Policy Brief No. 61
asphalt in Banat" due to hundreds of millions of Euros worth of contracts VEGA 93 SRL with institutions headed by PDL politicians.38 Cornu was involved in Vega 93 is one of the major several investigations. The prosecutors construction companies in the country investigated the company for a and it’s controlled by Corneliu Istrate. prejudice of 23 mln RON in a contract According to the press, in 2004, he with the Department of Nuclear donated to PSD for the elections34 Activities39 where it received the money for guarantee back, although During the Năstase government the works were not done. Also, a (PSD), VEGA 93 negotiated a series of report of CNANDR40 has shown that contracts with public institutions.35 the company received tens of mln. The company was accused of liaisons RON for works that have not been with Petre Lificiu, former PSD/PDL executed or have been heavily Minister of Water and Environmental overpriced. Protection. When was head of the Siret Water Directorate (later sub- ROMSTRADE SRL prefect of Bacau), Tudorița Lungu, stated that behind VEGA’s 93 Romstrade SRL was administered by contracts was Lificiu: There is a rumor Nelu Iordache, one of the first that the former Minister of the businessmen to be called “king of the Environment, Petre Lificiu, would be asphalt”. Iordache was involved in behind the company”. 36 several criminal cases. In 2012, DNA
S.C. CONFORT S.A. (bankrupt) investigated the minister of Transports, Silaghi Ovidiu Ioan (PNL) The current administrator and who asked Iordache, managing spokesperson for the company is director of Romstrade SRL, to open Cornu Georgica, a name associated new routes linking Satu Mare Airport with PDL politicians, although he to other destinations in Europe; in denied any connection37. The exchange he would have exerted businessman was called "the king of influence on some officials from
34 http://presagalati.ro/vega-93-a-fi-sau-a-nu-fi-in- 38 http://adevarul.ro/locale/cluj-napoca/romania- insolventa-ii/ lucrului-prost-facut-groapa-gunoi-cluj-costa-mai- www.expertforum.ro 35 http://adevarul.ro/news/politica/vega-93-galati- decat-spital-ultramodern- patronata-sponsor-psd- 1_5974bbe35ab6550cb869d9f0/index.html 1_50ac1bfc7c42d5a66384e8cc/index.html 39 http://www.gorjeanul.ro/actualitate/catuse- 36 https://ziaruldeinvestigatii.ro/blog/posts/romania- pentru-fosti-sefi-ai-raan-prejudiciu-de-peste-23-de- nasilor-corneliu-istrate-galati-ii milioane-de-lei 40 https://www.pressalert.ro/2012/04/exclusiv-de-la- 37 https://www.ancheteonline.ro/2015/08/cine-este- firma-regelui-asfaltului-din-banat-pentru-cnadnr-tun- consilierul-lui-traian-basescu-prins-in-plasa-de- de-peste-173-milioane-lei/ 36 procurorii-dna-cum-a-intrat-in-atentia-sri-si-ce- afaceri-grase-a-facut-cu-deputatul-puisor/
Money and politics: the links between public procurement and political parties
CNANDR to make timely payments Chirtoaca (PL), about which the press related to the contracts concluded by wrote it had a close relationship with SC Romstrade SRL. These new flights former head of state Traian Basescu44. were needed to support the electoral campaign of a person close to the Almost 20% of the contracts were minister and resulted in losses, for the signed with 3rd District Municipality, of airline company, of about 2,000,000 which almost all between 2008 and lei (about 500,000 euros)41. 2011, when mayor was Liviu Negoiță, PDL. Iordache was indicted in 2013 for embezzlement with EU funds from the ROMENERGO S.A Nădlac –Arad Highway; the sum was more than 31 mln. EUR. In 2014 he The company is administered by was indicted for instigation to abuse in Dragos Balteanu. DIICOT investigated office related to the works for him for capital market manipulation modernizing 148 km of DN 67C and embezzlement of financial Transalpina42. investment companies (SIF)45.
DELTA ANTREPRIZA DE TANCRAD SRL CONSTRUCTII SI MONTAJ 93 SRL (DELTA ACM 93’ SRL) Tancrad is one of the largest construction companies in the country, The company is administered by with contracts worth hundreds of FLOREA DIACONU and IONEL millions of Euros, mainly in Galaţi and PIRPILIU, the brother of former PDL Braila. The company was set-up by deputy, Stefan Pirpiliu. The press Traian Stancic and is administered by wrote that the company has CATALIN CRISTIAN and ADRIANA preferential contracts with the state.43 ELENA STANCIC. According to the Florea Diaconu is close to Silviu press, Tancrad could benefit of Prigoana, former PDL deputy and support from PSD through deputy former candidate for the Bucharest Cristian Rizea, the former president of City Hall in 2012. After prospering CJ Brăila, Bunea Stancu and the during PDL’s rule, DELTA ACM has former mayor of Galați, Nicolae expanded into Moldova. Incidentally, Dumitru (former colleague with Traian one contract in Chisinau was Stăncic)46. Almost half of the attributed to DELTA by Dorin company’s contracts are signed with
www.expertforum.r 41 http://www.pna.ro/comunicat.xhtml?id=4289 o-firma-de-casa-a-partidelor-lui-traian-basescu- 42 http://adevarul.ro/news/eveniment/nelu- castiga---568231.html iordache-adus-sediul-diicot- 45 http://economie.hotnews.ro/stiri-finante_banci- 1_5718656a5ab6550cb8339353/index.html 18785483-cine-este-dragos-bilteanu-tarul-pietei- 43 http://m.jurnalul.ro/special-jurnalul/anchete/pe- capital-acuzat-manipularea-pietei-capital.htm ce-a-cheltuit-primaria-lui-piedone-100-de-milioane- 46 de-euro-in-ultimii-cinci-ani-701014.html http://www.puterea.ro/campaniile_puterea/campanii o 44 le-puterea-familia-stancic-asfaltatorii-de-serviciu-ai- http://inprofunzime.protv.md/stiri/politic/adevarul- psd-galati-127352.html 37
Policy Brief No. 61
the Municipalities of Braila and Galati, beginning of 2000s when Miron Mitrea CJ Braila and Ecosal Galați. (PSD) was minister of Transports48. 93% of the revenues of the company
come from CNADNR. Tehnostrade is also owned by Umbrărescu. In 2014, Tancrad SRL was indicted by DNA in a case where the PSD CORAL SRL president of CJ Brăila, Gheorghe Bunea Stancu, was accused of abuse The firm is administered by two of office, conflict of interest and businessmen: Georgescu Constantin- obtaining undue advantage for himself Cornel and Bratu Alexandru-Florentin. or for another. Prosecutors have Bratu was indicted in 2015 for bribing shown that four contracts concluded the mayor of Tulcea in order to build a between Tancrad SRL and Braila complex of apartments without all the County Council were attributed legal documents; mayor Constantin fraudulently, with an estimate figure Hogea was promised an apartment in of 2,450,752.88 lei. According to the the building49. investigators, Stăncic has put pressure on the County Council ELSACO ELECTRONIC SRL officials and the members of the Evaluation Commissions to attribute The Elsaco Group is owned by JITARU the contract to Tancrad SRL.47 OVIDIU, POPA DORU, IFTIME VALERIU, PARFENOV PETRU, BACIU SPEDITION UMB SRL / DRAGOŞ-CONSTANTIN (a). Iftime is TEHNOSTRADE considered by the local press a close of the Moldovan PNL leaders Gheorghe The firm is administered by Flutur and Cătălin Flutur.50 It donated businessman UMBRARESCU C. to PDL in 2011. DORINEL and UMBRARESCU V. MIRELA and is one of the most SC DIMAR SRL important companies in constructions works in Romania. The press wrote The firm is run by Iulian Dragunoiu. that the company had its first success The company was investigated by the during the PSD government at the Competition Council for participating in possibly rigged procurement51.
www.expertforum.ro
47 http://www.puterea.ro/dezvaluiri/clientela-psd-si- 50 http://www.puterea.ro/dezvaluiri/doi-pesedisti- pnl-construieste-locuinte-sociale-in-odobesti-un- grei-batuti-in-licitatie-de-protejatul-fratilor-flutur- contract-de-85-milioane-lei-124512.html 146104.html
48 http://www.hotnews.ro/stiri-arhiva-1100866- 51 afacerile-lui-dorinel-umbrarescu.htm http://www.consiliulconcurentei.ro/uploads/docs/ite 38 49 ms/bucket7/id7385/investigatii_drumuri_aprilie_201 http://www.pna.ro/faces/comunicat.xhtml?id=6636 2.pdf
Money and politics: the links between public procurement and political parties
Drăgunoiu donated 50,000 RON to Iridex group of companies, alongside PDL in 2009. Corneliu Pascu, a former PC senator. He was general director of Iridex, as IASICON SA well as vice president of the Romanian Association of Construction The company is owned by Titel Entrepreneurs. Iridex and six other Sinescu, one of millionaires of Iasi. companies have illegally won contracts The press put him close both to in 2011 for the closure and greening Gheorghe Nichita, former PSD mayor of some mines, announced in 2012, of Iași52 or Relu Fenechiu, former PNL after a control, the Ministry of president of the County Council53, Economy, which cancelled the sentenced to jail for corruption. Some procedures. The institution stated of the company’s projects are that the procurements were organized controversial: a gondola worth 80 mln without following the legal provisions, RON that will be recuperated in 200 so that certain companies would be years or the Palace of Culture, a declared winners.The Iridex Group has project that lasted for 10 years. About construction activities (civil, industrial, the project Creșterea accesibilității schools, sports halls, shops), waste spre zona centrală economică și management (construction More comercială a Polului de Creștere Iași, ecological ramps) and irrigation.54 funded with EU money, the press wrote that it was won with half of the UTI GRUP SA estimated price and after a short while the sidewalk collapsed and the Until 2016 the company was led by asphalt was cracked. Tiberiu Urdeareanu, former MAPN major, UNPR member. Tudor Tanase, IRIDEX GROUP CONSTRUCTII former director at the Special Telecommunication Service was part The company owns IRIDEX GROUP of the company, such as other former IMPORT EXPORT SRL, which in turn is military or intelligence personnel55. owned by PASCU CORNELIU, former The company was involved in 2016 in PC Senator from Buzau between 2004 a 21 million RON tax evasion case56. and 2008, close to the Voiculescu Urdareanu was involved in several family. Feodorov is a shareholder of criminal investigations for corruption. IRIDEX GROUP IMPORT EXPORT SRL. He declared in 2016 that he bribed the According to the press, former PSD minister of Energy, Constantin Nita to intervene for a Valentin Feodorov, the one with whom contract related to the traffic Costin Berevoianu (Sorin Oprescu's management at the former PSD mayor counsellor, under criminal of Iasi, Gheorghe Nichita57. investigation) owns several properties, is a shareholder in the
52 vrut-dumnezeufirma-unui-fost-senator-la-un-pas-de- http://www.puterea.ro/campaniile_puterea/campanii a-lua-gunoaiele-menajere-ale-militarilor-constanteni- le-puterea-constructorii-pe-bani-publici-si-relatiile- 37459-366901.htmla lor-politice-iii-124674.html 55 https://www.ancheteonline.ro/2015/11/uti-si- www.expertforum.r 53 http://www.national.ro/dezvaluiri/prietenul-lui- securitatea-cine-este-maiorul-tiberiu-urdareanu- fenechiu-blagoslovit-de-biserica-ortodoxa-romana- mituitorul-primarului-iasiului-gheorghe-nichita/ cu-8-milioane-de-euro-326915.html/ 56 http://www.mediafax.ro/social/perchezitii-diicot- 54 http://www.mediafax.ro/social/declaratia-de- intr-un-dosar-cu-prejudiciu-de-peste-21-de- avere-a-fostului-consilier-al-lui-sorin-oprescu-costin- milioane-de-lei-15406434 berevoianu-are-13-terenuri-11-locuinte-trei-firme- 57 http://adevarul.ro/news/eveniment/afaceristul- un-ponton-si-actiuni-de-peste-350-000-de-lei- tiberiu-urdareanu-denunturi-banda-rulanta-impartit- o 14747538, spaga-doi-politicieni-psd-10-nichita-5-nita- http://www.ziuaconstanta.ro/stiri/eveniment/asa-a- 1_58188a8c5ab6550cb81c3bd6/index.html 39
Policy Brief No. 61
Urdareanu declared: about that agreement between the companies relationship we found out after the involved to participate in bidding
contract was concluded. He is the one rigged deals.58" who told me that Nichita requires 10% of the contract value as a 50% of the companies contracts come commission. Nita also asked for a from Regia Autonoma de Distributie a commission for the contract, namely Energiei Termice Bucuresti (31.58%), 5% of the contract value. For making Societatea Nationala de Transport that recommendation to the mayor of Gaze Naturale TRANSGAZ SA Medias Iasi. As a result of these discussions, I (14.04%), equal to 35% of all the found that I was basically asked for a money the company ever received and total commission of 15% of the Electrocentrale Bucuresti S.A. contract value, which was impossible (7.60%). to achieve because it exceeded the possibilities of the contract, did not fit into the project budget.
TEHNIC ASSIST SRL - see page 52
TEHNOLOGICA RADION S.R.L. - see page 49
S.C. T.M.U.C. Bucuresti S.A.
The press wrote that TMUC is close to PDL. Dumitru Cotescu was member of the administration board. His brother, Dan Costescu was appointed Minister of Transport in 2015. The Competition Council included the company in a Transgaz-related investigation and announced that it "carried out unannounced inspections at the
www.expertforum.ro headquarters of 13 companies that participated in public procurement procedures organized by Transgaz Mediaş in 2011 as part of an
investigation into a possible
58 http://m.ziuanews.ro/dezvaluiri-investigatii/cfr- mandatul-actualului-ministru-al-transporturilor-dan- 40 sa-a-pierdut-peste-2-000-000-000-de-euro-n- mircea-costescu-355948
Money and politics: the links between public procurement and political parties
Statistics regarding contracts
Company No of contracts
Municipiul Timisoara 646
Municipiul Galati 332
MUNICIPIUL DEVA 287
Municipiul Oradea 286
COMPANIA NATIONALA DE AUTOSTRAZI SI DRUMURI NATIONALE DIN ROMANIA 285
Municipiul Cluj-Napoca 263
Consiliul Judetean Neamt 259
Consiliul Local al Municipiului Craiova 230
ADMINISTRATIA NATIONALA APELE ROMANE 230
CONSILIUL LOCAL AL MUNICIPIULUI ARAD 192
MUNICIPIUL TARGOVISTE 191
Consiliul Judetean Constanta 191
Consiliul Local Municipal Braila 190
PRIMARIA (CONSILIUL LOCAL) ZALAU 169
Municipiul Iasi 169
Municipiul Brasov 166
Municipiul Bistrita 165
COMPANIA NATIONALA DE CAI FERATE CNCF ""CFR"" SA 154
Consiliul Judetean Suceava 151
Arhiepiscopia Craiovei 151
Top 20- including taxes – contracting authorities. Up – no of contracts, down - sums
Contracting authority Sums
COMPANIA NATIONALA DE AUTOSTRAZI SI DRUMURI NATIONALE DIN ROMANIA 18399197028
COMPANIA NATIONALA DE CAI FERATE CNCF "CFR" SA 8232642756 METROREX S.A. 2215237072 ADMINISTRATIA NATIONALA APELE ROMANE 2096838553 RAJA S.A. Constanta 1161279412 Municipiul Iasi 815066711.4
Compania Nationala Administratia Canalelor Navigabile SA Constanta 800710337.3
Compania Apa Brasov SA 781856792.6
Compania de Apa Somes SA 736562185.8
Compania de Apa Oltenia SA 720050598.2 COMPANIA NATIONALA ADMINISTRATIA PORTURILOR MARITIME S.A. 619603279.2
www.expertforum.r Municipiul Timisoara 604213519.9 Municipiul Oradea 599689620.6
VITAL SA 596953152.3
Judetul Iasi 590325857.8
HIDRO PRAHOVA S.A. 577281794.9 o
Apa Canal S.A. Galati 571580970.3 41 Compania de Apa Targoviste - Dambovita S.A. 559872811.9
COMPANIA AQUASERV S.A. 556618332.2
APAVITAL S.A. IASI 554403167.1
Policy Brief No. 61
Company No of contracts AVENSA CONSULTING SRL 104
HIDROCONSTRUCTIA SA 77
Romexpo SA 65
PRIM AUDIT SRL 65
CEZ DISTRIBUTIE 64
E.ON GAZ DISTRIBUTIE S.A. 61
EXPERT PROIECT 2002 SRL 57
Agentia Regionala pentru Protectia Mediului Timisoara 56
INSPECTORATUL REGIONAL IN CONSTRUCTII SUD - MUNTENIA 51
FLAROM ADVERTISING S.R.L. 50
Proiect SA Galati 49
BILANCIA EXIM S.R.L. 45
ROMAIR CONSULTING SRL 44
PROJECT EXPERT ASSOCIATION S.R.L. 44
INSPECTORATUL REGIONAL IN CONSTRUCTII VEST 44
ETA2U SRL 44
ROMCONTEXPERT S.R.L. 43
RAMBOLL SOUTH EAST EUROPE S.R.L. 43
TITAN TRACO SA 42
RENAISSANCE MANAGEMENT & CONSULTANCY COMPANY SRL 41
IRIMAT CONS SRL 41
ELSACO ELECTRONIC SRL 41
SC PROMO MEDIA SRL 40
LUCA WAY SRL 40
Top contractors, including taxes – Up – no of contracts, down - sums
Company Sums Astaldi SPA Italia SUC: Romania Bucuresti 2602506316 HIDROCONSTRUCTIA SA 2444055208 ALSTOM TRANSPORT SA 2196672214 ASOCIEREA FCC CONSTRUCCION S.A./ASTALDI S.p.A JV 1911307154
FCC Construccion SA 1796379190
Tirrena Scavi SpA Italia Sucursala Cluj 1718970392
AKTOR S.A. 1455059038 IMPRESA PIZZAROTTI & C S.p.A 1438681359
Swietelsky Baugesellschaft m.b.h. Linz Sucursala Bucuresti 1350523774 VEGA 93 SRL GALATI 1024400620
www.expertforum.ro S.C. CONFORT S.A. 958817259.3 Porr Construct S.R.L. 955764100.6 STRABAG SRL 937933250.2
Van Oord Dredging and Marine Contractors BV 895358247.9
ROMSTRADE SRL 827343070.1
DELTA ANTREPRIZA DE CONSTRUCTII SI MONTAJ 93 SRL 821513279.7
42 ROMENERGO S.A 808748919.4
CONSTRUCCIONES Y AUXILIAR DE FERROCARRILES SA 787109012
TANCRAD SRL 783198170
STRACO GRUP SRL 726415214.7
Money and politics: the links between public procurement and political parties
In order to see which are the most councillor. Georgescu also received frequent relations in terms of 10% of the shares and he sold them in contracting we calculated top 30 2012 to Expertissa HQ SRL. In 2012, relations. We have excluded taxes, he was named during the Ponta expropriations or contracts with Government (PSD) as director of the suppliers such as energy. Compania Națională
Contracting authority - Company No of contracts Municipiul Galati-Proiect SA Galati 31 Municipiul Galati-TRUSTUL DE PRESA DUNAREA DE JOS S.A. 30 COMPANIA NATIONALA DE CAI FERATE CNCF "CFR" SA-ETA2U SRL 29 Consiliul Judetean Constanta-EXPERTISSA CONSTANTA SRL 27 PRIMARIA (CONSILIUL LOCAL) ZALAU-TAFFO S.R.L. 26 Municipiul Timisoara-CASA SOCIALA A CONSTRUCTORULUI 24 Municipiul Targu Mures-SC MEDIA MARKETING SRL 21 Municipiul Oradea-NICKOS MEDIA TEAM SRL 20 Primaria Botosani-AVENSA CONSULTING SRL 19 MUNICIPIUL SFANTU GHEORGHE-KOBAK SRL 18 Municipiul Oradea-SC PROIECT BIHOR SA 18 Consiliul Local al Municipiului Miercurea Ciuc-OTP CONSULTING ROMANIA S.R.L. 18 AUTORITATEA NATIONALA PENTU TURISM-Intact Publishing SRL 18 PRIMARIA MUNICIPIULUI SATU-MARE-SOLPRESS SRL 17 Consiliul local al Municipiului LUPENI-PROJECT EXPERT ASSOCIATION S.R.L. 17 Consiliul Judetean Constanta-STRUCTURAL ING SRL 17 Municipiul Iasi-EXPERT PROIECT 2002 SRL 15 Municipiul Cluj-Napoca-RELIANS CORP SRL 15 Consiliul Local Vaslui-AVENSA CONSULTING SRL 15 Municipiul Oradea-SERBIS SRL 14 Consiliul Judetean Constanta-STAFF SRL 14 Primaria Sibiu-SC CASA DE PRESA SI EDITURA TRIBUNA SRL 13 Primaria Municipiului Targu-Jiu-Crescendo SRL 13 PRIMARIA MUNICIPIULUI SATU-MARE-TRADEHOLDING SRL 13 Municipiul Timisoara-AF CONSULTING SRL 13 MDRAP-GRUPUL DE PRESA ROMAN S.R.L. 13 Municipiul Cluj-Napoca-AECOM INGENIERIA S.R.L. 13
EXPERTISSA CONSTANTA Administrația Canalelor Navigabile S.A. According to the local press, Nicolae Colțan, Ion Colțan’s brother was More than 90% of the company’s www.expertforum.r Nicușor Constantinescu’s councillor contracting is done through direct (President of CJ Constanta from PSD), procurement; 24% of the contracts while his nice was also hired by comes from the Sanitary Department, Constantinescu. In 2009 he quit as 12% from RAJA, almost 8% from the administrator and was replaced by county hospital and other 7% from CJ. o Daniel Georgescu, PSD local 43
Policy Brief No. 61
MEDIA MARKETING SRL AVENSA CONSULTING SRL
Cătană owns through Info Statistics The only associate is NECHITA SRL the local TV station Stii TV ROXANA-MARIA, the wife of Ionut together with his wife, Emilia Lucia Nechita (deceased). Avensa is one of Catană; she worked in Targu Mures the major consultancy companies in Municipality, in the Legal Romania and the press wrote that the Department59. company is close to PDL60. In 2013, the vicepresident of PNL Cluj declared According to the press, Catana was that Avensa is part of the “PNL close to the PDL mayor of Targu camarilla” and it is owned by a relative Mures, Dorin Florea. Bogdan Ilies, his of Gheorghe Flutur. partner at Info Statistics was the son of head of the Persons’ Record The top year for the company in terms Service. 5 of 6 contracts of the of procurement was 2008-2010, company were signed with Targu during the PDL government. Mureș Municipality.
www.expertforum.ro
59 http://ardealnews.ro/2017/03/14/ancheta- 60 http://www.obiectivdesuceava.ro/local/firma-care- caracatita-inflorea-la-nivelul-primariei-tirgu-mures- a-consultat-suceava-la-mari-proiecte-cu-fonduri- 44 nepotisme-rubedenii-si-prietenii-lascamergesiasa- europene-pe-mana-dna/ macarafacutceva
Money and politics: the links between public procurement and political parties
founding member of the company, along Sorin Ovidiu Vântu, one of the KOBAK most controversial businessmen in Romania, sentenced several times 62. KOVACS VAJDA ISTVAN donated We was head in Gelsor during the 2,500 RON to UDMR in 2010. bankrupcy of FNI and was involved in the privatisation of Petrom. STRUCTURAL ING SERBIS SRL The company is owned by STANCIU CONSTANTIN, member of PSD The three associates are NAGHIU Constanta61. Almost half of the money MIHAIL LIVIU, LUNGU MIHAELA that the company got through LILIANA and NAGHIU GEORGE contracts came from CJ Constanta SEBASTIAN. Naghiu’s wife, Doina that was headed by Nicusor Naghiu is working as an expert
Constantinescu (PSD) and that was (contact point from procurement) in investigated in several cases for the Bistrita Municipality. The company corruption. had 10 contracts with the Municipality.
RELIANS CORP
The associates are PRICOP MARIA
MAGDALENA and RAȚĂ OVIDIU www.expertforum.r EUGEN, while ROMCAPITAL INVESTSA is administrator. Dan Stratan is shareholder at Romcapital. He is
61 62 http://adevarul.ro/news/societate/milionarul- http://www.ziuaconstanta.ro/stiri/actualitate/consili umbra-vintu- o ul-lui-nicusor-da-contracte-tinerilor-psd-isti-12480- 1_50aeb3747c42d5a6639f4d69/index.html 262272.html 45
Policy Brief No. 61
III.B. Irregularities and fraud in In 2011, due to the low absorption EU funds and high number of issues related to procurement the Government According to the OLAF reports, published OUG 66/2011 on between 2013 and 2016 Romania prevention, reporting and sanctioning occupies the second place in numbers the irregularities. OUG 66 was when it comes to detecting modified through OUG 47/2014 which irregularities, after Spain. defines for what kind of irregularities the corrections can be applied.
Moreover, Decision 875/2011 – the application norms – for OUG 66 Member State/OLAF detection of defines types of fraud. irregularities and their financial impact in the areas of Structural Funds and The law clarifies the difference 63 Agriculture for the period 2013-2016 between irregularity and fraud: (adapted table) Irregularity - any deviation from legality, Moreover, Romania is placed on the regularity and compliance with national and / first positions when it comes to or European provisions and with the provisions actions taken by national judicial of contracts or other legal commitments authorities following OLAF’s entered into force under these provisions resulting from an action or inaction of the recommendations issued between 1 beneficiary or of the authority with January 2008 and 31 December 2015 competences in the management of European – 100 out of 527 (OLAF 2015 report). funds, which prejudiced or could prejudice the budget of the European Union / the budgets of the international public donors and / or the national public funds related to them through an amount unduly paid;
Fraud - the offense committed in connection with the obtaining or use of European funds and / or national public funds afferent to them, incriminated by the Criminal Code or other special laws;
Therefore, irregularities are not fraud, but more of a www.expertforum.ro deviation that is not sanctioned Controls finalized with fraud suspicions, through penal instruments. For according to DLAF64 irregularities financial corrections are applied that can go up to 100%. Still,
63 The OLAF report 2016, https://ec.europa.eu/anti- 64 46 fraud/sites/antifraud/files/olaf_report_2016_en.pdf, http://www.antifrauda.gov.ro/docs/ro/raport_dlaf/Ra p. 31 portActivitateDLAF_PeAnul2016_VarRO.pdf
Money and politics: the links between public procurement and political parties
More than 3 corrections / selected projects
7 6 6 6 5 5 4 4 4 3 3 3 3 3
2
1
0 UAT Ilfov UAT lasi UAT UAT Sibiu UAT UAT SC Diatrans UAT Arad UAT Craiova Botosani Maramures SRL Prahova irregularities and frauds can be related and an irregularity can lead to a Others Non-eligible potential fraud. 13% payment 20% According to the data Deadline published by the Institute reduction 7% for Public Policy, the value of corrections between 2009 and 2011 is approximatively 600 mil EUR, while between 2011 and 2014 went down to almost 230 million EUR65. According to the same report, 73% of the Restrictive corrections are applied for criteria discriminatory and 60% restrictive criteria in public Type of irregularity, selected database procurement. In 2015, for POS Mediu the If we analyses the reports of the Audit percentage was 93%, for POT 8% and Authority, we can conclude that the for POR 67%67. highest percentage from the financial corrections are related to public In order to indicate more concrete the procurement. In 201366, from the causes of corrections, EFOR requested total financial impact of the through Law 544/2001 (FOIA) the top irregularities from the audited 30 projects reported to the dimension expenses, in POR, the issues related of the correction applied by the Audit to procurement represent 67 %, from Authority for the REGIO Program68. www.expertforum.r POS Mediu 81% and from POT 52%.
65 http://www.ipp.ro/wp- 67 content/uploads/2015/06/IPP-Ro_Studiu.pdf http://www.rcc.ro/Publicatii/Raportul%20public%20p 66 e%20anul%202015.pdf o http://www.rcc.ro/Publicatii/Raport%20Public%2020 68 We also requested corrections for PNDR and POS 13.pdf Mediu to the abilitated authorities, but the answers 47
Policy Brief No. 61
We have analyzed 135 projects Matei Paul Nicolae. Matei Aurora was a financed by POR. Of these, financial county councilor in Iasi, elected on the correction gathering lists of the Democrat Liberal Party. 2,091,625,814.00 have been applied. More than 70% of the corrections In other cases, corrections up to 75% have been applied for projects were applied. For example, CJ Prahova implemented before 2011. had 3 such corrections in 2011, 2012 and 2013 for not following the 60% of the corrections have been decisions of the National Council For applied for restrictive criteria in the Solving Complaints (CNSC). All three procurement procedure. For two instances (one was 25%) occurred in a projects, the corrections represented project contracted to CAST SRL. The 100%, which means that practically total sum was 21,744,693.74 RON. all the funds have been returned. The company is managed by Olga Paladă and its name has been involved The project Reabilitare si modernizare in several criminal investigations. The drum judeţean DJ 604. KM 36+717- company was sentenced in a criminal 74+749, Olt was managed by CJ Olt investigation related to tax evasion. and it had a total sum of Also, Gimi Costin Palada has been 17,998,822,94 RON. The two winning indicted in 2015 for obtaining EU funds companies are T DANCOR and in an illegal manner (Hidro Prahova ROMCONSTRUCT. Between 2002 case)72. and 2013 the administrator of the company was Ciocan Cornel. His Palada was also involved in the case of brother, Dan Ciocan69 was county the PSD president of CJ Prahova, councilor and deputy (since 2012) Mircea Cosma. Cosma was bribed to coming from PSD. According to the offer advantages for certain companies local media, the two brothers are in procurement procedures. Palada supporters of the president of CJ Olt, stated during the prosecution that he Paul Stănescu70. Dan Ciocan donated gave 10% of the contract to Vlad to PSD in 2008, 2009, 2013 and Cosma (PSD), member of the 2014. Cornel Ciocan was sentenced to Parliament for a contract that he jail for tax evasion71. signed with the county council; Cosma intervened with his father in order to The contracting authority is Negresti ensure that the bills are paid in time. Oaș (Satu Mare) and the name of the According to Palada, the money also project is Reabilitarea reţelei de străzi went to PSD Prahova73. urbane in orasul Negresti (2011). The value of the contract was 994,500 In 2012, another project in which RON. The companies the won the CAST was the contracted company procedures are SC Euro Project was subject to corrections. For the Consulting SRL and SC Simpa Consult project Modernizarea si reabilitarea SRL. Euro Project Consulting is owned drumului de centrura al municipiului by Sandu Alina, Matei Aurora and Targoviste, Municipality of Târgoviște www.expertforum.ro were not received until the date when this report psd-cui-pentru-dat-bani-publici-primarita-craiovei- was published. lia-olguta-vasilescu.htm 69 72 http://www.pna.ro/comunicat.xhtml?id=6661 http://www.cdep.ro/pls/parlam/structura2015.mp?i 73 dm=68&cam=2&leg=2012 http://www.puterea.ro/campaniile_puterea/campanii 70 http://www.cotidianul.ro/paul-stanescu-baronul- le-puterea-constructorii-pe-bani-publici-si-relatiile- psd-de-olt-are-candidati-personali-la-camera- lor-politice-xxiii-prahova-familiei-cosma-1- deputatilor-200148/ 131526.html 48 71 http://dosareachizitii.hotnews.ro/stiri- achizitii_stiri-18310740-achizitiile-unui-lup-tnar-din-
Money and politics: the links between public procurement and political parties lost 25% of the project due to Cornelia Cazacu was PD senator restrictive criteria. The administrator between 2004 and 2008. of its partner in the procurement, Trans Bitum was convicted in 2013 for Cazacu resigned after a report was tax evasion74. The contract was ended published showing that his company, and the works were continued by Ralexim SA (that became Eurovia) was Tehnologica Radion in 201375. benefitting from business with the Municipality. According to the press, A fifth contract with CAST brought the success of the company continued corrections for Dragasani that lost even after Cazacu left his position76. 119,417.53 for non-eligible expenses. The procurement calculation shows The project was implemented in that the contracts of the company association with Viceexpert. faded down when PDL was no longer governing. EUROVIA-CONSTRUCT INTERNATIONAL SA is another The company is listed with 5 contracts company whose name appears five with corrections worth of times in the selected projects. Two of 230,439,010.00, all of them with CJ the associates are CRISTESCU ILIE Ilfov in 2012; all five represent 25% of DAN and CAZACU C. DANUT MIRCEA. the contract. All five contracts also Cristescu is the godfather of Mircea include a partnership with Drăghici, leading figure in PSD. Mircea TEHNOLOGICA RADION. The Cazacu is a former general councilor company is owned by BERNA GH. (PD) in Bucharest during the mandate THEODOR. Berna denounced that the of Traian Basescu (PD); his wife, former PSD deputy Sebastian Ghiță asked in 2011 from him 500,000
www.expertforum.r
74 http://www.graiulsalajului.ro/halmajan- defunctei-tehnologica-radion-sprijinita-de-o-firma- condamnat-la-doi-ani-de-inchisoare-cu-suspendare- siciliana-implicata-intr-un-scandal-de-mare-coruptie/ a-34762 76 http://m.jurnalul.ro/special- 75 jurnalul/anchete/povestea-de-afaceri-din-spatele- o http://www.gazetadambovitei.ro/administratie/targo palatului-de-pe-lacul-snagov-712914.html viste-peste-lucrarile-la-centura-se-intinde-umbra- 49
Policy Brief No. 61
Euros so that Realitatea TV (the 1st District81. According to judicial station he owned) would not attack sources they bribed the mayor and his the construction company publicly77. close acolytes with more than 8 mln. Berna and Tehnologica Radion were EUR in order to get procurement prosecuted in 2014 for money contracts between 2008 and 2014; the laundering78. Berna was Traian sums represented 10% of the Băsescu’s councillor at the Bucharest contracts. 25% of the contracts of the Municipality79; the peak of success for company are signed with CNADNR, the company was the PDL while other almost 20% with the 1st governance. After 2012, the success District Municipality. of the company fades rapidly.
STRACO GRUP was also partner in three of the procurement procedures. The company is owned by HORPOS MITLIV EXIM appears in four TRAIAN and HORPOS ALEXANDRU and projects that have been subjected to was prosecuted in 2014 in a case of corrections. Mitliv Exim is owned by tax evasion of 16 mil. EUR80. The CIOANĂ V. ION - LIVIU and CIOANĂ media wrote that it is close to the CARMEN-MIOARA. former PSD mayor of Piatra Neamt, Gheorghe Ștefan. The two brothers are also under investigation in the case of the former PDL/PNL mayor of www.expertforum.ro 77 80 http://evz.ro/de-profesie-denuntator-alexandru- https://www.agerpres.ro/justitie/2017/04/07/theod horpos-eliberat-din-arest-in-dosarul-filierei-de- or-berna-in-instanta-ghita-mi-a-cerut-500-000-de- evazionisti-din-neamt-cum-au-facut-bani-grei- euro-pentru-realitatea-tv-daca-nu-vreau-sa-am- oamenii-de-casa-ai-fostului-primar-pinalti.html probleme-14-38-34 81 78 http://www.economica.net/theodor-berna-si- http://www.pna.ro/faces/comunicat.xhtml?id=6432 , tehnologica-radion-trimisi-in-judecata-pentru- https://www.agerpres.ro/justitie/2015/06/19/dosar- evaziune-fiscala-si-spalare-de-bani_91401.html chiliman-mita-de-peste-8-milioane-euro-platita-de- 79 http://www.digi24.ro/stiri/economie/theodor- sc-straco-reprezentata-de-traian-si-alexandru- 50 berna-fost-consilier-al-lui-t-basescu-la-primarie-si- horpos-surse--10-15-28 al-doilea-important-asfaltator-din-romania-283145
Money and politics: the links between public procurement and political parties
Aries cu strada A. I. Cuza si respectiv cu str împăratul Traian in vederea Cioană is one of the richest preluării traficului auto pe Bvd Carol, businessmen in Dolj82. The company str Aries the municipality received is has been indicted in 2014 for tax 2,131,294.14 RON (restrictive evasion83. criteria).
EuroStrada, Habau Construct, Straco A fourth project in which Mitliv was Grup and Tel Drum are related to involved is Centrul Multifuncţional three corrections each. Craiova - Pavilion Central. The correction was 4,402,332.50 RON, UAT Salaj and UAT Cluj were imposed representing 10%, for restrictive three corrections of 25% criteria. The project was implemented (7,708,501.88 – reduced time), 10 % by Craiova Municipality and Mitliv Exim (1,215,025.70- restrictive criteria) signed the contract in association with and 193,540.44 (non-eligibile SC Recon SA and SC Romelectro SA. expense) for the project Reabilitarea drumului Ciucea-Crasna-Varsolt. TEL DRUM is one of the most profitable companies in Romania. The Both Habau Construct and Mitliv Exim administrators of the company are are involved in the same projects, COSTACHE MIRELA, IONIȚĂ IOANA, managed by Craiova Municipality. For PITIȘ PETRE, NEDA FLOAREA and the project Amenajare parcare DOBRESCU L. LIVIU LUCIAN. The subterana în zona Teatrului Național media wrote intensely that the were imposed corrections of company is controlled by Liviu 842.337,89 (5% - did not met the Dragnea, president of PSD and head of qualification criteria) and 675,143.51 Chamber of Deputies84. Almost 50% of (non-eligible). the contracts (value) of the company
For the project Construirea unui pasaj subteran in vederea descongestionării
traficului rutier din zona metropolitana www.expertforum.r Craiova - realizare pasaj denivelat subteran pe sub intersecţia străzii
82 http://www.forbes.ro/liviu-cioana-500-miliardari- 84 http://adevarul.ro/locale/alexandria/tel-drum- editia-2011_0_4282-13395 istoria-mega-afaceri-increngaturi-duc-laliviu- 83 http://www.diicot.ro/index.php/arhiva/1270- dragnea-firma-controlata-hartie-fostii-colegi-liceu- o comunicat-de-presa-07-10-2014 liderului-psd- 1_562654aaf5eaafab2cdad5e1/index.html 51
Policy Brief No. 61
are signed with CJ Teleorman, while 10.928,77 RON for non-eligible 18.2% are contracted by CNADNR. expense.
Neda Floarea is also shareholder at SC A third correction is related to the SPRING SERV COM SRL and SC project Modernizarea drumului SPRING ROAD CARGO SRL. The first judeţean DJ 109 L, Satu Mare – one donated to PSD in 2008. Negreşti Oaş – Turţ, jud. Satu Mare, where the contracting authority is CJ For the contract Reabilitare DJ506, Satu Mare. The correction consisted in Cervenia-Vitanesti-Babaita km 4,651,051.61 RON (10%) for 17+400-km 58+000 (2010), CJ restrictive criteria. Tel Drum was Teleorman was imposed a financial associated with Tehnic-Asist and Alfa correction of 25% - 12,799,575.29 Rom in this project. RON. The contract was suspected of arranged procurement, as all the TEHNIC ASIST donated to PNL other competitors’ offers were 20.000 RON in 2009. Mirel Vlas, one of declared not eligible. ANRMAP the owners of the company was published a report in 2011 and fined indicted in 2016 in a case in which CJ Teleorman for breaking the Mircea Govor, PSD vice president of CJ procurement legislation. The Satu Mare and Valer Marian, president Competition Council opened an of the county PSD branch are also investigation that was closed due to investigated. Govor threatened a insufficient evidence85. The European lawyer to help him “fix” procurement Commission stopped the payments for procedures in institutions where his all the payments for REGIO – Axis 2, firm was providing legal assistance86. Improvement of regional and local transport infrastructure and asked the Botosani Municipality received a Romanian authorities to verify all the correction of 25 % (4,586,428.07 projects financed through this axis. RON) for restrictive criteria for the project Modernizare si reabilitare Another project that was included in accese pietonale si carosabile precum this investigation is Reabilitare DJ si iluminat arhitectural in Mun 701, limita jud Dambovita-Gratia- Botosani. The contract was signed in Poeni-Silistea-Scurtu Mare-Slavesti- 2011 with Victor Construct (see more Ciolanesti-Zambreasca-Dobrotesti, KM at page 23)
www.expertforum.ro 44+240, Km 104+890. The Audit Authority applied a correction of
85 http://www.hotnews.ro/stiri-esential-15427193- suspectate-trucaj-vezi-marile-semne-intrebare-din- exclusiv-consiliul-concurentei-exonerat-firma- licitatiile-cante.htm apropiata-liviu-dragnea-alte-companii-mari- 86 52 constructii-orice-raspundere-doua-licitatii- http://www.obiectivdesuceava.ro/romania/patronul- firmei-tehnic-asist-trimis-in-judecata-de-dna/
Money and politics: the links between public procurement and political parties
III.C. The expertise pays well
Publicity and services87
As we could not use a filter that might have identified very clearly the type of procurement by CPV, we used combinations of words in the name of the contracts. This will not generate an exact image of the procurement, but is an approximation that shows who are the companies that contracted most of the money. We searched after the following keywords: publicitate, comunicat de presa, promovare, informare, conferinta, comunicare. Some of the contracts combine technical assistance and publicity campaigns.
According to a report published by Center for Independent Journalism, in 2013, the value of the contracts signed was 139,209,655.10 RON / 31,502,524.35 EUR out of 338,975,838.58 RON / 76,708,721.11 EUR procedures that were opened88.
The sample included 3017 contracts in value of 258,666,083.4 RON.
www.expertforum.r
87 Also consult the reports on clientelism in media, 88 http://www.cji.ro/wp- published by EFOR - http://expertforum.ro/indexul- content/uploads/2014/06/Raport_Romania.pdf o clientelismului-2/, http://expertforum.ro/starea- mass-media-gorj/ 53
Policy Brief No. 61
Company No of contracts % of Services for political advertising parties in the electoral selection campaigns TRUSTUL DE PRESA DUNAREA DE JOS S.A. 35 1.16% ALDE & PNL
FLAROM ADVERTISING S.R.L. 34 1.13%
SC PROMO MEDIA SRL 32 1.06%
INTERPRESS S.R.L. 30 0.99% ALDE, PSD, PMP, PNL
SOLPRESS SRL 23 0.76% ALDE, PSD, PMP, UDMR
MEDIA UNO SRL 23 0.76% ALDE, PSD
VIZUAL SRL 22 0.73%
RENAISSANCE MANAGEMENT & CONSULTANCY 22 0.73% COMPANY SRL NEVA EXPERT SRL 21 0.70%
Atlas Tour SRL 20 0.66% ALDE
Sign 4 You SRL 18 0.60%
NICKOS MEDIA TEAM SRL 18 0.60%
DUAL PROMO S.R.L. 18 0.60%
GRUPUL DE PRESA ROMAN S.R.L. 17 0.56% PSD, USB
SC RBC PRODUCTIE PUBLICITARA SRL GIURGIU 16 0.53% ALDE, PSD, PMP, PNL
Inform Media SRL 16 0.53%
EISEN LAND S.R.L. 16 0.53%
ASOCIATIA PENTRU COMUNICARE, DIALOG SI 16 0.53% AJUTOR SOCIAL - DIALOG XXI SC INSIDE MEDIA SRL 15 0.50% PSD
SC CASA DE PRESA SI EDITURA TRIBUNA SRL 14 0.46% ALDE, PSD, PNL, USR
OPINIA SA 14 0.46% ALDE, PSD, PNL, PMP
EXPERTISSA CONSTANTA SRL 14 0.46% PSD, USR
EDITURA LUXMUNDI S.R.L. 14 0.46%
Top companies signing advertising contracts / no of contracts
www.expertforum.ro
54
Money and politics: the links between public procurement and political parties
controversial Explore the Company Sum % of ServicesCarpathian for political parties Garden advertising in the electoral campaigns selection campaign). The company AECOM INGENIERIA S.R.L. 28247255 10.77% is owned by BALOTESCU MEDIA INVESTMENT COMMUNICATION S.R.L. 20798272 7.93% ALEXANDRU DAN and
B.V. McCann Erickson SRL 20645628 7.87% THE GROUP OF
ROMAIR CONSULTING SRL 12001506 4.58% COMMUNICATION AGENCIES S.A. The latter HILL International SA Luxembourg 10533434 4.02% is owned by SZIGETI EXPERT ONE RESEARCH SRL 3899206 1.49% ZOLTAN EUGENIU and RUTIN CONSULT SRL 3210323 1.22% NICOLA MIHAELA and it’s EPTISA ROMANIA S.R.L. 2927504 1.12% one of the most VIZUAL SRL 2917480 1.11% important players in the ADDVANCES STRATEGIC SOLUTIONS SRL 2897174 1.10% advertising market.
INSOFT DEVELOPMENT & CONSULTING S.R.L. 2814203 1.07% Among the associates of
RENAISSANCE MANAGEMENT & CONSULTANCY 2727939 1.04% Media Investment COMPANY SRL Communication SRL was HYDRO-CARPATI SRL 2707856 1.03% Flash Investitii SA, where EPMC CONSULTING SRL 2601636 0.99% one of the associates was PDE STRATEGII SI INVESTITII S.R.L. 2518830 0.96% Rares Constantin Dan, FLAROM ADVERTISING S.R.L. 2066144 0.79% PMPthe son of the general SMART INTEGRATION SRL 1985735 0.76% Gheorghe Dan from the
MEDIA ONE S.R.L 1894988 0.72% Romanian Intelligence 89 DUAL PROMO S.R.L. 1886792 0.72% Service . Gheorghe set- up in 2006 together with DC Communication SRL 1858359 0.71% Anca Dinu, the sister in AVENSA CONSULTING SRL 1792553 0.68% law of PDL minister Elena SC PROMO MEDIA SRL 1673530 0.64% Udrea the company Central Residential Park Doi SA. Top companies signing advertising contracts / value Teodor Bogdan Nicola, one of the founders of The Group was sentenced MEDIA INVESTMENT to two years in jail for buying influence COMMUNICATION SRL – he paid officials from the 1st District Municipality in order to get The company won the contract with construction documents90. the Ministry of Development for the promotion of Romania (the
www.expertforum.r
89 http://www.romaniacurata.ro/exclusiv- 90 https://www.paginademedia.ro/2014/10/bogdan- conexiunile-de-afaceri-spectaculoase-ale-lui-daniel- nicola-unul-dintre-fondatorii-the-group-condamnat- dragomir-plus-cum-a-obtinut-fostul-sri-ist-care-a- la-inchisoare-decizia-nu-este-definitiva o comandat-spionarea-codrutei-kovesi-obligatiuni- regale-de-17-milioane-de-euro/ 55
Policy Brief No. 61
EXPERT ONE RESEARCH / XOR IT SYSTEMS The peak of success for the company was year 2011, when it got 2 The company is owned by GĂITĂNARU contracts from MDRAP totaling 12.5 GABRIEL, close to the former PSD mln. RON. deputy Sebastian Ghiță, currently fugitive in Serbia91. According to Rise ROMAIR CONSULTING SRL Project,
The company is owned by Gheorghe To a lesser extent, the practice of Boeru and was detained for bribery subcontracting or associating to win a public contract also worked for XOR IT Systems and trafficking influence in 2015. The (currently called Expert One Research), PSD vice-president of the Prahova controlled according to Rise Project through a County Council helped Boeru get a series of offshore by a friend and former high contract of 162,731,194 euro for the school colleague of Sebastian Ghiţă, associated with Omnilogic or another company owned by project Reabilitarea și modernizarea Gabriel Marin, Omnilogic owner - a company sistemelor de apă și canalizare în and person involved in the Microsoft corruption județul Prahova (SC HIDRO PRAHOVA case as part of the price spike for products IT, SA Ploiești). which results in the loss of the Romanian dignitaries. XOR IT Systems has also been associated with a company owned by a Sicilian, According to DNA, son of an Italian deputy, involved in several corruption cases in Italy, to win a European Starting from 2010, before and during the money contract in Vaslui.92 procurement procedures for the service contracts and works to be concluded within the INSOFT DEVELOPMENT & framework of the European-financed project "Rehabilitation and modernization of water and CONSULTING S.R.L. sewage systems in Prahova County" (total value of Total value of EUR 162,731,194 The company is considered to be close having as contracting authority SC HIDRO to the former PSD deputy Sebastian PRAHOVA SA Ploieşti), there have been 93 discussions and agreements between several Ghiță . Teamnet and Asesoft influential people and with important political transfered 3.4 mil RON to Insoft. One support, regarding the realization of the of the main contracts for the company interests aiming to illegally obtain some was signed in 2012 – when the money from Payments made by the company declared 0 employees – with beneficiary of the project, SC HIDRO PRAHOVA SA. The money was to be received in the form the Management Authority of POS of commissions from the approved companies, MEDIU for IT solutions. The which each of the persons involved would contracting authority was represented support them in awarding the contracts by by Ciprian Ghioc, director of AM POS exercising the influence they had at Mediu. According to Rise Project, his wife, Mirela Ghioc is director in Asesoft Management and employees of SC HIDRO PRAHOVA SA, resp Representatives of the International and benefitor of a private Ministry of Environment and Forests with loan of 30,000 from Sebastian Ghiță, responsibilities related to the implementation the owner of the corporation. Ciprian of the project. Ghioc also worked at Asesoft from
www.expertforum.ro 2003 to 2008.
91 http://www.bursa.ro/siveco-si-o-firma-apropiata- 90-milioane-de-euro-cu-siveco-si-alti-jucatori-din- lui-sebastian-ghita-au-castigat-un-contract-it-de- domeniu-13699679 peste-31-milioane- 93 https://www.riseproject.ro/articol/cum- d...&s=print&sr=articol&id_articol=262774.html functioneaza-fabrica-de-bani-a-lui-sebastian-ghita/ 56 92 http://www.gandul.info/stiri/cum-si-au-pasat- firmele-apropiate-de-sebastian-ghita-contracte-de-
Money and politics: the links between public procurement and political parties
HYDRO CARPATI DUAL PROMO
The company is owned by CHITEA Faraon Ciprian, one of the MARIAN-DUMITRU. He was shareholders is member of the investigated by DIICOT for tax administration council of Sibiu Airport evasion and money laundering94. He and also member of PNL. In 2017 he was member of PDL Olt, former head was a candidate as vice-president in of Hidroserv Olt SA, former head of the county Sibiu PNL branch. the European Integration Department in CJ Olt and sub-prefect of the ATLAS TOUR county in 2009. He resigned in 2011 due to his connections to Sandu The company’s administrator is Mirela Anghel. Manu. The local press97 wrote she is close to PSD county councilor and EPMC CONSULTING CNSRL Frăția union leader Constantin Pirvu. Four of the contracts signed by The current administrator is the company are with CJ Valcea (EU CORPODEAN CRISTINA IULIANA. Still, funding). Pirvu was administrator and in 2010 – 2011 the administrator was shareholder in another company Razvan Zamfir Stan, who was a PD owned by her, Infotour SRL. In 2014, local councillor in the 3rd District the company signed a contract with Municipality95. He was also the County Hospital in Valcea for press administrator for KVB ECONOMIC, a services while Pirvu was in the company in Bucharest where the administration board98. former PDL minister of Environment, Sulfina Barbu was shareholder together with Silvian Ionescu, former chief of Environmental Guard96. EPMC consulting was named KVB ECONOMIC FILIALA CLUJ NAPOCA SRL.
www.expertforum.r
94 http://www.editie.ro/articole/eveniment/fost- 97 http://ziaruldevalcea.ro/2015/07/11/atlas-tour- subprefect-de-olt-in-arest-pentru-evaziune- firma-sub-acoperire-a-sindicalistului-pirvu-a-pierdut- fiscala.html contractul-de-miliarde-cu-hidroserv/ 95 http://romanialibera.ro/special/investigatii/fostii- sefi-de-la-mediu-fac-averi-din-consultanta-de- 98 http://saptamana.net/articol/6925-in-loc-de- mediu-110469 seringi-sju-valcea-ofera-pacientilor-un-ziar-sa-l-dea- o 96 http://gazetadebistrita.ro/pe-autostrada-se- din-mana-in-mana decontamineaza-indiferent-de-culoarea-politica/ 57
Policy Brief No. 61
GRUPUL ROMAN DE PRESA
The company is managed by BORCAN ALEXANDRU SABIN. In fact, the company is controlled by Dan Adamescu (deceased) and his son, Bogdan Adamescu, owners of Romania Liberă newspaper. Dan Adamescu was sentenced in 2016 to
jail for bribery99. The former PSD deputy Iosif Armas received a suspended sentence; they were investigated for bribing judges in order to get favourable solutions for the insolvent companies.
The company has 2329 contracts, of which 80% with Bucharest Regional General Finance Department. The press wrote that Adamescu was close to the Democrat Liberal Party100.
www.expertforum.ro EXPERTISSA CONSTANTA SRL – see page 43
99 100 http://jurnalul.ro/special-jurnalul/anchete/cum- https://www.agerpres.ro/justitie/2016/05/27/dan- au-fost-ingropati-in-bani-mogulii-lui-basescu- 58 adamescu-condamnat-definitiv-la-4-ani-si-4-luni- 707780.html inchisoare-cu-executare-14-45-56
Money and politics: the links between public procurement and political parties
Consultancy and expertise
For consultancy and expertise, we used the following keywords: consultant, studii de fezabilitate, proiectare, dirtigentie de santier, expertiza tehnica.
Company Total sum % of selected consultancy procurement EPTISA ROMANIA S.R.L. 227059028.6 10.60%
ROMAIR CONSULTING SRL 165367964 7.72%
S.C. Fichtner Environment S.R.L. 147156239.2 6.87%
AECOM INGENIERIA S.R.L. 141351298.8 6.60%
RAMBOLL SOUTH EAST EUROPE S.R.L. 91443293.83 4.27%
SC HALCROW ROMANIA SRL 88255088.42 4.12%
LOUIS BERGER SAS 66265558.51 3.09%
VAMED Standortentwicklung und Engineering 51944658.39 2.43% GmbH & Co. KG AZVI SA 50627052.47 2.36%
TEHNIC-ASIST S.R.L. 49484685.18 2.31%
INTERGROUP ENGINEERING SRL 47444904.32 2.22%
METROUL SA 42699427.21 1.99%
HILL INTERNATIONAL (Bucharest) SRL 41010013.19 1.91%
TAHAL CONSULTING ENGEINEERS LTD 36507443.4 1.70%
INOCSA INGENIERIA S.L. 34860762.29 1.63%
Mott MacDonald 34441866.25 1.61%
LOUIS BERGER S.R.L. 34287533.74 1.60%
PROJECT DEVELOPER s.r.l. 28816964.11 1.35%
HILL International SA Luxembourg 28595235.56 1.34%
INTERDEVELOPMENT SRL 23345111.62 1.09%
TRANSTECH GLOBAL ENGINEERS SRL 23158495.22 1.08%
C&S DI GIUSEPPE INGEGNERI ASSOCIATI SRL 20823354.98 0.97%
Resourcing Environmental Consulting SRL 20284133.25 0.95%
EPMC CONSULTING SRL 19811835.64 0.92%
TRACTEBEL ENGINEERING S.A. 19751761.61 0.92%
www.expertforum.r
o
59
Policy Brief No. 61
Company Total sum % of selected consultancy procurement
Persoana fizica 488 14.14%
AVENSA CONSULTING SRL 62 1.80%
ROMAIR CONSULTING SRL 27 0.78%
IRIMAT CONS SRL 25 0.72%
EPTISA ROMANIA S.R.L. 24 0.70%
Konsent SRL 22 0.64%
EXPERT PROIECT 2002 SRL 21 0.61%
SC ANDRALEX PROJECT COMPANY 20 0.58% SRL PROJECT-THC S.R.L. 20 0.58%
LUCA WAY SRL 19 0.55%
BUILD.ING CONSULT S.R.L. 19 0.55%
SC EUROPROJECT PARTNER SRL 18 0.52%
SEARCH CORPORATION S.R.L. 18 0.52%
BETA-COPS SRL 18 0.52%
ADAMS CONSTRUCT SRL 16 0.46%
SPECIALIST CONSULTING S.R.L. 15 0.43%
AQUA SERV S.R.L 15 0.43%
TRACTEBEL ENGINEERING S.A. 14 0.41%
RomActiv Business Consulting SRL 14 0.41%
PROJECT EXPERT ASSOCIATION 14 0.41% S.R.L. BRING CONSULT S.R.L. 14 0.41%
MEDOS CONSTRUCT & 13 0.38% CONSULTING SRL SC IDEA PRO SRL 12 0.35%
RAMBOLL SOUTH EAST EUROPE 12 0.35% S.R.L. AECOM INGENIERIA S.R.L. 12 0.35%
and the former president of CJ Bistrita Liviu Rusu. The company S.C. FICHTNER ENVIRONMENT S.R.L. is owned by PĂUNESCU RADU- According to DNA102 DAN and FICHTNER GMBH & CO. KG. Păunescu worked at the Ministry of During 2009, the defendants Popescu Lazăr Enviroment101 and was shareholder at and Sabău Ioan Claudiu constituted a criminal Interdevelopment together with association, supported by Andreica Ioan, whose purpose was to fraudulently award Cozariuc Mircea, also working in the public auctions by several clientele companies same ministry. Interdevelopment’s from which they received money in return or name was related to an investigation Works in subcontracting and, in some cases, by DNA against Ioan Andreica – even subcontracting work in full. The purpose
www.expertforum.ro of the association was to exercise influence former secretary of state in the over dignitaries or civil servants with influence Ministry of Transport and later over decision-makers in awarding such Ministry of Regional Development – auctions. Mainly, there were works for the design and construction of roads, sewerage,
101 http://gazetadecluj.ro/baietii-destepti-de-la- 102 60 mediu-centreaza-si-dau-un-gol-de-27-de-milioane- http://www.pna.ro/faces/comunicat.xhtml?id=3083 bugetul-cj-cluj/
Money and politics: the links between public procurement and political parties construction rehabilitation, design and worked in the ‘90s as director within execution of waste management centers, etc. the National Agency for Cadastre and Real Estate Advertising. He donated To this end, after the defendant Sabau Ioan Claudiu identified the companies interested in 248,500 RON to PSD and USL in 2012. carrying out such works, the defendant Popescu Lazăr, who had a coordinating role INTERGROUP ENGINEERING within the group, concluded with the respective companies consultancy contracts amounting to EUR 15,000 (upon conclusion In 2003, Intergroup Engineering was Contract) plus between 5 and 7% of the value owned by Vasile Lupu, Secretary of of the works awarded. These contracts were state at the Ministry of Agtriculture in fictitious because the amounts collected under 2005. He was close to Gheorghe Flutur this heading were in fact the commissions of and member of PNL. Silviu Novac II şi the members of the group and the amounts awarded as unfair advantages to the civil Ion Banciu are shareholders. The local servants involved in the procurement press wrote that Banciu is shareholder procedures and the benefits to the persons at 11 companies, including DVI Balast exercising the influence of trafficking. SRL with Victor Vevera, former officer in the secret service of the Interior RAMBOLL SOUTH EAST EUROPE Ministry and former councillor of Emil Boc on national security, appointed The company is managed by STOICA director for Transelectrica during the SILVIU, which is a former director of PDL government104. Another associate the management authority for at DVI is Decebal Lohan, former PDL environment projects. The company youth leader and councillor of the was originally called Geonet minister of Education, Daniel Funeriu Târgoviște, Blominfo and Blom (PDL). Silviu Novac is associate at România; PSD deputy Ionuț Cristian High Training & Consultancy with Anca Săvoiu was administrator of the Raluca Gache, the secretary of the company between 2004 and 2006. PDL member of the EU Parliament, Blom ASA Norway bought the Traian Ungureanu. company and in 2014 the company was bought by Ramboll Denmark. Silviu Stoica is according to the press close to Săvoiu. Ramboll hired his wife, Viviana Alina Săvoiu103. Săvoiu
www.expertforum.r
103 http://www.nasul.tv/exploziv-marea-cadastrare- 104 http://actualdecluj.ro/nereguli-in-caietul-de- a-romaniei-interpusii-lui-sebastian-ghita-in-spatele- sarcini-primaria-obligata-sa-anuleze-licitatia-pentru- o unei-firme-care-vrea-o-bucata-din-contractul-de-13- consultanta-in-atragerea-de-bani-europeni/ miliarde-de-euro/ 61
Policy Brief No. 61
IRIMAT CONS
Florin Gelu Goroneanu, the only a case related to the Craiova associate is a former director of waterpark107. The company that held CNADNR between 2005-2007105. the construction site management Goroneanu was the president of the (dirigentie de santier) was accomplice evaluation commission for a contract for SC Polystart Impex SRL that has with Ascot Engineering – the contract modified the structure of a building in was investigated by DNA due to order to use less material and suspicions that the shareholders of therefore subtract the funds for its the company were also working for own use. CNADNR106. The company had 14 contracts worth of 224,761,152 RON LUCA WAY SRL (almost 35% of the total incomes of the company) with CNADNR. The associates are FLORIN MIHAI LUCA, RADU LUCA and MARIA PROIECT THC CARMEN GODUN. According to the press the two brothers are close to the SC PROJECT THC SRL and former PDL minister Adriean ROMANESCU CEZAR RĂZVAN were Videanu108. Luca Way / CONSILIER indicted in 2016 for frauds related EU CONSTRUCT donated to PDL 20.000 funds, bribe and money laundering in RON in 2008.
www.expertforum.ro
105 http://jurnalul.ro/special-jurnalul/anchete/un- 106 http://jurnalul.ro/special-jurnalul/anchete/un- fost-director-din-cnadnr-a-incasat-5-milioane-de- fost-director-din-cnadnr-a-incasat-5-milioane-de- euro-din-consultanta-in-drumuri-732938.html, euro-din-consultanta-in-drumuri-732938.html http://www.mediafax.ro/social/legalitatea- 107 http://www.pna.ro/comunicat.xhtml?id=7870 contractului-de-consultanta-atribuit-de-cnadnr- 108 62 firmei-ascot-verificata-de-dna-6431961 http://www.ziuaconstanta.ro/informatii/combaterea- criminalitatii-in-achizitiile-publice/pentru-mai-putin-
Money and politics: the links between public procurement and political parties
SEARCH CORPORATION S.R.L. III.D. Who got the EU funds for agriculture (PNDR)? The associates are MICHAEL MIHAI STANCIU and SEARCH AVG. INC. The The National Rural Development company is set-up in 1991 and was Program 2007-2013 is implemented contracted for significant contracts with support from FEADR (7.9 bln. such as the feasibility study for EUR) and PERE (101 mln. EUR), 109 Transilvania highway . He was also financed by the European Commission. administrator of Primacons Group According to a declaration of the head SRL, another significant constructions of DLAF in 2014 POSDRU and PDNR company. The press wrote that the are the programs where most niece of Emil Boc, the PDL mayor of suspicions of fraud occur111. The DLAF Cluj works for Primacons. 82% of the report for 2014 stated that most of the contracts signed by Primacons are control activities, that were still in with CNADNR (value) progress, the largest part was related
Most of the contracts of the company to PNDR (80 out of 305, post- are signed with Sector 1 Municipality accession funds)112. In 2012 and 2013 (20% all of them in 2009), CNADNR the situation is similar and PNDR (17% mostly 2007 - 2011) and occupies a leading position in terms of ADMINISTRATIA STRAZILOR the most controls initiated. BUCURESTI (8% - 2009 - 2010) in term of number of contracts. Also, the OLAF reports mention a high number of cases related to PNDR and The press wrote in 2010110 that Mircea SAPARD (pre-accessions funds)113. Popa represented the company in relation to the General Council of Bucharest while the head of the Transports Committee was Ionut Popa, his son (PDL). Also, the 2015 report states that:
OLAF’s overall caseload in Bulgaria and Romania includes a large number of
www.expertforum.r de-jumatate-din-valoarea-initiala-luca-way-srl-a- 111 http://www.bursa.ro/finantarea-europeana-editia- obtinut-contractul-ce-vizeaza-supravegherea- a-vi-a-andrei-chendi-dlaf-posdru-si-pndr-cea-mai- 528447.html mare-pondere-a- 109 http://www.cotidianul.ro/cazul-michael- suspi...&s=fonduri_europene&articol=239624.html stanciu-search-corporation-si-genialitatea-studiilor- 112 de-fezabilitate-139299/ http://www.antifrauda.gov.ro/docs/ro/raport_dlaf/ra p__ro.pdf o 110 http://evz.ro/dna-ancheteaza-filiera-pdl-de-stors- 113 https://ec.europa.eu/anti- bani-din-pmb-894874.html fraud/sites/antifraud/files/olaf_report_2015_en.pdf 63
Policy Brief No. 61
investigations involving the misuse of SAPARD 2005 by Liviu Harbuz. He was head of funds. However, SAPARD-related cases have the ANSVSA secretary of state at the led to a relatively low rate of judicial indictment. This was mainly due to the Ministry of Agriculture, during the widespread use of consultants and agents in mandate of Ilie Sârbu and personal preparing aid applications and tender councilor to Sârbu’s son-in-law, former documents, which raised doubts at judicial PSD Prime minister Victor Ponta. The level about the fraudulent intent of the company was originally called AGRI beneficiaries. In both countries, the indictment rate of non-SAPARD cases is higher114. RISC CONSULTING SRL; in 2007, Harbuz quits his shares to his Below, we have published the top concubine (councillor in the ministry private beneficiaries (just companies) and at ANSVSA while Harbuz was and explained who some of them are. minister). In 2009 she passes the
Company Sum % of Connections PNDR SC FONDUL DE GARANTARE A CREDITULUI RURAL - IFN SA 115313453 6.78%
INNOVACION DESARROLLO LOCAL SL MADRID 14020159.63 0.82%
SC WIN WIN BUSINESS SRL 12540625.21 0.74% See below
SC SIVECO ROMANIA SA 10744688.91 0.63% See below
SC TEAMNET INTERNATIONAL SA 7645003.08 0.45% See page
SC ROMAIR CONSULTING SRL 7186102.52 0.42% See page
SC CROCO SRL 5717786.8 0.34%
SC RGIC CONSULTANTA SRL 5521776.12 0.32% See below
SC VELROM SRL 4857490.69 0.29%
SC OLTINA IMPEX PROD COM SRL 3785553.65 0.22%
SC MAXAGRO FARM SRL 3781871.39 0.22%
GBI CONSULTING MEHLMAUER-LARCHER&KASTNER OG 3732711.08 0.22%
SC NATURA SRL 3636955.47 0.21%
SC MARAGRO SRL 3487339.23 0.21%
SC GALLI GALLO SRL 3484944.8 0.20%
SC AGROINTER SRL 3363840.87 0.20%
LDK CONSULTANTS ENGINEERS AND PLANNERS SRL 3282303.6 0.19%
SC AGROSUIND COM SRL 3170014.17 0.19%
SC DELTA-ROM AGRICULTURE SRL 3075304.47 0.18%
SC MEGASIMITIS SRL 2993299.83 0.18%
SC SMART FOOD SOLUTIONS SRL 2986999.36 0.18%
SC CLICK TOP MANAGEMENT SRL 2986035.92 0.18%
SC BIOROMOIL SRL 2972808.35 0.17%
SC MARIA TURISM SRL 2955518.29 0.17%
SC PATI-PAN MARIANO SRL 2952188.29 0.17%
www.expertforum.ro SC WIN WIN BUSINESS SRL company to Ștefan Miclăuș and in 2010 the company changes its name The company is managed by Ştefan and gets 8 out of the 9 contracts Adrian Miclăuş, but it was set-up in dedicated to instructing farmers115.
114 The OLAF report 2015, https://ec.europa.eu/anti- europene-pentru-instruirea-fermierilor- fraud/sites/antifraud/files/olaf_report_2015_en.pdf 282245?c=q2561 64 115 http://romanialibera.ro/special/investigatii/fratie- politica-pentru-banii-ue--unde-ajung-fondurile-
Money and politics: the links between public procurement and political parties
Harbuz was member of the Chamber SC RGIC CONSULTANTA SRL was of Deputies in the mandate 2012- deleted (October 2019) as per request 2016 from PSD.116 He donated to PSD of the company. in 2011 and 2012 the sum of 47,500 RON.
SC SIVECO ROMANIA SA
The company is one of the major IT companies in Romania. Irina Socol, the president of Siveco was sentenced
in 2016 to two years and six months in jail for tax evasion117. The prosecutors stated that Siveco created a criminal network with other 50 companies and generated fictive transactions in 2009-2013 in worth of 10 mln. EUR.
The name of the company is mentioned in other corruption cases in Romania. One is the procurement of IT licenses for the Ministry of Education in which several ministers are under investigation. During the 118 procedures Siveco, Compaq and Fujitsu Siemens Romania were favored and the Ministry bought licenses with 30-40% more expenses than the market price and computers and software with up to 50% more expensive.
www.expertforum.r
116 socol-fondatoarea-siveco-condamnata-definitiv-la- http://www.cdep.ro/pls/parlam/structura2015.mp?id doi-ani-si-jumatate-inchisoare-cu-executare-12-19- m=163&cam=2&leg=2012&pag=0 09 o 117 118 https://www.agerpres.ro/justitie/2016/05/03/irina- http://www.pna.ro/faces/comunicat.xhtml?id=5309 65
Policy Brief No. 61
several times, whole lists of entries have to be discarded because the numbers typed in do not make sense. What in reality should be 2-3 million We have also analysed a part of the RON appears in the table as a sum procurement procedures. The files bigger by orders of magnitude. exported on data.gov.ro were Compared to column AH (estimated incomplete for the period 2007-2016 value), the some of the sums are (for example, the information related extremely high, tricking one into to the EU fund was missing), so we concluding that the executed sum was analyzed only the period for which the 10 times bigger than the estimated information existed: six years, value! But this is wrong: the between 2011 and 2016. Direct explanation is that points or commas procedures were excluded from the were not typed in, or maybe they were sample, as no information exists but got lost in the online system, so related to the type of financing in the that decimals database.
The quality of the data is very poor, became full units, or thousands, etc. being obviously introduced in SEAP carelessly. As mentioned above No of contracts PNDR / year
1000
www.expertforum.ro 800 837 790 600 536 568 568 400
200 255
0 66 2011 2012 2013 2014 2015 2016
Money and politics: the links between public procurement and political parties
That such errors persist in large numbers, year after year, also shows that the monitoring institutions are not taking seriously their role to ensure the integrity of information and to perform policy analysis on it.
The database includes 3,554 entries.
PNDR - Value/year
1.8
1.6 1.555925214 1.4 1.410793992 1.45649873 Billions 1.304789568 1.2 1.101305913 1 0.8 0.6 0.613513128 0.4 0.2 0 2011 2012 2013 2014 2015 2016
Most of the procedures were done Procurement, Top 30 companies and through participation invitation sums119 (3,540) and 15 through open bidding. Company + CUI Value 9630549 137687195.1 Asocierea S.C. TECHNOCER 9615034.27 S.R.L. & S.C. ALIDO PROIECT S.R.L. Asocierea S.C. TECHNOCER 9895779.24 S.R.L. & S.C. CRISTICONS S.R.L. & S.C. PROIECT M&M S.R.L. & S.C. MANU CONSULTING S.R.L. ASOCIEREA SC TECHNOCER 5166198.47 SRL - SC AGMA TIUCA SRL - SC PROIECT M&M SRL, LIDEER SC TECHNOCER SRL Asocierea SC TECHNOCER SRL 3668977.7 (lider) - SC LONGHERSIN SRL ASOCIEREA SC TECHNOCER 6131433.23 SRL SI SC PROIECT M&M SRL ASOCIEREA SC TECHNOCER 3319463.63 SRL SI SC TRISKELE SRL
TECHNOCER SRL 99890308.56 www.expertforum.r 12472562 96359043.41 MIS GRUP S.R.L. 90422455.41
SC MIS GRUP SRL 5936588
o 119 According to the data in SEAP the first company We consider that this is an error due to deficient should be Albanic Service with a total of 907373412. input of sums. 67
Policy Brief No. 61
8006670 86169264.55 ASOCIEREA SC GENERAL 3554856.48 TRUST ARGES SRL SI SC CONIZ Asocierea SC TANCRAD SRL - 14560451.71 ROMARG SRL SC REMICO COMPREST SRL SC General Trust Arges SRL 17547921.96 ASOCIEREA SC TANCRAD SRL 4489563 & SC TROIA CONSTRUCT SRL 6178970 44927725.57 ASOCIEREA SC.TANCRAD SRL. 4259499 GALATI & SC. BODO INVEST MULTIPLAND S.R.L. 36558799.09 SRL. SC MULTIPLAND SRL lider al 8368926.48 TANCRAD S.R.L. 62859750.84 asociatiei SC Multipland SRL + SC Triga SRL + SC Sabe SRL- SC 18687226 73810642.74 TNT Perspective Design SRL ING SERVICE S.R.L. 73810642.74 7224633 44776810.37 13027407 68500149.45 Asocierea SC Drum Construct 3729307.93 SRL - SC Triskele SRL Asociatia SC Dimex 2000 1051669.78 S.C. DRUM CONSTRUCT lider al 19355988.52 Company SRL Rebrisoara LIDER asocierii cu S.C. CONSILVA S.A SI SC Inst Nistor SRL SC DRUM CONSTRUCT SRL 21691513.92 Asocierea Dimex 2000 8916251.76 Company SRL - lider si Frasinul 13845570 44027230.47 SRL ASOCIEREA SC DIFERIT SRL SI 5960279.89 ASOCIEREA SC DIMEX 2000 6137272.03 SC CONREP SA COMPANY SRL REBRA SI SC DP DIFERIT S.R.L. 38066950.58 PROIECT SRL CLUJ NAPOCA DIMEX 2000 COMPANY S.R.L. 52394955.88 6837257 43685950.74 9093941 66457630.67 Asocierea SC Construct Perom 4573463.8 SRL (lider) - SC Starcom Exim ASOCIEREA dintre S.C.CAST 9357832.29 SRL S.R.L.,S.C.PAULUS S.R.L. si S.C. CONSTRUCT PEROM S.R.L. 30138212.94 FEBOS S.R.L. Cast S.R.L. 57099798.38 SC.CONSTRUCT PEROM SRL 8974274 BISTRITA, in ascociere cu SC NV 8126900 58375514.4 CONSTRUCT SR CLUJ, SC Asocierea SC Prodeximp SRL - 297574.71 MODERN BAU SRL CLUJ si SC SC Bodnar SRL IMSAT SERVICE SA CLUJ PRODEXIMP S.R.L. 56604889.69 715617 41668571.98 PRODEXIMP SRL, lider al 1473050 Asocierea SC HIDROTERRA SA 9552331.8 asocierii PRODEXIMP SRL si (lider asociere) + SC DELTA ACM SAMUS CONSTRUCTII SA 93 SRL + SC C&D SPECIAL 32500560 57902089.86 TRADE + SC TEHNOELECTRIC SRL S.C. SENERA S.A 57902089.86 Asocierea:S.C. HIDROTERRA 8697249.6 5172139 55827013.62 S.A. ; S.C. GEPROCON S.A. ; S.C. C & D SPACIAL TRADE Asocierea S.C. CONIZ ROMARG 5897193.4 S.R.L. ; S.C. TEHNOELECTRIC S.R.L. + S.C. ALFRID S.R.L. S.R.L. ;S.C. ABC-CON CONIZ ROMARG S.R.L. 49929820.22 INTERNATIONAL S.R.L. ; S.C. 12337680 54788472.31 ECO AQUA DESIGN S.R.L. HIDROTERRA 3181099.86 Asocierea SC FRASINUL SRL - 6066400 LIDER DE ASOCIERE cu SC HIDROTERRA S.A. 20237890.72 EPUROM SA 712912 41106487.8 ASOCIEREA SC FRASINUL SRL 3785191.89 ANIES (LIDER DE ASOCIERE), SC Asocierea S.C. CON BUCOVINA 6576741.07 LUCRARI DRUMURI SI PODURI SA + S.C. CALCARUL SA + S.C. SA BISTRITA SI SC DP PROIECT DRU-PO S.R.L. + S.C. IMPO SRL CLUJ NAPOCA CONSTRUCT S.R.L. Asocierea SC Frasinul SRL- SC 3897204 Asocierea SC CON BUCOVINA 3511313.12 Doralex SRL - SC Indemanarea SA - Lider - SC Prodcom SRL + SC DP Proiect AGROPRESTSERVICE SRL - SRL Asociat www.expertforum.ro SC FRASINUL SRL 41039676.42 Asocierea SC CON BUCOVINA 5312935.65 SA - SC CALCARUL SA - SC 15428170 47990998.44 WARESO PROD SRL ASOCIERE S.C. GENERAL 26888220 CON BUCOVINA S.A. 25705497.96 TRUST ARGES SRL/SC STAR 10074560 39766691.96 TRADING IMPEX SRL Asocierea S.C. Doralex Com 5184183.26 SRL(lider de asociere) , SC Prodeximp SRL 68
Money and politics: the links between public procurement and political parties
Asocierea SC Doralex Com SRL 8516515 The company is owned by SPATARU (lider) + SC SCA.MO.TER SRL DORALEX COM S.R.L. 26065993.7 CATALIN MARIAN. The press wrote he is close to PSD121. He is the godson of Ion Stoica, former chief of Olt and Vâlcea Police departments and former general secretary in the Ministry of Above five contracts – contracting Internal Affairs122. authorities – companies Half of the company’s money came COMUNA MIHAILENI - POSADA MED 8 S.R.L. from CNADNR, while 10% comes from Consiliul Local Scarisoara-IMPACT MEDIA 8 CJ Arges. S.R.L. COMUNA PIETROASA -TECHNOCER SRL 8 DIFERIT Comuna Sagu - CONFORT S.A. 7 COMUNA MAGURA ILVEI - MIS GRUP 6 S.R.L. COMUNA CORNU LUNCII - ASSIST 6 The company is owned by PETRI SOFTWARE S.R.L. DANIELA DENISA and PETRI NICOLAE. Directia Sanitara Veterinara si pentru 6 Siguranta Alimentelor Hunedoara - Grigore Vădean și the administrator of Omnivet Impex S.R.L. the company. His name appears in the Directia Sanitara Veterinara si pentru 6 case of former president of CJ Cluj, Siguranta Alimentelor Hunedoara - Horea Uioreanu. Răzvan Pop, the NOVA Group Investment S.R.L. president’s former councillor declared COMUNA FARCASA - Asocierea S.C. 6 BOCCARDO ENTREPRISE S.R.L-SC C&A that Vădean bribed Uioreanu in his PROIECT SRL-SC CUBICON INVEST SRL- office123. Almost 43 of the company’s SC DIFERIT SRL-SC REEA PRODCONS revenues come from Primaria Cluj SERV SRL SC ZICU IMPEX SRL Napoca. COMUNA PRUNDENI - SC ELECTRIC 6 CONTROL SRL HIDROTERRA We have identified some of the companies from top 100, in terms of The company is managed by PĂSTRĂV contracted sums. This list is not COSMIN-VASILE. In 2013 he was exhaustive, but shows some of the arrested for tax evasion124. political relations these companies may have. CONEST
POSADA MED is owned by Adrian The company is owned by Viorel Pompiliu Bogdan, PDL/PMP leader120. Cozma. The press wrote he is close to The company was investigated by the the former PSD mayor of Iasi, Competition Council. Gheorghe Nechita and is the godfather of the PDL member of the Parliament GENERAL TRUST ARGES Petru MOvila125. The current PSD
120 http://www.turnulsfatului.ro/2017/01/08/2017- contractelor-de-deszapezire-atribuite-pe-motiv-de- www.expertforum.r ca-n-2015-o-singura-organizatie-presedinte-ales-de- extrema-urgenta-480614 catre-membri/ 124 http://www.obiectivdesuceava.ro/local/patronul- 121 http://ziaruldevalcea.ro/2010/09/08/ion-cilea-a- florconstruct-retinut-intr-un-mega-dosar-cu-o- dat-o-suplimentare-de/ evaziune-fiscala-de-10-milioane-de-euro/ 122 http://adevarul.ro/locale/pitesti/chestorul- 125 http://www.ziarulatac.ro/eveniment/ce-i-leaga- ionstoica-nasul-regelui-asfaltului-arges- pe-nichita-si-movila-un-infractor-de-drept-comun-si- 1_57dfd8895ab6550cb8cb9fb7/index.html multe-milioane-de-euro o 123 http://www.digi24.ro/special/campanii- digi24/romania-furata/romania-furata-afacerea- 69
Policy Brief No. 61
mayor of Iasi, has worked until TEST PRIMA 2002126 at Conest. The company is owned by Viorel Jurvale, investigated for several felonies. The press wrote that the CONSULTUS company is close to the former PNL senator Orest Onofrei and to Gheorghe Consultus is a consultancy company Flutur129. Moreover: managed by Botond Ferenc Szentgyorgy, the son of former UDMR For the auctions he attended but did not meet county councillor Sandor the qualification criteria, Juravle set out a 127 scheme designed to turn him into the winner. Szentgyorgy . This involves not only political support but also help from the judiciary. DUMEXIM In cases where Test Prima was eliminated, he The company is owned by DUME would challenge the auction at CNSC, and then, if he did not win, he would address the FLORIN GABRIEL and DUME SIMONA court. And each time he obtained favorable MARIANA. The company donated solutions at the Suceava Court of Appeals from 1,000 RON to UDMR in 2009. They the courts coordinated by former President have both been indicted for frauds Cezar Hâncu, whose mother was a member of with EU funds, from PNDR. According the religious community he led. Although his offers were not the most beneficial to the to DNA beneficiaries, thanks to justice, First Test handed contracts. Between January-April 2013, in the context of the organization of a tender for awarding a Among the works thus obtained were water contract financed by European funds (FEARD), supply, sewage and sewage treatment plant in entitled "Design and execution works- the commune of Ciprian Porumbescu, funded Modernization of the forest road Valea Iadului- by PNDR, measure 332, which he awarded with Bulz Commune", defendant Dume Simona a higher bid than the competitors after three Mariana, manager of SC Dumexim SRL complaints at CNSC and two actions at the Oradea, presented fake price offers in support Court of Appeal. of the tender offer, but also for its
adjudication128. GECOR
TEAMNET INTERNATIONAL – see The company is owned by CUSĂ page 25 www.expertforum.ro GHEORGHE and CUSĂ IOANA. The press wrote that he is the godson of the former PSD senator Cătălin Voicu,
126 http://m.jurnalul.ro/bani- 128 http://www.pna.ro/comunicat.xhtml?id=5827 afaceri/economia/chirica-un-primar-c-onest- 129 contract-urias-pentru-firma-de-suflet-738131.html http://www.puterea.ro/campaniile_puterea/campanii 127 http://www.ifz.ro/conflict-de-interese-la- le-puterea-constructorii-pe-bani-publici-si-relatiile- 70 atribuirea-unui-contract-pentru-un-proiect-cu- lor-politice-ii-124383.html finantare-europeana/html
Money and politics: the links between public procurement and political parties sentenced for corruption130. Between DIMEX 2000 2004 and 2007, Voicu’s mother was a shareholder in the company. The company is currently owned by SCURTU NELUTA LUCRETIA. Her Most of the company’s contracts are husband, Ioan Scurtu was sentenced signed with CJ Giurgiu and CNANDR. to 2 years with suspension for buying influence, in the case of the former CONBETAS (under criminal chief of the Prosecutor’s Office in investigation – DNA) Năsăud, Adriana Moldovan132. The gift was a bridge built by Scurtu near the vacation house of the defendant in The company is owned by Ciprian exchange to intervene for him in a civil Safir. Safir’s mother, Ecaterina Safir case. was investigated by ANI for conflict of interests and in 2016 was found The press wrote that the company is guilty. As head of accountancy in CJ close to Radu Moldovan, PSD President Vaslui she signed two contracts in of CJ Nasaud133. The data shows that value of 854.650,24 Ron with 60% of the money the company CONBETAS, the company of her contracted came from the county son131. council (30% of the contracts).
CONBETAS was investigated for EU CAST – see page 48 funds fraud. The company was awarded the contract for the project PROEXIMP - S.R.L. Modernizarea drumului comunal DC 49 Schitu Hadâmbului - Urşiţa – The company is owned by MUREȘAN Mironeasa and although the project PETRE. Mureșan was the head of PDL was not finalized, the mayor of branch, Satu Mare and candidate for Mironeasa (the beneficiary) signed the the parliament134. documentation that attested that in fact was finished. FRASINUL
23 of the 36 contracts of the company The company is owned by Traian are signed with Vaslui Municipality Larionesi. The press wrote that the (63%) and 14% with CJ Vaslui. company was involved in illegal wood purchasing, with the support of the TEHNIC ASIST S.R.L. – see page 52 local authorities135. Also, the prosecutors investigated the support TANCRAD – see page 37 of the local Nasaud police chiefs for
130 http://www.hotnews.ro/stiri-esential-13852493- firmei-sc-dimex-2000-company-srl-condamnat-la- gecor-firma-apropiata-catalin-voicu-asociere- inchisoare-cu-suspendare/ deszapezire-tel-drum-firma-apropiata-liviu-dragnea- 133 https://www.flux24.ro/baronul-psd-de-bistrita- www.expertforum.r gecor-castiga-38-milioane-lei-din-contractele- da-contracte-pe-banda-rulanta-unei-firme-acuzate- deszapezire.htm de-coruptie/ 131 http://adevarul.ro/locale/vaslui/fosta-contabila- 134 http://www.ziardecluj.ro/seful-pdl-satu-mare- cj-vaslui-ecaterina-safir-condamnata-parafat- castiga-licitatia-pentru-proiectul-centrului-de- contracte-bani-publici-firma-fiului-ei- varstnici-de-la-cluj 1_581372b55ab6550cb8ff3710/index.html 135 https://www.timponline.ro/prosperitatea-la- 132 control-locuinta-sefului-directiei-silvice-bistrita- o http://www.pna.ro/faces/comunicat.xhtml?id=1575, gheorghe-ivan-perchezitionata-de-dna-foto/ http://gazetadebistrita.ro/ioan-scurtu-patronul- 71
Policy Brief No. 61
the “illicit activities” of the to ANI data he worked at Eforie Sud company136. (public administrator, counsellor), Murfatlar (mayor's counsellor), 5th LOTUS SA District Municipality (director). The company is a shareholder in Rosal The company has is managed by Invest (bankrupt), which is also Rosal TRASTER S.R.L. One of the censors in Grup shareholder. Rosal has signed Ovidiu Caragea. In 2010, Caragea numerous contracts with the State for joined UNPR, became vicepresident137. the provision of sanitation services; Social media analysis shows that in Among the shareholders we can find 2016 the youth organization held Silviu Prigoana, son of PDL MP Silviu press conference in a location of the Prigoană139. company138. VICE EXPERT (under criminal GRADINARIU IMPORT EXPORT investigation – DNA)
The company donated 10.000 RON to The company donated to PSD in 2009
PSD in 2008 and it’s owned by the sum of 6300 RON and it’s owned GRADINARIU RADU and GRĂDINARIU by Victor Petcu. Petcu and the ANDREI-CĂLIN. The local press has company were indicted for illegally written that the company has been obtaining EU funds. In 2012, Petcu successful in contracts while Valerian signed a contract with MDRAP for the Săvălăstru was a director at Salubris, project Centru de sprijinire a afacerilor a company owned by the Iasi City furnizorilor de servicii la distanță (POR Hall. Săvălăstru was secretary of PNL 2007-2013) and declared that there Iaşi, a godson of Relu Fenechiu, a PNL are no issues with the implementation leader and minister convicted for of the project. Still, the prosecutors corruption. He was part of the PDL in stated that 1994, PNL in 2000, UNPR in 2010, where he resigned in 2014. According
www.expertforum.ro
136 http://adevarul.ro/locale/bistrita/cine-baronii- d=1114250421930227&id=947188648636406&subst lemnului-vizati-dna-bistrita-traian-larionesi- ory_index=0 impatimit-trofee-exotice-africa-emil-iugan- 139 https://www.7est.ro/exclusiv- milionarul-discret-forbes- 7est/anchete/item/10593-10-milioane-de-euro-care- 1_5555c606cfbe376e3539a4e1/index.html miros-cam-urat-cine-a-primit-contractele-pe-mega- 137 http://www.gorjeanul.ro/monden/gura-targului- proiectul-colectarii-deseurilor-din-judetul-iasi.html, caragea-lasa-lotus-ul-pentru-deputatie declaratii.integritate.eu 72 138 https://www.facebook.com/permalink.php?story_fbi
Money and politics: the links between public procurement and political parties
Thus, when initiating the procedure Asocierea SC Complis SA, SC 8572960.33 for awarding the works contract, the C&I Trans Europe SRL si SC Local Consult SRL defendant Petcu Victor coordinated in 9630549 5166198.47 fact two of the companies to which ASOCIEREA SC TECHNOCER 5166198.47 invitations for participation were sent SRL - SC AGMA TIUCA SRL - SC and he was affiliated with the PROIECT M&M SRL, LIDEER SC manager of one of the firms with TECHNOCER SRL 14854372 3744012.56 which he concluded in a Final works SC ALPHA CONSTRUCT SISTEM 3744012.56 contract execution. SA 15112169 2398016.16 INTREPRINDEREA DE 2398016.16 DRUMURI SI PODURI GORJ S.A. 8716154 2327263.62 VIA VITA ASOCIEREA SC ELDICLAU 2327263.62 IMPEX SRL - SC CORPORATE The company is owned by DUDUCEA MANAGEMENT SOLUTIONS SRL - SC DRUM PROIECT SRL, LIDER VIOREL-SORINEL, a local PNL leader SC ELDICLAU IMPEX SRL 140 in Mehedinți and former director of 24955919 1797500 the National Roads Department in Centrul de Consultanta si 1797500 Mehedinți. The press wrote that his Asistenta S.R.L 14656235 1296465 wife led the company while he was S.C MOB VAD S.R.L. 1296465 head of the Road Department. He was 25827950 1184000 arrested in 2013 for tax evasion and TOP MANAGEMENT ING SRL 1184000 money laundering. In 2014141 he was arrested for bribery and buying HUGE CONSTRUCT S.R.L. influence; the targeted officials were (bankrupt) Carmen Sârboiu, the chief prosecutor of Orșova prosecutor’s office and Ion The company is owned by VIZITIU Ianoși, Chief Commissioner. He IOAN and VIZITIU SERGIU offered them construction materials in CONSTANTIN. Sergiu Vizitiu was PDL order to protect his company from and UNPR deputy142 and he’s one of criminal investigations. Duducea and the richest parliamentarians in Vaslui. Ianoși have been acquitted in 2016, while Sârboiu as sentenced with COMPLIS suspension for abuse in office.
The company donated to PSD+PC in 2008 the sum of 20,000 RON. Until Top 10 – consultancy contracts / sums 2011, among the shareholders of the (CPV starting with 7) company was the PSD deputy Gheorghe Ana; he was also president Company + CUI Sums of CJ Dâmbovița. Between 2006 – 13904073 33614391 TEAMNET INTERNATIONAL 33614391 2009, he did not declared his shares, 17260226 9295954 although he publicly declared he was HUGE CONSTRUCT S.R.L. 9295954 shareholder of the company143. 2856116 8572960.33
ALPHA CONSTRUCT SISTEM www.expertforum.r
140 142 https://www.7est.ro/exclusiv-7est/item/193389- http://www.puterea.ro/campaniile_puterea/campanii cel-mai-bogat-deputat-din-iasi-turnat-la-diicot-1- le-puterea-constructorii-pe-bani-publici-si-relatiile- milion-de-euro-frauda.html lor-politice-xxvi-mehedinti-dolce-vita-pentru-gasca- 143 http://www.jurnaldedambovita.ro/jdb_articol--cj- o lui-duicu-133556.html dambovi-539-a-plate-537-te-complis-incaseaza- 141 http://www.pna.ro/comunicat.xhtml?id=5700 procor-beneficiaza-sau-a-prestat-gratis,9318.html 73
Policy Brief No. 61
The company is owned by Constantin IV. THE NATIONAL FUNDS FOR Isvoranu. The press wrote that he was INFRASTRUCTURE, AN EASY close to PDL leaders in Gorj, such as CATCH Ionel Manțog (investigated for corruption). In 2006, he was partner Based on our previous researches and with Dumitru Manțog, Ionel Mantog’s discussions with stakeholders, one of brother in Portal Grup SRL and with the first conclusions is that national Marcel Petrică Iacobescu, former funds are more vulnerable when it 144 general secretary of PDL Gorj . In comes to allocation and procurement, 2013, he has investigated for tax but also implementation and 145 evasion . monitoring. The budgets are quite high, but the capacity to evaluate and MOD VAD monitor these projects is very low.
The company was owned by Mihai We will refer to two national funds for Vădan. In 2008, he was the treasurer infrastructure. One of them is of PDL Dâmbovița. He as also general managed by the National Investments director at Agentia de Plati pentru Company, which works under MDRAP Dezvoltare Rurala si Pescuit (APDRP) and the second one is the National Dâmbovița. The press wrote that he Program for Local Development, also executed the consultancy for managed by MDRAP. The first one contracts where the implementation managed around 6 bln RON, while was ensured by companies related to PNDL about 6.5 BLN RON between Florin Popescu, former PDL president 2013 and 2016 and for the following 4 146 of CJ Dâmbovița . Vădan was years period a sum of 30 bln RON has accused that his company signed been approved. contracts with PDL communes from Dâmbovița and that APDRP distributed The distribution mechanisms are much funds to communes where the simpler than in the case of the EU procurement procedures were won by funds and include a much lighter SC Ian Lux Consulting SRL, where scheme of institution involved in their associate was Iancu Caracota, prefect management and implementation. In of Dâmbovița. the following sections we will refer to the management of these funds, procurement and politically connected companies and we will attempt to compare them with the EU funds.
IV.A. National Investments Company (CNI)
The company manages investments
programs of public or social interests in constructions such as sports halls, www.expertforum.ro cultural spaces, sanitary institutions or cinema halls. The programs are
144 http://www.romaniacurata.ro/cine-sunt- mehedinti-evaziune-fiscala- investitorii-din-spatele-proiectelor-mhc-dintr-o- 1_528e845bc7b855ff56227889/index.html zona-protejata-a-raului-bistra/ 146 https://www.ancheteonline.ro/2014/04/legea- 145 http://adevarul.ro/locale/turnu-severin/tibi- pentru-unii-muma-pentru-altii-ciuma-cum-sunt- 74 giuca-costi-isvoranu-retinuti-procurorii-diicot- protejati-oamenii-lui-traian-basescu-cazul- consilierului-prezidential-mihai-vadan/
Money and politics: the links between public procurement and political parties
approved by the Ministry of Regional According to one of the interlocutors, Development. The funds come from one of the main vulnerabilities related
Comparison, no of contracts
500
450
400 156 350
300
250 230 200 101 150 306 65 100
124 111 124 50 82 33 0 USL PSD PNL PDL UDMR Altele
2004-2008 2009-2012
* a number of 345 projects out of 2109 were not included due to the fact that they did not contain any year and for some of them, the Comparison % of sum procurement is being currently organized 0.7
0.6
24.70% 0.5
0.4 43.85%
0.3
13.17% 0.2 39.91% 12.47%
0.1 15.80% 16.55% 16.43% 11.32% 5.81% 0 USL PSD PNL PDL UDMR Altele
2004-2008 2009-2012
www.expertforum.r the state budget, the budgets of the to procurement is the lack of local councils and other sources. The professional capacity of the personnel company ensures the entire progress in CNI, the insufficient management of of a project: project, procurement, the contracts and the delayed implementation of works and the payments for CNI and CNANDR.
o
reception of works. 75
Policy Brief No. 61
* only finalized projects, according to the exports on 22.08.
Comparison, no of contracts
250
200
117 150
100
66 50 33 6 24 15 31 15 23 10 8 0 10 USL PSD PNL PDL PDL+PNL Others
2013 2014 2015 2016
The budget for 2015 was 543,861,000 went to PSD, while between 2009 and RON, while the total sum, according 2012, the money went to PDL, as the the CNI website147 is 6,331,037,427 democrat liberals were in power. RON. The tables bellow reflect an Moreover, in 2013-2016 the number approximation of how the money were of projects received by social distributed from 2004 to 2008. As we democrat municipalities is even higher do not have the exact date of the and the graphics shows that the contract, but just the year of number of contracts rises year by implementation, there may be slight year. differences, due to the fact that 2004, 2008 and 2012 were electoral years The company was in the center of and we could not separate before and several scandals during its existence. after the elections. Also, we have In 2010 Elena Udrea, minister of partially taken into consideration the development named Ana Maria data from the migration in 2014, Topoliceanu as head of CNI. According when 552 mayors switched the to the press they were former party148. business partners. Topoliceanu was member of PDL, Sector 6, headed by The data above shows that there is a Elena Udrea149. correlation between the party in power at the local and central level Topoliceanu is investigate in the Gala and the money allocated to the Bute case for taking bribe, while Elena www.expertforum.ro beneficiaries. Between 2004-2008, Udrea for taking bribe, abuse in office when PSD and PNL were mostly in and attemptive to use false or inexact power, almost 40% of the money
147 http://www.cni.com.ro/proiecte, according to the https://expertforum.ro/extra/primari-migratori/ that data from 22.08.2017 show how the public officials migrated 148 For more information about the migrations of the 149 http://www.comisarul.ro/politic/fufele-coruptiei- 76 mayors consult the maps published by EFOR, udrea-bica-topoliceanu-si-crinuta_285353.html http://expertforum.ro/primari-clientelari/ and
Money and politics: the links between public procurement and political parties
where former PDL local councillor at Combination – locality No of Turda, SILAGYI GABRIEL was where the investment is contracts associate. The company won a being implemented / contract for a plastic ice rink, although company the deadline for the offers was expired152. The company’s most
Petrosani - CONSMIN SA 7 successfulSlobozia company- CONCIVIC was between 3 Sector 4 - S.C. INTEGRAL S.A. 7 2007Miercurea and 2011, Ciuc -when BENZOT PDL HAR was SA in 3 Petrila - CONSMIN SA 6 power.Galati The -ASOCIEREA press wrote LEMACONS that he & would3 be underEURO PROIECTinvestigation for a potential Braila - S.C. CONCIVIA S.A. 6 bribeBușteni for president -AVRIL of CJ Cluj, Horea3 Galati - ASOCIEREA 5 Uioreanu23 August153. - ASOCIEREA SIGMA 3 LEMACONS & VEGA 93 APS CONSTRUCT & GRUPO Gura Humorului - ELMAR 4 Natalia Silagyi, his wife, held the Baia Mare - IMI SA 4 Calarasi - GENERAL CONCRETE 3 Turnu Magurele - ASOCIEREA 4 positionSector of 1 councillor- S.C. CONFORT on evalution S.A. in3 PLUS CONFORT & TECON the Project Monitoring Department, Sighisoara - S.C. CONSIG S.A. 4 MDRT,Baia while Mare -MBS S.C. IMIwas S.A. implementing 3 Focsani -S.C. VEGA 93 S.R.L. 4 projectsSector signed 2 - S.C. with ERBASU CNI S.A.154. 3 Sector 3 - S.C. INTEGRAL S.A. 4 Tulcea - S.C. CORAL S.R.L. 3 Gheorgheni - IMPEX AURORA 3 In termsSighetu of Marmatiei most localities - S.C. IMI and S.A. 3 Botosani - CONDACIA SA 3 contractsSlatina (the- S.C. procurement GRUP PRIMACONS 3 S.R.L. Roman - MOLDOCOR SA 3 proceduresSector 6 -are S.C. managed CONCAS S.A. by CNI 3 directly), for the projects in Petrosani, most of the contracts went to Consmin documents to obtain EU funds150. (see page 76), while for Sector 4 went Prosecutors state that Topoliceanu to Integral S.A. received money from a company to ensure the payment of the contracts in time.
Other scandals related to CNI have drawn the attention on the high prices of works. For example, Gazeta Sporturilor published an article in which it was underlined that a similar ice-skating rink in Brasov was three times more expensive than one in Miskolc, Hungary151. The contract was www.expertforum.r signed with MBS Group, a company
150 153 https://www.clujust.ro/suspectii-din-dosarul- http://www.pna.ro/faces/comunicat.xhtml?id=6217 uioreanu-ii-acopera-spectrul-politic-psd-pdl-pnl/ 151 http://www.tolo.ro/2010/04/14/incredibila- 154 http://jurnalul.ro/special-jurnalul/anchete/cine- disparitie-a-doua-patinoare/ este-afaceristul-pdl-ist-care-a-primit-122-de- o 152 http://www.tolo.ro/2010/04/06/licitatie-cu- milioane-de-euro-de-la-stat-693828.html dedicatie/ 77
Policy Brief No. 61
Top winners, no of contracts Top winners, sums
Company + CUI No of Company + CUI Sums / contracts top 10 1153932 66 792555 228577157 CONCAS & TECON 5 CON-A & ACI CLUJ & NISAL & 216068597 CONCAS 61 DICO SI TIGANAS - BIROU DE PROIECTARE 2945191 47 CON-A 12508560 IMI & TECON 2 1153932 223903224 INTREPRINDERE 45 CONCAS & TECON 20935476 MONTAJ-INSTALATII CONCAS 202967748 2135110 45 430008 175203684 CONSMIN & CONSTRUCTII ERBASU & 20923352 EURODACONS CONCELEX CONSMIN & 2 CONSTRUCTII ERBASU & 32209992 SERCOTRANS MULTINVEST CONSMIN & TECON 5 CONSTRUCTII ERBASU 122070340 ASOC. CONSMIN & 1 200513 170891301 ORIZONTURI 2025 ACI CLUJ & BOGART CONSTRUCT 70440551 CONSMIN 37 ACI CLUJ & DICO SI TIGANAS - 100450750 BIROU DE PROIECTARE & CON-A 1869347 36 15291641 170011578 RICO & EUROPEAN 1 MBS GROUP 170011578 BUSINESS CONSULT 2135110 107160499 RICO 35 CONSMIN & EURODACONS 26287387 33 CONSMIN & SERCOTRANS 4666488 LEMACONS & 12 CONSMIN & TECON 13104032 CRICONS & EURO ASOC. CONSMIN & ORIZONTURI 0 PROIECT 2025 LEMACONS & EURO 3 CONSMIN 89389979 PROIECT 1869347 96956655 LEMACONS & VEGA 18 RICO & EUROPEAN BUSINESS 0 93 CONSULT 10801936 30 RICO 96956655 LOR INSTAL 1 5160991 95178488 CONSTRUCT S.A & SIM GENERAL CONCRETE CERNAVODA 95178488 CO BH 2945191 86808443 LOR`INSTAL 1 IMI & TECON 3434734 CONSTRUCT & TECON INTREPRINDERE MONTAJ- 83373709 LOR`INSTAL 2 INSTALATII CONSTRUCT & 10801936 80448606 TRANSPROIECT 2001 LOR INSTAL CONSTRUCT S.A & 0 ASOC. LOR'INSTAL 1 SIM CO BH CONSTRUCT & SIM- LOR`INSTAL CONSTRUCT & 0 CO BH TECON LOR`INSTAL 25 LOR`INSTAL CONSTRUCT & 1636579 CONSTRUCT TRANSPROIECT 2001 22415742 28 ASOC. LOR'INSTAL CONSTRUCT & 0 SIM-CO BH VASI FLOR 28 LOR`INSTAL CONSTRUCT 78812027 1154504 27 INTEGRAL 27 Some of the companies above are 2897361 27
www.expertforum.ro politically connected, as shown below: TRUSTUL DE 27 INSTALATII - MONTAJ SI CONSTRUCTII CONCAS is owned by Ionel Gagu and 6341643 26 his wife, Emilia, Cristian and Georgia GRUP PRIMACONS 3 Raicu and Constantin şi Dorina & TRANSCON Ghiveci. The local press wrote that CARAIMAN Gagu was close to the former PDL/PSD GRUP PRIMACONS 23 78 leader of Buzau, Constantin
Money and politics: the links between public procurement and political parties
Boşcodeală. Constantin Ghiveci would Șlic who was vicemayor between 2004 be close to the ex-PDL leader Cezar and 2005 was declared by ANI Preda155. 30% of the company’s incompatible due to the fact that he contracts come from CNI, while other contracted works with his own 9% from Buzau Municipality. companies158. His recourse was annulled due to the fact that his MBS Group – see above documents were not stamped.
SCADT is owed by UNPR senator Ion TEHNODOMUS Toma, former head of the Olt PSD organization. Two of the associates in Tehnodomus, Gheorghe Maxian and Virgil Henț were EMILIANO VEST is owned by indicted in 2016 for bribery in 2010, Mihaela Bejeriță, the wife of Ion when they gave money to Teodor Bejeriță. They are both indicted for Giurgea in order to ensure the optimal tax evasion. The company got almost conditions for the contracts of the 44 milion RON from contracts with Mureș Water Administration with the CNI and has multiple contracts with company159. municipalities in Caras Severin. Ion Bejeriță is vicepresident of PSD Caraș The company donated to PSD (2008, Severin and the godfather of PSD 2012), PSD+ PC (2009) and PDL president Ion Mocioalcă156. (2014) the sum of 97,000 RON. A local PNL leader accused clientelism in GENERAL CONCRETE CERNAVODA awarding a contract to Tehnodomus, stating that the contract would have The company is owned by Valentin been up to 40% cheaper: Popescu. 60% of the company’s contracts come from CNI (9) and Subcontracting is definitely a way of Societatea Națională wrinkling public money. It was very NUCLEARELECTRICA S.A. (22), while clear that Technodomus, who has no 53% of the money come from the experience in bridges, not even latter one. Popescu was a candidate footbridges, has been able to achieve for the position of mayor of such an important objective as Trajan Cernavoda from PDL157. He donated to Bridge. Made for maneuvers, PDL and PSD 255,000 RON in 2008 subsequent financial engineering, to and 2009. pay a significant amount of money in the pockets of the PDL clients160. The CONBAC project “Reabilitare Centru Istoric Vechi” was financed from POR and The company is owned by Mihai Șlic, cost 15 mln EUR. former PDL councillor, vicemayor (PNL) of Bacău and Corneliu Saftiuc.
155 http://m.jurnalul.ro/special-jurnalul/anchete/cni- 157 http://jurnalul.ro/special-jurnalul/anchete/cni- ul-tehnocrat-continua-constructia-salilor-de-sport- compania-elenei-udrea-ingroapa-banii-in-groapa- de-pe-vremea-lui-udrea-cu-aceleasi-firme- 593352.html www.expertforum.r 720503.html, 158 http://www.desteptarea.ro/mihai-slic-a-pierdut- http://www.puterea.ro/dezvaluiri/magnati_buzoieni_ razboiul-cu-ani/ abonati_la_salile_de_sport_ale_elenei_udrea- 22621.html 159 http://www.aradon.ro/patronii-de-la- 156 http://www.stiripesurse.ro/lider-psd-cercetat-de- tehnodomus-trimisi-in-judecata-pentru- dna-pentru-un-prejudiciu-de-5-milioane-de- mita/1658752 lei_922476.html 160 http://www.mediafax.ro/politic/conducerea-pnl- o arad-reclama-sifonarea-de-fonduri-catre-clientela- pdl-printr-o-investitie-locala-9789787 79
Policy Brief No. 61
a contract signed with the Olt Water Company, financed by EU funds. CONDACIA PLUS CONFORT Until 2005, Radu Cătălin Drăguș was director or member of the The company is owned by RAMBA management of the company. CHRISTIAN – VIRGIL and ANDREI Between 2004 and 2008 he was PDL OBICIU RAMBA. The latter one is the deputy and afterwards director of OI- son of the former director of RADET POSDRU of the Ministry of Bucharest. Ramba denounced Darius Education161. The peak of success for Vâlcov, PSD deputy in a case of the company was in 2008, while most trafficking in influence, together with of the contracts were signed with CNI Theodor Berna (Tehnologica Radion). (30% of the incomes of the company).
Berna Theodor (...) has denounced that during 2009, as administrator of SC Tehnologica Radion SRL Bucharest, he contacted Vâlcov TEL DRUM - see page 51 Bogdan Darius, mayor of Slatina, Olt county, to whom It proposed that in return for providing VICTOR CONSTRUCT – see page 23 support to the decision-makers of the contracting authority in order to win tenders for works in Slatina, Scorniceşti, Piatra Olt and CONDOR PADURARU Drăgăneşti, to give 20% of the sums received (without VAT) according to the execution The company is owned by Sorin contracts for the respective works163. Păduraru. According to the press, Păduraru bribed in 2012 Darius Vâlcov In 2012, when Berna had financial (100,000 EUR), PSD senator and later problems, minister and Minel Prina, mayor of Slatina in order to intervene to the Vâlcov Bogdan Darius linked Berna Theodor officials that could have approve the with the deputy mayor of Slatina, Prina Minel Florin, who (...) decided, in order to dissipate payments for an EU funded project in the illegal origin of money, that the difference Slatina (reabilitation of Lipscani and in money that the denouncer did not paid Mihai Eminescu streets)162. Moreover, would be transferred by SC Tehnologica Radion during the investigation he stated that SRL to SC Plus Confort SRL, by concluding three fictitious contracts for the supply of another 1.7 mln RON have been given goods / services, without this company www.expertforum.ro to Vâlcov in order to exercise his providing any services under the special influence to get the money in time for contracts concluded for this purpose.
161 163 http://www.cdep.ro/pls/parlam/structura2015.mp?i https://www.agerpres.ro/justitie/2015/03/26/valcov- dm=44&cam=2&leg=2004 a-fost-denuntat-de-theodor-berna-si-andrei-ovidiu- 162 http://olt-alert.ro/2015/09/10/afacerile-lui-sorin- ramba-referat-dna--13-32-58 80 paduraru-spaga-pentru-fonduri-europene-si-lucrari- de-mantuiala/
Money and politics: the links between public procurement and political parties
VEGA ‘93 – see page 36 a contract with more than 3 mln RON165. MOLDOCOR donated to PDL in 2007, 2008 and 2009 and to PC in 2008. According to the sentence in first The company is owned by Mihai instance166, a part of the money that Bătrânu, an influential businessman in the former PDL minister Elena Udrea Neamț. received from Gala Bute case went to PDL Bucharest as donations and Two of the shareholders at service contracts. TERMOGAZ COMPANY are Adrian and Miron Gărdean. Their names IV.B. The National Program for appear in the DNA investigation Local Development (PNDL) related to the Bute Gala. The DNA press release states that Expert Forum has already published a series of reports related to PNDL, In 2010, Minister Udrea Elena Gabriela showing on one side problems related received indirectly, for himself and for another, through Lungu Ştefan, material benefits from to the allocation of funds and on the Gardean Adrian and Gardean Miron, in order to other side, issues related to the ensure the timely financing of works contracts procurement procedures. concluded by SC Termogaz Company S.A. with several territorial administrative units under the "Skiing for Romania" program. We have analysed the distribution of infrastructure funds since 2004 On 24.08.010 and 20.12.2010, the bribers (including money from the Reserve ordered the transfer of the total amount of Fund of the Government) and noticed 695.367,06 lei to the patrimony of a company that all the parties used these funds in controlled by the defendant Lungu Ştefan order to finance their mayors. In through several fictitious acquisition contracts. This amount represents 10% of the value of 2007-2008, parties in power received the payments made by the ministry to UAT three times more than the opposition, Cavnic and UAT Borsec for the work of S.C. while in 2012-2016, the parties in Termogaz Company S.A. power received twice more funds.
[...] We have also analyzed more than 700 In 2011, Udrea Elena Gabriela requested and procurement procedures in 10 received from the defendant Gărdean Adrian, counties and noticed the following: for himself and for another, material benefits worth 10% of the payments made by the - In each of the counties, Ministry for the works contracts concluded by S.C. Termogaz Company S.A. and S.C. Kranz between 30-50% of the Eurocenter S.R.L., in exchange for the winners are not published in guarantee that the funding will be approved in SEAP time164 - In each of the counties studied, Miron Gărdean was also indicted in almost 50% of the contracts 2016 together with Cornel Răzmeriță, are won by 5-6 firms from mayor of Lupeni; the mayor attributed 40-50 competitors. A a contract by breaking the provisions significant number of them have of OUG 34/2006 and over-evaluating been subject to criminal www.expertforum.r investigation or have political or family ties with mayors, county
164 http://www.pna.ro/comunicat.xhtml?id=6217 in-patrimoniul-elenei-udrea-si-al-pdl-bucuresti- 165 http://www.pna.ro/comunicat.xhtml?id=7328 motivare-gala-bute- o 166 https://www.news.ro/justitie/instanta-suprema- 1922400425222017072017108663 banii-proveniti-din-infractiuni-de-coruptie-au-ajuns- 81
Policy Brief No. 61
council presidents, local In the case of CNI the procurement is councilors, parliamentarians or done directly by the company, while in party or local party leaders at the case of PNDL, the procurement the local or central level goes to the municipalities, without the - Ties are in many cases party, involvement of the MDRAP. but tend to be built around local The map of distributions of funds and power relations. So they are the reports regarding public owners of companies that procurement can be found on EFOR’s donate to several parties, are website: political traders or have family http://expertforum.ro/en/clientelism- ties with people from other 2016. Read more about this topic in parties. EFOR’s 2016 annual report, - Some of the companies are www.expertforum.ro/raport-anual- headed by unknown 2016. administrators in papers, but in reality they are headed by politicians or other powerful persons. In some of the cases identified, real owners did not
make too much effort to
camouflage and did business
directly with their firms.
- The rule of county/regional monopoly seems to apply, different from the big projects financed from EU funds
www.expertforum.ro
82
Money and politics: the links between public procurement and political parties
V. CASE STUDIES Art. 181 – (1) Using or presenting in bad faith false, inaccurate or incomplete documents or statements, which has as result the illegal In recent years, several cases of fraud obtaining of funds from the general budget of with European funds and abuse of the European Union or from the budgets leadership position in a political party administrated by it or on its behalf, shall be have been brought to the attention of punished with imprisonment from 2 to 7 years the public. Some of them have been and interdiction of certain rights. (2) The deliberate omission to provide the sent to court and gone through information required according to the law, with judicial proceedings. In this section, a the purpose of obtaining funds from the selection of relevant cases are general budget of the European Union or from presented and analysed. the budgets administrated by it or on its behalf, shall be sanctioned with the same punishment as the one provided by paragraph All of the issues identified and (1), if it results in the unfair obtaining of these analysed in this section have been funds. extracted from definitive judgements (3) If the deeds provided by art. 1 and 2 of courts in Romania. While there are caused particularly serious consequences the special limits of the punishment shall be many other cases that deal either with increased by a half. fraud with European funds and/or abuse of power, our interest in this part of the report has been solely for what the criminal courts have judged 1. Court decisions on fraud and sanctioned in a definitive manner. with EU Funds – art. 181 Some of the pending cases have been referred to in other sections of the The practice of falsifying documents in report. order to obtain European funds occurred in 5 cases analysed here These cases deal, first of all, with from various courts in Romania fraud with European Funds, secondly (Ploiesti, Constanta, Cluj). with the abusive use of a leadership Involved in 3 of the definitive position inside a political party in judgements168 included in this report, order to obtain benefits. These two the defendant M.S., was engaged in a issues are, in some cases intertwined. profitable business of successfully From a legislative point of view, of consulting companies to obtain a grant interest is Law no. 78/2000 on from the National Program for Rural preventing, discovering and Development (PNDR) which is financed sanctioning corruption offences167, from the European Agricultural Fund particularly two articles: art. 13 and for Rural Development (FEADR) art. 181. Measure 1.2.1 „Modernization of agricultural exploitation structures”. Art. 13. - The deed of a person who has a This fund is mainly dedicated to leadership position in a party or in a political projects in the rural area that aim to formation, in a trade union or in a non-profit develop local business in the society or a foundation that uses its influence or authority for the purpose of obtaining for agricultural area, raising animals etc. himself or for somebody else money, goods or According to the facts presented in other undue advantages, shall be punished by these cases, once a project become www.expertforum.r imprisonment from 1 to 5 years. eligible to obtain a grant, the company
167 no. 687/A/14.06.2016, Criminal and minors panel, http://www.pna.ro/faces/legislatie.xhtml?sectiune=2 Galați Court of Appeal; Decision no. 896/13.07.2016, &id=14. Crminal, minors and family panel, Ploiești Court of Appeal. o 168 Decision no. 367/22.03.2016, Criminal, minors and family panel, Ploiești Court of Appeal; Decision 83
Policy Brief No. 61
had to forward the expenses by itself and then demand a reimbursement Following various investigations from the fund, with the exception regarding fraud with European funds, when the company makes a special the Agency issued an internal request that an advance be paid. provision creating the obligation for Among the conditions that need to bet the officers to verify the authenticity met in order to obtain such an of the documents provided by the advance is for the grantee to provide grantees170. the Fund with a guarantee letter from a Bank for 110% of the value of the Among some other interesting aspects advanced payment. in all of these 3 cases, the administrator of the company was in In all the cases brought before the reality the person in charge of the court, the defendant M.S. would company, the shareholder being just a provide consulting services to these formality. In order to have access to grantee companies who, in all cases this particular funding scheme, the did not manage to obtain such letter owner of the company had to be under from the banks. She would then 40 years old. In all the cases, the proceed to falsify these letters, administrator was either the uncle or provide them to the grantees who the father of the shareholder. would then forward them to the Management Authority and obtain the Secondly, in all of these cases the money. defendant, M.S., obtained large sums of money (for example 10,000 EUR in While in most cases these crude one case) for her services. In one case counterfeits were immediately though, she was promised by one of detected by the Management the co-defendants, who at that Authority by simply confirming with moment was the leader of the local the issuing Bank, in one case169, the subsidiary of a party, that he will Management Authority actually did direct potential clients towards her171. pay the advance to the company. This In all 3 cases, the company was held is because, legally, officers at the criminally liable also and in two of the APDRP (the Agency in charge of cases it was also prohibited from Payments for Rural Development and participating in public tenders for a Fishing) had no obligation to verify period of time (1 year). the authenticity of the documents provided by the grantee, in this case In all of these cases, the financing the guarantee letter issued by a Bank, contract was terminated and the just that all the documents were grantees had to return all the money, provided. aside from the criminal charges. Relevant is also a decision where the This reflects well the fact that in defendants masked the subcontracting Romania the tendency is to cover of the entire project as a service possible risks by overlegislating. This providing contract172. is more likely to reflect a trend
www.expertforum.ro towards bureaucratization rather than In this particular case, the court the attempt to prevent fraud and deemed that the grantee mismanagement. subcontracted the entire project to
169 Decision no. 367/22.03.2016, Criminal, minors 171 Decision no. 367/22.03.2016, Criminal, minors and family panel, Ploiești Court of Appeal, pg. 9. and family panel, Ploiești Court of Appeal, pg. 12. 84 170 Decision no. 367/22.03.2016, Criminal, minors 172 Decision no. 165/A/2016, Criminal and minors and family panel, Ploiești Court of Appeal, pg. 12. panel, Cluj Court of Appeal.
Money and politics: the links between public procurement and political parties another company. Not only that, but the subcontracting company took all A. Grilled chicken for the the necessary measures to hide the political campaign173 fact that it was a different entity and created the appearance of acting on The case judged by the High Court of behalf of the grantee. Such measures Cassation and Justice, in March 2016, included avoiding to apply stickers on sentenced the national vice-president the equipment used with the name of of a party (PDL, also President of the the company as not to raise County Council, aka “local baron”) to questions. two years of prison for exerting influence in his capacity of leader of a 2. Using the influence or political party in order to gain undue authority of a leadership benefits (art. 13 of Law no. 78/2000). position in a political party The benefits referred to in this case were 60 tons of grilled chicken that to gain benefits – art. 13 - were used during the 2012 local the „baron” profile of most elections campaign. party leaders The cases related to the abuse of The prosecutors initiated their leadership position of a party (art. 13 investigation due to a denunciation of Law no. 78/2000) are even more made by the company that had interesting, as all the definitive provided the grilled chicken. judgements studied for the purpose of The case portrays very well the reality this report reveal not necessarily a of Romanian politics and rural very complex scheme in obtaining communities where political parties personal benefits (money, goods use basic goods (chicken, flour, oil) to etc.), but that all political leaders bribe the electorate in their favour. have a highly politicized While the case was probably not administration under them that is set surprising in any way, the testimonies in motion for any kind of action that provided in the case revealed how the leader deems important. politicized public institutions are in Nevertheless, most of the people Romania, especially in smaller local involved do not gain anything communities. personally or are not entirely aware of the purpose of a specific action that The defendant, president of PDL’s they take part of. On the contrary, organization in Dâmbovița, had used their participation is usually motivated his influence through the entire county by their fear not to lose their position in order to organize for the electoral in the administration. campaign for local elections in 2012. Particularly, companies in the county As a general remark, the National had to contribute in money or goods, Anticorruption Directorate started the in this case, 60.000 chickens from the investigations as a consequence of a denunciator’s company to give out to denunciation of a person who, up to a people for electoral purposes. certain point in the case, was directly involved in the crime, as in the first The distribution of the goods involved www.expertforum.r two cases presented below. Most the deceiving of a whole group of local cases are linked to a political businesses and institutions, who were campaign that was ether on-going or tricked into believing that the goods set to take place in the near future. were to be given away by the county
o 173 Decision no. 68/14.03.2016, High Court of Cassation and Justice, 5 judges panel. 85
Policy Brief No. 61
council in a charitable event. Several to improve the relations with the political companies and persons were involved spectrum (…). Considering that the defendant was the vicepresident of the Governing party in the actual distribution – a local and the positions at the Financial Guard were company with refrigerating units, politically appointed, there was a possibilty that several transportation companies to I would not be able to go through some of the distribute the goods to several hierarchial steps.”174 locations in the county, the Chief Commissioner of the county Financial While the defendant argued that all of Guard (anti-fraud tax inspection) who these actions were taken not for the accompanied some of the purpose of his electoral campaign, but transportation units to some of the for the purpose of a charitable event locations in order to make sure that organized by the County Council of they will not be stopped by other which he is the President, the Court control units and even falsifying rejected this argument on the basis transportation documents to create that the whole operation was the appearance of a contract between conducted in an illicit manner – two companies and not a donation. All falsifying documents, no mention of of them were involved in the process the purchase or donation in the without being given the reality of the County Council’s accounting records, operation. the involvement of the defendant’s party members, the decision to The testimony of the witness G., Chief conduct the operation in a party Commissioner of the county Financial meeting, the involvement of the Guard is essential to understanding Financial Guard etc. the power of the President of the County Council in Romania and the B. Gathering votes for the politicization of public administration. second voting round in the The position of the Chief Presidential elections175 Commissioner should be independent Between the first and the second from any political influence. round of elections during the Nevertheless, the Chief Commissioner Presidential elections in 2014, in the accepted the request of the President county of Caraș-Severin, the President of the County Council to accompany a of the County Council, who also held transport, without further questioning the position of national vice-president as to the purpose of the transport or of PNL (National Liberal Party), tried to the need for his involvement in the use his position in order to influence 9 activity. mayors and several secretaries of
different localities in the county to His testimony: (…) I felt that a lot of pressure was exerted determine citizens to vote for PNL’s over me to stop the control, I was afraid of candidate or else they will be losing my job, of the influence over my sanctioned by means of the budget for professional career exerted by political factors, the following years (2015 and 2016). nd since on the 22 of June 2012 my secondment The vice-president of the County expired, I accepted the meeting with E. (…). Since I was appointed temporarily on this Council was charged with the same www.expertforum.ro position, I felt that political pressure was offence. exerted over the institution, not necessarily from a particular party. E. was a person about Beyond the facts of the case, the whom A. (president of the County Council) had said was his friend. Acting in this manner decision of the Court of Appeal in this [agreeing to accompany the transport] I tried case goes into a very interesting
174 Decision no. 68/14.03.2016, High Court of 175 Criminal Sentence no. 666/A/25.05.2016, Court 86 Cassation and Justice, 5 judges panel, page 7. of Appeal of Timișoara.
Money and politics: the links between public procurement and political parties analysis of the political structures and City Council would be influenced by the way influence is exerted in the the results of the elections. territory, revealing a clientelistic network. The defendants’ arguments are very revealing for the purpose of our First of all, the mayors who were report, as they define very well the targeted were not mayors of the same way politics is done in the local political color as the defendants, but 9 administration of Romania. mayors who had, recently, decided to First, although they had threatened „change sides”. Particularly, before the mayors with budgetary allocations, the Presidential elections of 2014, the in fact, neither of the defendants had Government in power decided to any power in this sense since the adopt a Governmental Emergency allocations were done by the Ordinance176 that would allow mayors Government. While this may be true, and local/county councilors to change in this particular case, the defendants parties without losing their mandate. had created a collegial body in the The legislation prohibits this, County Council that would analyze, sanctioning such actions with the loss from an opportunity point of view, any of the mandate. The Emergency kind of request for financing from the Ordinance created an exception for a local authorities to the Government. limited duration (45 days from the This, corroborated with the entering into force of the Ordinance) declarations of the mayors that it was for the purpose of attracting as many well-known in the county that the mayors and councilors on the side of defendant made all the decisions in the governmental party. The final the County Council, led the Court to purpose was that mayors and acknowledge the importance of the councilors would then exert influence perception of the local authorities in in the territory to gather votes for this sense. their candidate. This ordinance was later deemed unconstitutional by the The second argument is that, Constitutional Court, but too little, too nevertheless, the sums that they were late. referring to were too small to actually allow mayors to have an impact in In this context, 552 mayors and over their community and thus bring them 4000 councilors (local and county) any gain. But, it is well-known that migrated from one party to another or small rural communities in Romania become independent in the autumn of suffer from severe underfinancing and 2014177. In the county of Caraș- some are in economic collapse that Severin, as we learn from the decision does not permit them to cover their of the Court, 9 mayors had switched administrative costs, which means the party but the defendant still that any sum is important. considered them as their own and The Court goes on to analyze the that they owed him this service. The mechanism of influence that the County Council vice-president would defendants imply when trying to travel in the territory and influence the mayors. As vice- communicate this message to the president of a party and president of www.expertforum.r mayors, warning them that the the County Council, they were budgetary allocations made from the administrative and political superiors of the mayors involved in this case.
176 OUG nr. 55/2014 177 For further details, please see the Migrating o Mayor’s Map developed by Expert Forum (https://expertforum.ro/primari-migratori/). 87
Policy Brief No. 61
Since they had given their support Last but not least, the defendants during political campaigns for these argue that „this is the way to do mayors to win their seats in small politics and it has always been this communes, the defendants believed way”, and that what they asked the that they were indebted to them for mayors to do is not to make use of their political careers and thus had to illegal tools to determine people to obey such requests, no matter what vote in a certain way, thus raising the political color they had now. question of whether the idea, and especially the practice of Should they have managed to raise using the mayor as an electoral agent votes for the party’s candidate in the represents a correct procedure and Presidential elections, the defendants whether this practice isn’t in itself would have benefited personally: they meant to corrupt the freedom to vote would have got positions of power of the electorate179. inside the party, thus capitalizing on their investment (as Vicepresident of This argument, in the court’s opinion, the party or the like), or even a tries to draw a very thin line between promotion on „meritocratic” criteria. illegal, legal and imoral behavour in the political spectrum since it ignores The defendants than invoked the the „realities of the rural Romanian argument that neither of them had world” where the mayor has influence, any interest in gaining any benefits authority and power, a world where from this, since he was vice-president those that are approached by the of the party and president of the mayor to vote in a certain way will County Council, or vice-president of give course to such a request out of the County Council, respectively. fear and interest. This is of utter importance and perpetuates a very Besides the fact that the criminal problematic issue in the Romanian offence provided by art. 13 of Law no. society since 78/2000 does not require for the such practices of political parties endanger the personal benefits to be obtained, public trusts in political parties, in the electoral process and in its results, thus corrupting the being enough that such personal legitimacy of the political class and thorugh this benefits be identified and sought after endangering the fundamentals of a democratic by the defendant, the Court rejects society”180. this argument, underlining the following: The defendants did not exert influence over mayors members of their own The defendant, whether he was aware of this party, but over mayors who had left or not, formulated a defense that implies the their party to join the opposition, idea that he considers he will remain president which, in the opinion of the Court of the County council and national vice- president of the party in the future without makes it unethical. Moreover, when having to prove to the party and the electorate the mayors are being „motivated” by absolutely nothing. The political and social threats with budgetary allocations, reality is different, being obvious that in order promises of support in their political www.expertforum.ro to occupy dignitary or party positions, one needs to have accomplishments and merits. carreer and the appeal to old moral Or, through his actions, the defendant is debts, the actions of the defendants looking to be able to invoke in his favor such pass from unethical to undue accomplishments and merits178. influence, making it illegal.
178 Decision no. 666/A/25.05.2016 of the Court of 180 Decision no. 666/A/25.05.2016 of the Court of Appeal of Timișoara, pg. 9. Appeal of Timișoara, pg. 10. 88 179 Decision no. 666/A/25.05.2016 of the Court of Appeal of Timișoara, pg. 9
Money and politics: the links between public procurement and political parties
One of the defendants, J.I.P, General All these arguments reflect very well Inspector of the State Inspection for the clientelistic approach with which Constructions, together with the other „business” is done in the local 3 defendants, P.M.I., P.B. and V.M.C., administration, where the president of representatives of various private the county council controls budgetary companies, organized 11 events allocations although these are not nation-wide, a symposium under the under his power of decision. authority of the State Inspection for Constructions. Participants in these Nevertheless, they have the last word events paid a participation fee which over who gets money from the was, in the end, used to illegally Government, and how much. This is finance the electoral campaign. In particularly well portrayed by the order to do so, they created an defendants’ words on the message elaborate scheme of transfers and that the vicepresident should send to fictitious contracts that were the said mayors: „we are in good concluded between the State relations with any Government that Inspection in Constructions and will come, but we are the ones who various private companies that were give the money for 2015, 2016”181. owned by the defendants. Not only that the contracts were fictitious, but most of the operations were against C. Illegal financing of a the law. campaign involving a former Prime minister: Quality in For example, the State Inspection’s Construction Trophy right to collect the fees from the participants was illegally transferred to Probably one of the most well-known the bank accounts of the private corruption cases in Romania, as it companies controlled by the involved a former prime minister defendants P.M.I. and P.B. Moreover, being sentenced to 2 years of prison in order to contract these companies for committing the offence provided for the organization of the events, by art. 13 of Law no. 78/2000, the there was no public tender organized, investigation reveals a very the defendant J.I.P., General complicated mechanism for money Inspector, decided to award these laundering and illegally financing of companies the contracts directly, the presidential campaign of one of infringing legislation regarding public the defendants, A.N., in 2004, at that procurement. time the President of the biggest party in Romania, the Social The investigation was rigorous and Democrat Party (PSD). was constructed around the contracts and economic operations that took In short, the case involved a very place between the State Inspection for complex scheme thorough which Constructions and these various many public institutions, state companies for the services provided, companies, autonomous enterprises proving, on the one side, that the and private companies contributed contracts were fictitious and the www.expertforum.r with money to finance the electoral services provided by the companies campaign for presidential elections in were only in part real, that the 2004. contracts masked a money laundering operation and that, in reality, the
o 181 Decision no. 666/A/25.05.2016 of the Court of Appeal of Timișoara, pg. 28. 89
Policy Brief No. 61
money was used to finance the exerting influence – since there was electoral campaign of the defendant no evidence of direct involvement. A.N. The Court, nonetheless, takes into On the other hand, that the defendant consideration the fact that, it was A.N., president of PSD and the proven beyond doubt that the candidate of the party for the electoral campaign of the defendant in presidential elections in 2004, was 2004 was financed illegally with funds aware of all these actions, although from two companies linked to two of not directly involved, and that he the other defendants and that the exerted his influence as president of source of money were the contracts the biggest party in Romania, firstly, concluded between the State to influence the other defendants to Inspection for Constructions and these design and implement this scheme. companies183. Moreover, the Court Secondly, he exerted influence to concludes that the campaign was convince party members in high financed mostly through illegal funds: positions of public institutions to „chip the actual sum was four times as large in” for his campaign by agreeing to as the one declared.184 pay public money from these budgets of these institutions to participate in a To prove the fact that the defendant symposium which, in many of the A.N. was involved in this activity, the cases, had nothing to do with the Court proceeds to verify whether the activity of the institutions – quality other defendants were close to him. standards in constructions. For Based on testimonies of witnesses and example, amongst the public other documents, the Court confirms institutions that agreed to allow that the other two defendants were employees to participate in these included in the „sphere of influence” of events and, thus, pay the the former prime-minister185. participation fee, was the National Furthermore, the Court goes on to Authority for Consumer Protection and answer the question whether such a all its subsidiaries in the country, and scheme could have been possible the National Forest Authority, both of without the defendant A.N. knowing them managed by members of the anything of it, especially since he was same party, or, more hilariously, the principal beneficiary. The Court Avicola Buzău, a private company appreciates that it could not have whose main activity is raising been possible, taking into chickens182. consideration that the other defendants were close to him and that While the first part of the all measures taken by the other investigation concerning fictitious defendants were illegal. contracts and money laundering was based on the contracts and the money The Court concludes that the reason route, the second part of the why the other defendants took such investigation was more difficult to risks is prove - the wilful involvement of the
www.expertforum.ro defendant A.N., president of PSD and not because like any naïve criminal, they candidate for presidential elections, by thought they will not be discovered (the evidence of their criminal activity being enough and not very difficult to discover), but because
182 Decision no. 176/30.01.2012, High Court of 184 Decision no. 176/30.01.2012, High Court of Cassation and Justice, Criminal Panel, pg. 138. Cassation and Justice, Criminal Panel, pg. 125. 90 183 Decision no. 176/30.01.2012, High Court of 185 Decision no. 176/30.01.2012, High Court of Cassation and Justice, Criminal Panel, pg. 118. Cassation and Justice, Criminal Panel, pg. 125.
Money and politics: the links between public procurement and political parties
they believed that they will never end up being The corruption of the Romania political class, investigated due to the beneficiary of their personified in the year 2004 by the defendant actions and his success in the future A.N., represents a phenomenon that can no elections186. longer be tolerated by the Romanian society, the justice system being obligated to react This case was a cornerstone in the firmly every time it deals with such a case, as proof that the rule of law is not an illusory fight against corruption in Romania in issue, but that it functions in the benefit of its 2012, given the complexity of the citizens”187. case and the position of the principal defendant. This aspect is conveyed perfectly by the Court in its decision:
Some of the most frequent clientelistic financing mechanisms, fraud and potential illegal funding mechanisms identified:
paying a commission (typically 10- 20%) of the contract value by
a company to the contracting authority in order to win a public procurement; in some cases part of the money goes from the decision-maker (county council president, minister, etc.) to the
party
requesting bribes by decision-makers (eg mayor, county councilor) to approve payments for works already executed by companies the use of false or overrated consultancy contracts to mask
the illegal campaign funding
obtaining funds in situations of conflict of interest – the decision-maker is the shareholder, administrator or is controlling the firm in any other form and uses the public office to
directly or indirectly get contracts for the company
– the existence of firms whose leaders are decision-makers who work or worked at public institutions such as CNADNR or MDRAP – institutions that manage funds and procurement procedures soliciting from companies various products or services for
electoral campaigns (campaign materials electoral, consulting or
advertising services, food, etc.) determining the local decision-makers (mayors, for example) by a county council president or other political leader to cast votes
in exchange for approving funds (for example, from the National
Program for Local Development). obtaining funds illegally under the pretext of organizing events, by paying participation fees overestimating contracts illegally, although there is no justification
for works or services (consultancy, feasibility studies, etc.)
appointing people close to political parties in key posts (for example at the head of state-owned companies) to facilitate the
procurement of public procurement contracts; part of the money to www.expertforum.r
get to the party
o 186 Decision no. 176/30.01.2012, High Court of 187 Decision no. 176/30.01.2012, High Court of Cassation and Justice, Criminal Panel, pg. 126. Cassation and Justice, Criminal Panel, pg. 132. 91
Policy Brief No. 61
VI. RISKS AND VULNERABILITIES There is enough evidence that - CONCLUSIONS party-related companies and politicians use public procurement Party financing as a tool for enriching themselves and, in subsidiary, for the The charts (first section of the report) financing of the electoral show that PDL was the party which campaign; in recent times the raised the largest sums from methods and channels became a companies and individuals, mostly in bit more sophisticated. 2008 and 2009. PSD comes second, if we count the total sum. However, we Even if many cases of illicit political are only discussing here about legal financing made headlines in the press, donations. A closer look throughout while some have led to convictions in the report reveals numerous cases of courts, there no single pattern one criminal investigation on situations could follow. Strategies change all the when political parties used other time: during the electoral year 2016 avenues of getting money, such as they had changed compared to the manipulating procurement or previous rounds (2007, 2008, 2009), siphoning off resources from state when rules were slightly different and owned companies. the anticorruption institutions perceived as less of a threat. What is Opinions from interviews and the more, political money is not being analysis of documents enable us to used just for the direct financing of the draw a number of preliminary lessons: electoral activities, but also for funding parallel slander campaigns, getting In many situations politicians people on board, for hiring advisors, keep the illicit gains for their spin doctors or party trolls. own personal use and mislead Two preferred avenues through which the donors into believing the parties get funds are the siphoning fundraising was on behalf of the through fictitious services (see Bunea party; alternatively, they may Stancu case) or overvalued contracts. give a fraction of the gains to Parties seem to have shifted the the party in order to get strategy to some extent and dropped support, but still keep a cut for the use of cash in favour of themselves; manipulated contracts. Some Companies with political politicians have “sugar” companies connections use more national that assist them in doing the dirty job funds to get a percent of the and may be indicated to the briber as contract; the channel through which the money The same companies use in the must pass, in exchange for the same measure EU funds as fictitious or overevaluated work (see the charges in Gala Bute). Others do they do with national funds. not have such a network and rely on Some companies donate to
www.expertforum.ro each briber to find their own means to parties that may be the nominal get the money where they are needed. political enemy. This shows that, in fact, the connections Consultancy contracts (including are not just political, but rather feasibility studies) are some of the related to local networks of most vulnerable items of the
business interests. procurement system, because the final 92 product is difficult to assess, the
Money and politics: the links between public procurement and political parties working time can be easily Romanian and foreign companies use manipulated and in consequence the the same illicit instruments, as the overpricing hard to detect. In latter ones have to adapt to the elections a method chosen by many market. Some of them are also was to offer materials to the involved in illegalities related to competitors, either more than procurement outside Romania. declared or not declared at all188. Some market observers believe that It very common to find companies the procurement procedures may have related to decision makers as become cleaner lately precisely preferred contractors for consultancy because some companies are services. For example, the press already powerful enough and so wrote about P&T Consulting that had able to stifle the competition. If multiple consultancy contracts for true, this may be a development with PNDL 2 with communes from Valcea contradictory effects: positive, and Ialomita counties. The firm is because higher visibility and directly linked with Marin Adrănel reputational costs may increase the Cotescu, former PNL Senator and level of honesty; but also negative, deputy director at the General because higher market concentration Directorate Regional Development and creates the risk of cartelization and Infrastructure at MDRAPFE, the monopolistic behaviour. One could institution that decides the projects detect evidence for both trends, but it financed through PNDL189. Consultants is unclear at this point in time which are paid directly by the rural local would prevail eventually. governments, the costs being ineligible for PNDL. Similar projects What is more, it is true that the have been shown within the report, companies getting the most important highlighting that decision makers that contracts have capital, personnel and are- or have been- in ministries or experience, but the question is how agencies still earn money through did they have built these assets in the procurement. first place: was it not precisely the party connections and preferential Procurement procurement that helped their development? And if so, can we A robust conclusion, anticipated simply live untroubled with this by many EFOR reports from knowledge, even if more recently they previous years, is that national may have cleaned up their acts to money are more vulnerable to some extent? And in fact, have they clientelism than the EU funds, due done this indeed – or is it the case to the lower level of managerial that officials running the procurement and performance scrutiny. Still, simply know that a certain company clientelism and fraud occurs in EU should win because it is owned by a funding too, as the figures in this powerful politician, even without report demonstrates. explicit pressure applied?
When it comes to EU funds, most of The visuals in this report show how www.expertforum.r the important contracts were signed the success in procurement is with foreign companies. Some connected in many cases to the party interlocutors consider that both in power. The charts demonstrate how
188 See the monitoring reports published by Asociatia 189 http://saptamana.net/articol/11626-trafic-de- o Pro Democratia, www.apd.ro influenta-cu-proiecte-pndl-2-firma-paravan-a-lui- cotescu-abonata-la-contracte-de-consultanta 93
Policy Brief No. 61
a company stops getting money after Superficial documentations the party to whom is close is no and involvement of the same longer in power. Of course, survivors company in several stages of and donors to all parties that keep the procedures receiving contracts do exist, no Subcontracting; under the matter the party in power. current law the subcontractor may be According to procurement experts changed or not included in consulted, some of the problems the procedure from the connected to clientelism or fraud are: beginning Conflicts of interests; companies related to In OUG 34/2006 there were provisions opening the door for clientelism or stakeholders in the fraud, such as a high number of offline contracting authorities or at procedures, the lack of clarity higher levels regarding the modification of a Political influence in contract (what are the limits) or allocating the funds conflicts of interests. Companies with political connections or involved in The high number of changes to the illegal activities but which procurement law, resulting in cannot always be removed institutional instability, is another from the procedures source of problems. OUG 34/2006 The recurrent contracts for was modified 22 times, mostly the same investments (see through emergency ordinance in less for example contracts than 10 years. Also, the threshold of related to floods) the procurement was frequently modified. For example, for the direct Systematic contracting for procurement, the sum was 5000 EUR feasibility studies or (2006), 10.000 (2007), 15.000 (2009) consultancy with the local and 30.000 (2013). The latter was authorities from a certain contested at that time, as it was county or region believed that it could generate more Lack of professional capacity clientelism. Another criticized of the personnel in the modification was the introduction contracting authorities, through OUG 51/2014 of the good mostly in the rural areas conduct guarantee for the competitors and lack of support from that wanted to contest the procedure ANAP (1% of the contract, with some limit Poor quality of the feasibility caps), as it was believed that the high number of contestations block the studies that are reflected in absorption of funds. If the over-evaluation of the contestation was rejected, the money estimated value; copy-paste were lost by the contester. The OUG www.expertforum.ro studies that are sold to was declared non-constitutional one several contracting year later. authorities or studies that have already been done and When it comes to monitoring the they are re-done to get procedures, the main issue is the
some more money limited time for which www.e- 94 licitatie.ro saves the documents. If a
Money and politics: the links between public procurement and political parties stakeholder wanted to check the Law 98/2016 relaxed the provisions documents from a procedure which related to the subcontracting; it took place in 2010, it would remains an problem due to the fact impossible by using the official that the beneficiary of the contract procurement portal. In some cases, can bring a subcontractor during the legislation obliges the parties the implementation that was not involved to keep the documents for notified during the procedure only five years after the finalization of The guarantee of good the contract, therefore no real verification mechanism is in place for execution is contracted from fickle such cases. companies that can disappear in a matter of days; in addition, there According to the Audit Authority staff, are problems with the insurance 2007-2011 was the period with companies that refuse to execute most suspicions of irregularities. the contract It is no accident that in 2011 the European Commission requested that One of the conclusions based on all the procurement procedures be interviews and analysis is that a lot of verified. The most important class of fraud is occuring in the the irregularities are generate by the implementation, not in the various lack of knowledge of the beneficiaries stages of the procurement cycle, as – both private and public - and also the control is less invasive. For the the the legislation full of loopholes or national funds, the main control is unclear provisions. After 2011 a part performed by the Court of Accounts, of the procurement related issues an institution that has remarked in started to be addressed, amongst more than one report that the money other due to OUG 66/2011 that from the Government’s Reserve fund introduced supplementary measures are spent on electoral purposes. It has to fight fraud. also published a report about PNDL 1 blaming critical malfunctioning in the However red flags remain in the program, precisely in the stages of procurement system: procurement and implementation of countracts190. The difference between the sum estimated and the final Nonetheless, data sets remains a contracting value. Even if the vulnerability. Although, recently law permits a deviation and there institutions have started to publish are cases in which unforeseeable open data, the quality of the costs had to be included, the databases needs to be improved. As shown many times in the report, data difference may in reality hide becomes useless if it is full of errors either incompetence in estimating above a certain threshold and the sums or a potential fraud. matchable with other databases. Also, Additional costs for studies: old sloppy treatment of important figures (pre)feasiblity studies that are no in SEAP lead to severe distorsion in
longer relevant or expired are re- analysis and wrong conclusions. www.expertforum.r produced with minimal changes under a new contract for which the More recommendations about can also costs are not justified be found in our report on public
190 SINTEZA Raportului de audit al performanței autoritățile locale, o Programului național de dezvoltare locală finanțat de http://www.rcc.ro/Publicatii/Sinteza___RAP___%20 la bugetul de stat prin bugetul MDRAP și derulat prin MDRAP%20.pdf (2016) 95
Policy Brief No. 61
procurement system, Anti-fraud Such situations show that in remote measures in public procurement in the places and for small contracts, people EU single market191. probably calculated that the complications brought by an Power and wealth matter intermediary were higher that the risk to be caught – or they simply did not As amply shown before, a significant understand the law. This is why ANI number of companies are related to created and will start using PREVENT, decision makers, elected or not. Even a system to control the conflicts of if they are no longer part of the interests before the procurement company, such public officials may be takes place. According to Law no. still in control. One of the topics 184/2016, the scope of the system is: covered by OUG 66/2011 is precisely the conflicts of interests. Apart prevent conflict of interests in public from the general legislation – Laws procurement contract awarding by establishing an ex-ante control mechanism that will look 144/2007, 176/2010, 115/1996, into situations likely to generate conflicts of 192 161/2003 – additional rules have interests as part of procedures initiated in the been included in OUG 66/2011. electronic public procurement system, and will thus remove such conflicts without the procurement itself being impacted. Our interlocutors believe that the cases in which the links are visible For those politicians and officials who became less numerous because are indeed more professional in hiding officials have become more subtle: their misdemeanors, indirect ways they found increasingly a way around have to be found to prove their wealth incompatibility rules by using and its sources. Sometimes they intermediaries. register their property on their companies and so show very little in They are not always subtle, however, the personal wealth declarations. They especially in small municipalities and can set-up companies and pass them rural areas: in many cases officials to other close friends, but not to have under their direct control categories that can be under the companies that sign contracts with scrutiny of the law. Also, the bribes the authorities where they exert may be taken not directly through power power193. For example, ANI their companies, but using a chain of published an analysis showing that close companies and friends, so that between 2008 and 2012 a number of the money, contracts or goods cannot 1,240 out of a total of 2,856 county longer be traceable (see Cosma or and local councilors were shareholders Udrea cases). or administrators at private companies; they had 2,598 One of the issues raised during the companies in direct ownership. 190 of meetings with several institutions is them signed 802 contracts with the the lack of interdisciplinary analysis. state worth 25 mln EUR; 50% of them Institutions from different sectors were in incompatibility and conflicts or rarely wotk together to follow the
www.expertforum.ro interests. Most of them came from thread of more subtle political PSD (393 contracts – 93 mln LEI) and involvement; in most cases they PDL (221 contracts – 11 mln lei). invoke the lack of personnel or the limited legislative capacities to explain
191 http://expertforum.ro/en/anti-fraud-measures-2/ 193 http://www.gandul.info/stiri/administratia-locala- and http://expertforum.ro/transparenta-achizitiilor- srl-jumatate-dintre-consilierii-locali-si-judeteni- 96 publice/ verificati-de-ani-au-firme-cati-au-contracte-cu- 192 https://www.integritate.eu/A.N.I/Legislație.aspx statul-10346595
Money and politics: the links between public procurement and political parties such failures. For example, as some goods may not be registered on the names of the politicians, ANAF would be the relevant institution with competence to check, as they have access to more in-depth info. The fact that the databases are not integrated is a major setback in these kind of analysis.
www.expertforum.r
o
97
Policy Brief No. 61
CHAPTER II. CROATIA omnipresent throughout two decades of Croatian independence. The report is composed as follows. First, a brief overview of the integrity With the adoption of the Act on eco-system in the area of political Financing Political Activities and party financing is presented. Second, Electoral Advertising195 in 2011, that the legal framework concerning public was strongly influenced by the process procurement in Croatia is explained of Croatian accession to the EU, the and evaluated, following public overall integrity eco-system of political procurement data analysis with an activity in Croatia improved emphasis on corruption risks significantly. Despite five amendments indicators. Third, an overview of the to the Act between 2011 and 2017, its European funding landscape in Croatia key elements remained intact, is presented along with an analysis of providing responses to key political public procurement procedures integrity challenges related to the financed from EU funds and conducted financing of political activities. in Croatia from 2012 to 2015. Finally, However, frequent changes in the conclusions and recommendations are legislation have created not only legal presented in the last chapter. insecurity for the actors in political processes in Croatia, but also An overview of integrity eco- roadblocks to the functioning of system in the area of political control and accountability party financing mechanisms, as well as challenges to
researchers in defining and analysing Until 2011, the regulation of policy impact indicators. financing political parties and electoral
activities was covered piecemeal in several regulatory acts, primarily the The political activity financing (a) Act on Financing Political Parties, regulatory framework that has been in 196 Independent Lists and Candidates, (b) place since 2011 covers the Act on Financing Electoral Promotion financing of political actors (political for the Election of the President of the parties, independent candidates and Republic of Croatia, (c) Act on Election organized groups of candidates that of Representatives to the Croatian participate in elections), acquisition Parliament, (d) Act on the Election of and spending of funds for political the President of the Republic of activities, and supervision and audit of Croatia, (e) Act on Elections of financial management in political Municipal Mayors, the Mayor, the activities. Political actors and Prefect and Mayor of the City of participants in elections in Croatia can Zagreb and (f) Act on Election of fund their activities through a variety Members of the Representative Bodies of means, from limited commercial of Local and Regional Self- activities and membership fees, to Government Units194. The mandatory funding from state and fragmentation and lack of local budgets, and the reimbursement of election advertising costs to political www.expertforum.ro synchronisation of the legislation in the election-related regulatory parties that are successful in framework created a variety of national/local elections. The election- hindrances to attempts to address related activities of political actors can comprehensively anomalies in the be financed from the core funds of the financing of political parties that were political party/group/independent
98 194 Damjanović, D. (2011) Tko financira političke 195 Official Gazette 24/11 stranke? March 4, Iusinfo.hr. Available here. 196 Ibid.
Money and politics: the links between public procurement and political parties
candidate, and from donations based on temporary designated for election activities. exchange rate) 1,100,000.00 Per candidate Presidential 197 The 2017 regulation sets certain 200,000.00 Per list of Parliamentary limitations on these activities in order candidates in one to respond to breaches of integrity. election unit/region (total 10 + 2 Donations designated to support regions) election activities must be limited in 200,000 Per candidate/list of EU value/amount (Article 11), must be candidates Parliament held in a separate account by the 137,000 Per candidate/list of Elections for political party, coalition, independent candidates Mayor of candidate or group of candidates Zagreb and City (Article 14), and there are restrictions Assembly on the sources of donations (Article 82,000 Per candidate/list of Regional/loca 22). A private person can donate up candidates for l elections to approximately EUR 4,000 in any governors/mayors of large cities and one year to any type of participant in members of elections (political party, independent regional/local candidate, group of candidates). A representative body legal person can donate up to 34,000 Per candidate for Regional/Loc cities and al elections approximately EUR 27,000 in one year municipalities above (any given year, including the election 10.000 inhabitants year) as set out in Article 11 of the and members of regional/local 2017 Act. For independent candidates, representative body national minority representatives and 13,700 Per candidate for Regional/Loc political parties that participate in cities between 3001 al elections elections for the EU Parliament, and 10.000 inhabitants and donations by legal persons are limited members of to approximately EUR 13,700 in one regional/local year, while donations by legal persons representative body to participants in local elections 6,800 Per candidate for Regional/Loc (independent candidates, or groups of cities between 3001 al elections and 10.000 candidates) are limited to inhabitants and approximately EUR 4,000 in one year. members of regional/local Article 11, among other issues, aims representative body at a clientelist incentive for party donors, by the limiting value of Foreign states and foreign legal donations and establishing the limited persons cannot fund political parties in impact of political party donors on Croatia (Article 22). The prohibition on political leaders. In addition, funding political activity applies to expenditure by a political party during public sector entities, including public elections is also limited. companies, professional associations, religious-based organizations and non-
governmental organizations, private Table 1. Permitted expenditure in election companies with unresolved tax debts, campaigns, Croatia anonymous donors, and funding www.expertforum.r through intermediaries. The Act also Total permitted Entity unit Type of prohibits any kind of political extortion expenditure in elections or trading in influence related to election campaign funding political activity. The Act (approx. in EUR prescribes administrative and o
197 Official Gazette 24/11 99
Policy Brief No. 61
misdemeanour sanctions for aspect of the relationship between violations. Administrative sanctions donors, political parties and politicians for violations of the Act can be in power will be elaborated later. An administered by the State Election additional challenge in the Commission, and include partial or enforcement of the act is the complete suspension of compensation implementation of the adopted of election activity costs, depending regulations. As stated in the on the type of violation. The initiation Transparency International CRINIS of proceedings before courts in cases Index reports that cover political party of misdemeanour related to political financing, in the period 2011198 - party financing fall within the 2013199, the overall regulatory jurisdiction of the State Attorney. framework related to financing political Sanctions prescribed for activity has improved from ‘average’ misdemeanour offences vary from in 2011 to ‘good’ in 2013 (the approximately EUR 13,000 to categories are ‘unsatisfactory’, approximately EUR 68,000 for the ‘average’, and ‘good’). However, most severe violations, including despite the overall score being ‘good’, violation of articles relevant to this practice in enforcing sanctions remain research (i.e. violation of Articles 11, problematic in both regards (from 0.7 14 and 22). to 1.5, on a scale from 0 to 10). This An additional strength of the indicates that the probability of misdemeanour provisions is the ability initiating proceedings and enforcing to sanction both parties in violation of sanctions in cases of violations of the the Act; the donor and the recipient of Act is relatively low, which hinders the the donation. In addition, all political overall impact of such legislation and parties are subject to annual audits affects issues relevant to this conducted by the State Audit Office, research. whose reports are publicly available and shared with the State Election The public procurement landscape Commission and State Attorney charged with enforcing the Act. While The Croatian public procurement the regulation that has been in place system started to develop when the since 2011 has significantly improved country gained independence in the overall political integrity eco- 1991and has undergone significant system related to political party changes since then. The first act financing, research indicates that entered into force in 1998 and the there are still issues that need to be latest piece of legislation, in force addressed. As this research focuses since 1 January 2017, is the Public on the relationship between financing Procurement Act (OG 120/2016). Over political parties and their political several years, the legislation has been activities and EU funds (with a special continuously modified and adapted to emphasis on secondary procurement), EU requirements. the assessment indicates that there In this section, progress in the area of are no provisions in the legislation public procurement introduced by the
www.expertforum.ro that limit participation by political 2011 Act is addressed, as well as the party donors in public procurement most recent changes introduced by a procedures, where the recipients of new Act in 2016. In addition, an financial support exercise political overview of the characteristics and power before/after elections. This shortcomings of the procurement-
198 Mataković, H. (2011) Transparentnost 199 Transparency Interrnational Croatia (2013) 100 financiranja političkih stranaka. Transparency Transparentnost financiranja političkih stranaka. International Hrvatska. Available here. Available here.
Money and politics: the links between public procurement and political parties related institutional framework is bidding phase, cartels are detectable, presented. Finally, data on public and the winner of the contract is procurement in Croatia is analysed, unable to block payments towards with an emphasis on corruption risks subcontractors or commit fraud201. indicators. A special section of the PPA included Legal framework extended provisions on conflicts of interests. Article 13 of the PPA sets 200 The 2011 Public Procurement Act the framework and defines conflicts of (PPA) made significant changes to the interests as the following relations Croatian public procurement system, between contracting authorities and aimed at greater transparency, economic operators: (1) if a simplification of public procurement representative of the contracting procedures and their efficient authority is at the same time implementation, and preventing performing managerial duties for the conflicts of interests. One change is economic operator, or (2) if the the Electronic Public Procurement representative of the contracting Classifieds (EOJN), a portal where it is authority is an owner of business compulsory to publish all public shares or other rights on the basis of procurement announcements in which he/she participates in the accordance with thresholds that were management or in the capital of the increased by amendments in 2013 economic operator by more than (OG 143/2013) from approx EUR 0.5%. Contracting authorities are not 10,000 (OG 90/2011) to approx EUR allowed to enter into contracts with 34,000 for goods and services and the above-mentioned economic approx EUR 68,000 for works. In operators as tenderers or parts of a order to improve transparency and group of tenderers. These entities are provide economic operators with not allowed to act as subcontractors timely information on market for other bidders. If such a bid is demands, the obligation to develop successful, the contract will be and publish procurement plans, cancelled and may attract penalties. estimated procurement values and a register of contract agreements was introduced. An important instrument Simplification of procedures and for monitoring the activity of reduction of costs (for contracting subcontractors was also introduced. authorities and tenderers) were In order to avoid bids from companies achieved by allowing the process to that simply act as intermediaries, begin on the day of publication in the without actually implementing the EOJN. Communication and contract, the obligation was information exchange are enabled by introduced for the economic operators telefax and electronically, all participating bids to state the parts of documents are required in uncertified, the contract to be subcontracted. electronically printable copies, and in Furthermore, all subcontractors in open procedure, the tender public contracts must be divulged. documentation is in the EOJN, which
Under these conditions, all reduces administrative costs. www.expertforum.r subcontractors are identified in the
200 Official Gazette 90/2011 and affects small and medium-sized enterprises. 201 The introduction of a direct payment obligation to During the contract implementation, the tenderer is subcontractors is an attempt to use the regulation to allowed to change the subcontractor only with the o solve the problem of non-payment of subcontractors, permission of the contracting authority/entity. which is especially present in the construction sector 101
Policy Brief No. 61
The obligation to monitor the The State Commission for the execution of public procurement Supervision of Public Procurement contracts after being awarded, i.e. to Procedure is charged with check whether the execution complies investigating potential breaches of the with the conditions laid down in the Act in connection with the rights and tender, was also introduced.202 This interests of interested parties or clause was particularly unusual, competing tenderers205 and is the key because most public procurement legal protection mechanism for the laws in the EU regulate only up to the interests of tenderers.206 However, it point of signing the contract203. may act only at the request of Finally, in order to ensure the full and tenderers or interested tenderers effective transposition of the EU (those considering submitting tenders, procurement rules, a new Public if a complaint refers to conditions set Procurement Act was adopted on 9 in the tender), and its enquiries are December 2016. The most important limited to the irregularities stipulated amendments include: the most by the complainant. economically advantageous tender as the sole award criterion; the The Directorate for the Public introduction of the European Single Procurement System is in charge of Procurement Document (ESPD) as a capacity building in the procurement self-declaration form for bidders; the system, including obligatory, ongoing obligation for contracting authorities certified education, supervising all to conduct prior market consultations aspects of the PP system, and with interested economic operators on initiating procedures before the draft procurement documents; and Misdemeanour Court for violations of new types of procurement procedures, legal provisions prescribed in the PPA. in particular innovation partnerships However, the organisation lacks the and a competitive procedure with a capacity to monitor and supervise the 204 negotiation procedure. large number of contracting authorities and contracts, and Institutional framework decisions about the targets of pro- active investigations are left to the The public procurement process in discretion of Directorate employees Croatia is subject to monitoring by a and managers207. number of institutions: the State Commission for the Supervision of The State Audit Office verifies whether Public Procurement Procedures; the the public procurement procedure has Directorate for the Public Procurement been applied in areas where it is System; the State Audit Office; the obligatory, but does not typically Commission for Conflicts of Interest, examine the details of a particular and the State's Attorney‘s Office. procurement procedure, i.e. whether the financial statements issued by an
202 The contracting authority is obliged to monitor 205 Kolar, T., Loboja, A., Vuić, Z. (2011) Novelties in www.expertforum.ro whether the execution of the public procurement public procurement system in 2012. Zagreb: Croatian contract is in line with the conditions stipulated in Association of Accountants and Financial Experts. the tender documents and the chosen tender. 206 Pejaković, S. (2008) Legal protection in public 203 Podumljak, M., David-Barrett, E. (2015) The procurement procedures in Republic of Croatia. Public Procurement of Construction Works: The Zagreb: Financial Agency. Case of Croatia. Zagreb: Partnership for Social 207 Podumljak, M., David-Barrett, E. (2015) The Development. Public Procurement of Construction Works: The Case 204 Šantić, P. (2016) Croatia: New modernised of Croatia. Zagreb: Partnership for Social public procurement rules will enter into force on 1 Development. 102 January 2017. Schonherr.eu. 30th of December. Available here.
Money and politics: the links between public procurement and political parties audited entity, including statements of the Republic of Croatia in 2016 on public procurement, are true and (approximately 20% of total public accurate. Like the Directorate, the procurement value). In addition, State Audit Office has considerable around one half of the total public discretionary powers in terms of the procurement contracting value in subjects and timing of audits. Croatia during the period 2012-16 was executed by contracting authorities that were not public bodies210 and are The Commission for Conflicts of subject to weaker controls.211 Interest regulates provisions relating to conflicts of interest, but there is some uncertainty as to whether it is responsible for enforcing the provisions on conflicts of interest under the PPA. In theory, any action in breach of the PPA would lead to the contract being void and criminal charges being filed with the State Attorney’s Office, but it is not certain who is responsible for cancelling the contract and reporting the case for further action.208 Therefore, similar to the political party financing integrity eco-system analysis, in the area of public procurement initiation of misdemenaour procedures and enforcement of sanctions remain issues.
Overview of key public procurement corruption risk indicators
In 2016, the total value of public procurement in Croatia increased by 10.5% in comparison with 2015 and amounted to HRK 44.8 bn, or 13.1% of the GDP of the Republic of Croatia, which was lower than the average proportion of public procurement in GDP in the EU 28 (around 14%).209 Petty procurement, which is not recorded in a proper manner and cannot be addressed by public procurement safety mechanisms, reached a value of 2.83% of the GDP www.expertforum.r
208 Ibid. 210 Legal persons/entities which are not public 209 EC (2016) European Semester Thematic authorities and sectoral contracting authorities. Factsheet. Available here. 211 Podumljak, M., David-Barrett, E. (2015) The N.B. This is the latest estimate, not including Public Procurement of Construction Works: The Case spending by utility companies. Previous estimates of Croatia. Zagreb: Partnership for Social o including utility procurement were around 19% of Development. EU GDP, i.e. roughly EUR 2.3 trillion. 103
Policy Brief No. 61
Structure of total public procurement (works, goods and services) by type of contracting authorities and as % of GDP, 2012-16
14%
12%
10%
8%
6%
4%
2%
0% 2012 2013 2014 2015 2016 Petty Public Procurement Sectoral Contracting Authority Legal persons/Entities which are not Public Authorities Local and regional agencies / offices Local government units State agencies / offices Ministries and other state bodies including their local and regional agencies and offices
A public procurement assessment Table 2. Public procurement by type of procedure, 2012-2015 conducted on a sample of 75 212 contracting authorities in Croatia No. of Value of % of and a total of 11,163 public analyzed analyzed total procurement contracts concluded contract contracts value between 2012 and 2015 suggests a s (HRK) worrying decline in the Open 8,696 24,838,047,86 65,3% competitiveness of public procedure 6 procurement.213 The value of non- Negotiated 1989 6,864,337,507 18,1% competitive procedures represents procedure approximately 35% of the total value without prior notification of contracts concluded by 75 contracting authorities represented in Restricted 17 1,132,794,313 3,0% procedure the sample. Services II B 271 294.779.185 0,8%
Not defined by 15 60,145,415 0,2% law - exempted Source: Author's calculation based on the Negotiated 174 4,775,763,093 12,6% data of the Ministry of Economy, procedure Directorate for Public Procurement with prior publication System Competitive 1 44,706,250 0,1% www.expertforum.ro dialogue Source: Author’s calculations based on data from the Integrityobservers.eu TOTAL 11,163 38,010,573, 100% 629 database
212 20 ministries, 26 local government units, 19 213 Partnership for Social Development (2017) 104 legal persons, 10 sectoral contracting authorities Analiza integriteta u postupcima javne nabave u Republici Hrvatskoj. Available here.
Money and politics: the links between public procurement and political parties
The lack of competitiveness is further technical specifications of the tender, emphasized by the number of bidding procedure, and outcome of the tenderers that participate in each tender (selection of the successful tender214. As Table 2 shows, 75% of bidder). However, this legal protection the total value in the sample (75 mechanism applies only if the contracting authorities/all contracts in complainant (entity/person) four years) was concluded in a limited participates in the public procurement competitive environment of up to procedure. Therefore a lower number three tenderers, while almost half of of participants in a public procurement the value of contracts (47%) was tender is in direct correlation with the concluded in non-competitive lower probability of objections to environment (one tender received). different stages of the procedure, which consequently increases the risk of anomalies in the outcome of the
public procurement process. This high Table 3. Public procurement by number of ratio of non-competitive procedures tenders received, 2012-2015 and limited or non-competitive No. of Value of % of environments suggests there is a high analyze analyzed total risk of deviation and particularist d contracts value contract (HRK) distribution of resources in this area of s public spending. 1 5,483 17,931,274,91 47% tender 9 In addition, the academic and expert receive d literature disagrees on the risks related to the award criteria applied in 2-3 3,218 10,745.009,18 28% specific public procurement tenders 9 receive procedures. While a number of d authors suggests that the most ≥ 4 2,462 9,334,289,519 25% economically advantageous offer tenders criterion presents a higher risk of receive corruption in public procurement,215 d our findings show the opposite – that TOTAL 11,163 38,010,573,62 100 the lowest price award criterion 7 % presents a higher risk of corruption Source: Author’s calculations based on and clientelism in the distribution of data from the Integrityobservers.eu public resources. The main reason we database found was that in terms of post-award criteria, the most economically advantageous offer is easier to The competitiveness of the public monitor for compliance standards, i.e. procurement procedure, whether it deviations from the criteria set in the rests on competitiveness defined by tender are easier to detect. It also type of the procedures applied, or the suggests the stronger capacity of the actual participation of tenderers, is an contracting authority to conduct the important indicator of risks of public procurement procedure and corruption, politicization and www.expertforum.r creates a better value for money clientelism. The key instrument of outcome. Since the adoption of the integrity in public procurement is the latest EU Directive on Public right of bidders to object to the
Hungary – objective measures and new insights. o 215 Fazekas, M., János Tóth, J. (2012) Public Available here. Procurement, Corruption and State Capacity in 105
Policy Brief No. 61
Procurement (2014), the most especially during local level economically advantageous offer has implementations of public been the dominant award criterion, so procurement procedures, and finally, we assessed the performance of politicisation of public procurement, contracting authorities in this aspect. i.e. the transfer of public procurement As shown in Table 3, the lowest price to politically controlled or politically continued to hold a predominant opted economic operators at all levels, position in the award criteria applied especially in the case of contracting in the period observed. performed by legal entities that are not public authorities (public
No. of Value of % of total analyzed analyzed value contracts contracts (HRK) The lowest price 10,923 34,261,696,400 90.1% The most economically advantageous 240 3,748,877,228 9.9% tender TOTAL 11,163 38,010,573,628 100.0%
Table 4. Public procurement by award companies). criteria, 2012-2015 Evidence of politicization, Source: Author’s calculations based on corruption and clientelism in data from the Integrityobservers.eu Public Procurement tied to database European financial assistance in Croatia This suggests that significant proportion of the value of public European funds are financial procurement entails a higher risk of instruments which support the post contract deviation, contracted in implementation of specific EU policy an environment of low capacity on the objectives in the member states. One part of the contracting authorities, of the most significant is the Cohesion and representing a worse ratio of Policy, which is financed from three value for money as an outcome. (increasing to five) main funds: the Cohesion and Structural Fund, In addition, the assessment found in- European Regional Development Fund, house procurement and high value and European Social Fund. In addition, horizontal contracting between public the European Agricultural Fund for companies still rife in Croatia, Rural Development and the European multiplying corruption, politicization Maritime and Fisheries Fund are in the and clientelism risks. Other risks financial perspective from 2014-2020. detected included splitting the subject All five funds have a common title: www.expertforum.ro of the procurement procedure with European Structural and Investment the intention of avoiding the Funds (ESI Funds).216 The European application of the Public Procurement Union earmarked EUR 347 billion from Act, inadequate barriers to conflicts of the EU budget for the period 2007- interest in public procurement, 2013 to support the cohesion policy.
216 106 http://www.arpa.hr/eng/EUFUNDS/tabid/2392/Def ault.aspx.
Money and politics: the links between public procurement and political parties
This amount increased for the occurred in public procurement.221 following period (2014-2020) to EUR Therefore, secondary procurement tied 376 billion. to EU funds was closely examined for the purposes of this research. European Union funds constitute a considerable proportion of GDP in In this section, a brief overview of many member states, especially in European funding landscape in Croatia Central and Eastern European (CEE) is presented, following analyses of countries217. From 2007 to2013, the public procurement procedures 11 CEE countries had access to EUR financed from EU funds and conducted 175.99 billion of EU funds, which in Croatia from 2012 to 2015. Finally, constituted 15.5% of the annual GDP the most successful tenderers in EU of the region.218 The amount of funded procurement procedures are allocated EU funds for 2007-2013, on analyzed in order to measure the the other hand, varied between exposure to politicization of EU funded countries – the highest budget was procurement. allocated to Poland (38.2%), and the lowest to Croatia (0.7% of the Cohesion and Structural funds in estimated total budget)219. Croatia
From the anti-corruption point of By acquiring EU membership on 1 July view, European funds provide a large 2013, Croatia became entitled to use
No. of Value of % of total value analyzed analyzed contracts contracts (HRK) Open procedure 84 903,915,860 96.5% Restricted procedure 1 2,901,938 0.3% Negotiated procedure without prior 25 29,084,046 3.1% negotiation Not defined by law - exempted 1 735,360 0.1% TOTAL 111 936,637.204 100%
additional pool of public resources for Cohesion and Structural Funds at the rent extraction, i.e., they add to the very end of the financial period 2007- pool of particularistic allocation of 2013. 220 public resources. In Croatia, according to figures provided by the It currently utilizes funds from the European Union, a total of 13 cases of structural instruments of the financial possible misuse of European funds period 2007-2013 in the amount of were reported between 2008 and EUR 800 million, allocated to Croatia 2009, with a total value of as a new member state for its first six www.expertforum.r approximately EUR 90 million. Most
217 Czech Republic, Estonia, Hungary, Latvia, 220 Mungiu-Pippidi, A. (Ed.) (2013) Controlling Lithuania, Poland, Slovakia, Slovenia, Bulgaria, Corruption in Europe. The Anticorruption Report 1. Romania and Croatia. Berlin: Barbara Budrich Publishers. 218 KPMG (2016) EU Funds in Central and Eastern 221 HINA (2014) Deputy PM says Croatia entirely Europe – Progress report 2007- 2014. Available committed to fighting corruption. 14 May 2014. o here. Available here. 219 Ibid. 107
Policy Brief No. 61
months of membership. Of this amount, EUR 449.40 million was Table 5. EU funded public procurement by earmarked for the implementation of type of procedure, 2012-2015 the cohesion policy. The Croatia absorption rate is relatively low Source: Author’s calculations based on compared to the EU average. In fact, data from the Integrityobservers.eu
No. of analyzed Value of % of total contracts analyzed value contracts (HRK) The lowest price 107 930,289,463 99.32% The most economically 4 6,347,741 0.68% advantageous tender TOTAL 111 936,637,204 100%
for the financial period 2007-2013, database Croatia ranked lowest compared to other member states, with 81% of the The findings presented in Table 4 total expenditure verified by the end support the ubiquitous opinion in the of 2016 (the EU 28 average is new member states (accession after 222 94%). 2004) that EU funds and procurement tied to it are less exposed to In the financial period 2014-2020, corruption than local/national funds. Croatia has at its disposal a total of There are several reasons for this. EUR 10,676 billion from ESI funds. Of Although in most Member States, that amount, EUR 8,397 billion is public procurement contracting that envisaged for the objectives of the derives from EU funds is subject to cohesion policy, EUR 2,026 billion is national legislation, ex ante and ex envisaged for agriculture and rural post control mechanisms are different. development, while EUR 253 million is The EU keeps a close eye on envisaged for fishery development. By expenditure, pressing Member States December 2016, Croatia had to enforce existing legislation in cases contracted 11.84% of the total where procurement derives from EU available funds, while 3.2% was funds. Another reason for higher distributed to the beneficiaries.223 competitiveness lies in the size of contracts. As the data in Table 4 suggest, the average size of contracts EU funded public procurement concluded in open procedure is higher In the period from 2012 to 2015, a than EUR 10 million, and is total of 111 public procurement significantly above the benchmark set contracts financed from EU funds in the EU directives for publishing in were concluded in Croatia. The value the European TED (Tenders Electronic
www.expertforum.ro amounted to HRK 936.6 million and Daily). Thus, these contracts must be most of the procurement was concluded in open tender procedure. conducted in open procedure (96.5%).
222 Croatian Chamber of Commerce (2017) 223 Paparella, S. (2017) Europski smo gubitnici u 108 Razvojni prioritet – maksimalno iskoristiti sredstva iskorištavanju fondova. 2 February. Poslovni fondova EU. Available here. dnevnik. Available here.
Money and politics: the links between public procurement and political parties
A similar trend of increased Table 7. EU funded public procurement by award criteria, 2012-2015 competitiveness in public procurement derived from EU funds compared to No. of Value of % of national funds is also observed in the analyzed analyzed total number of tenderers that participate contracts contracts value in competitions. As shown in Table 5, (HRK) almost 80% of the value of contracts Lowest price 107 930,289,463 99.32% was won in a relatively high Most 4 6,347,741 0.68% competitive environment (4 tenderers economically or more). advantageous tender
TOTAL 111 936,637,204 100% Table 6. EU funded public procurement by number of tenders received, 2012-2015 Source: Author’s calculations based on
data from the Integrityobservers.eu No. of Value of % of analyzed analyzed total database contract contracts value s (HRK)
1 tender 43 48,963,084 5.2% Detailed analysis of the top 10 received Public Procurement contracts by 2-3 tenders 30 168,571,677 18.0% received value that derive from the EU ≥ 4 tenders 38 719,102,443 76,8% Funds received TOTAL 111 936,637,20 100 The top ten public procurement 4 % contracts, i.e. those with the highest values, financed from EU funds in Source: Author’s calculations based on Croatia during the period 2012-2015, data from the Integrityobservers.eu amounted to EUR 100 million (HRK database 765.5 million) and represented more than 80% of the total value of contracts in our sample. These However, domination of the lowest contracts were all contracted through price award criteria is even more open procedure and the lowest price pronounced in the EU funded criterion. procurement (99,32%) than it is the case in national funded procurement (90,1%).
As already stated, such findings suggest the lower capacity of contracting authorities and higher
exposure to deviation in the post contracting phase. It also suggests the limitation of the impact of EU
www.expertforum.r funds, i.e. the poorer ratio of value for money that derives from such award criteria.
o
109
Policy Brief No. 61
Table 8. The top 10 EU funded public procurement contracts, 2012-2015
Source: Author’s calculations based on
data from the Integrityobservers.eu database
Contracting Tenderer Value of contracts authority (HRK) Hrvatske Ceste Viadukt d.d. 161,888,677.19 d.o.o. Zagreb Ministry of Group of tenderers: Zagrebgradnja d.o.o.; 154,639,448.53 Entrepreneurship Geoprojekt d.o.o. and Crafts Međimurske vode Group of tenderers: Tegra d.o.o.; Đurkin d.o.o.; 132,369,116;69 d.o.o. Čakovec Hidrotehnika d.o.o.,; Međimurska hidrogradnja d.o.o.; Aquatehnika d.o.o.; Vodogradnja d.d.; Proton d.o.o. Ministry of the AgustaWestland 119,450,311.50 Interior Odvodnja Poreč Group of tenderers: Aquaterm d.o.o.; Brodska 71,124,984.55 d.o.o. Posavina d.d.; Vodogradnja Rijeka d.o.o. Međimurske vode Group of tenderers: Končar Inženjering za 60,290,759.66 d.o.o. Čakovec Energetiku i Transport d.d,; Hidroinženiring d.o.o.; Palir d.o.o. Ministry of the Group of tenderers: Gradnja d.o.o.; Cestorad d.d. 25,275,259.60 Interior Komunalac d.o.o. Group of tenderers: Sokol d.o.o.; Aquaterm d.o.o. 19,756,935.09 Županja Croatian Group of tenderers: Monte-mont d.o.o. i 12,216,214.93 Conservation Izgradnja d.o.o. Institute Vodovod Grada Group of tenderers: Safege d.o.o.; Institut IGH 8,498,437.50 Vukovara d.o.o. d.d. TOTAL 765,510,145.24
www.expertforum.ro
110
Money and politics: the links between public procurement and political parties
Table 9. The top 10 EU funded public corruption and clientelism in public procurement contracts by number of procurement.224 tenders received, 2012-2015
Source: Author’s calculations based on Table 10. Tenderers winning the top ten data from the Integrityobservers.eu EU funded contracts by type of ownership database
No. of % of total no. No. of Value of % of tenderers analyzed analyzed total contracts contracts value State owned 1 4.2% (HRK) enterprises 1 tender 0 0 0 Mixed ownership with 2 8.3% received more than 50% of private equity 2-3 tenders 1 119,450,311 15.6% received Privatized enterprises 7 29.2% ≥ 4 tenders 9 646,059,833 84.4% Private enterprises 14 58.3% received TOTAL 24 100% TOTAL 10 765,510,145 100%
Source: Author’s calculations based on data from the Integrityobservers.eu database and Financial Agency (FINA) The contracts were acquired in a relatively highly competitive As established in our previous environment with four or more research, the privatization process in tenderers (see Table 2). One contract Croatia was exposed to a variety of was the result of processes with only anomalies that still serve as two tenderers: the Ministry of the instruments of capture in the private Interior’s tender for a helicopter, won sector in Croatia225. The history of by an Italian company Agusta privatized enterprises is relevant to Westland in 2015, in the value of HRK our analysis, because the privatization 119.4 million. process in Croatia was associated with serious weaknesses in terms of fairness, transparency and procedure However, despite the relatively high (Bajo, 2011, Grubišić et al., 2009, commpetition and appli8cation of Bendeković, 2000). Several scholars open procedure, there were anomalies have characterized the process as one detected in the contracts concluded in which resources were allocated that pointed to the potential according to favoritism and cronyism, politicization of EU funds related with the political principals distributing procurement and preferential resources so as to extend their treatment of some bidders. The political control over the emerging ownership structure of the successful private sector (Čučković 2002, bidders shown in Table 3 suggests Franičević 1999). The new owners of that almost 50% were were either these enterprises were often state-owned enterprises (or those in successful in securing assets, not which the state held significant
because of their business competence www.expertforum.r shares) or privatized companies. This or financial resources, but because indicates the risk of politicization of they had fruitful connections with the EU funds, and significant risks of political elite (Franičević 1999;
224 Podumljak, M., David-Barrett, E. (2015) The 225 Podumljak, M., David-Barrett, E. (2015) The Public Procurement of Construction Works: The Case Public Procurement of Construction Works: The Case o of Croatia. Zagreb: Partnership for Social of Croatia. Zagreb: Partnership for Social Development. Development. 111
Policy Brief No. 61
Petričić). Therefore, the high analysis of public resources indicated frequency of state-owned and that each consortium had one or more privatized enterprises as successful entities publicly accused by the media bidders in public procurement tied to of corruption and financing political EU funds, along with the high value of parties in exchange for preferential the contracts won, suggests the treatment. The exception was the considerable exposure of EU funds to Italian company Augusta Westland, the local culture of politicization, which won the contract to provide clientelism and corruption, in spite of helicopters for the Croatian police. strong regulatory mechanisms and Although media accusations do not controls. necessarily mean actual violations This finding is further supported by took place, there is a high incidence of value of the contracts won by companies falling under suspicion of consortiums, where state-owned and corruption and other violations of the privatized enterprises played a Act, suggesting that the risks of significant role. As seen in Table 4, corruption in public procurement that seven of the top ten contracts were derive from EU funds are as high as in won by consortiums that involved that derived from national funding. state-owned and privatized companies, representing over 80% of Conclusions and recommendations the total value of those contracts (see Appendix 1). Despite the fact that the Croatian acts on financing political parties, electoral Table 11. Top ten contracts by advertising and public procurement appearance of SOEs and privatized set a relatively high standard and have companies established some important
transparency and control mechanisms, Value of No. % of contracts of total they still do not respond adequately to contr sample the overwhelming politicization of acts value public procurement and capture of the State owned 614,086,683.72 7 80.22% private sector that is evident from the enterprises and analyzed indicators. Research privatized indicates that the weaknesses of the enteprizes participation overall integrity eco system are also reflected in public procurement Private enterprises 151,423,461.52 3 19.78% derived from EU funds. Although TOTAL 765,510,145. 10 100% restrictive procedures are not 24 extensively used, and competition in Source: Author’s calculations based on public procurement related to EU data from the Integrityobservers.eu funds outperforms the national database and Financial Agency (FINA) average, risks of preferential treatment, corruption and clientelism In fact, the only contracts that did not remain present, leading to the involve state-owned enterprises and increased politicization of EU funds www.expertforum.ro privatized companies were those for distributed in Croatia. EU controls can the purchase of sophisticated be performed through formalities and equipment such as helicopters, and formal procedures; however they two minor construction contracts. This cannot comprehend local contexts and suggests the high exposure of EU the ability of local contracting funds to politicization, corruption and authorities to deviate from clientelism even in EU funding procedures. For example, if lowest 112through secondary procurement. The price is the dominant criterion, it is
Money and politics: the links between public procurement and political parties simple enough to provide confidential observed suggest that in Croatia, information on prices offered by there is not only a relationship competitors to the preferred entity or between political party funding and consortium in order to deviate from public procurement, but also economic procedure. Prices can be adjusted operators who serve as resource quickly and the preferred consortium providers for political actors in wins the tender. This is far more exchange for favours in the difficult to achieve if the economically distribution of public resources. Weak most advantageous offer is the national control mechanisms and weak criterion. The dominant presence of enforcement of sanctions for breaches the lowest price criterion in EU funds of procedures may be one of the related public procurement (99.32%) dominant issues that fuel politicization of the total value of the contracts) and corruption in EU funds related suggests that there is high risk of public procurement. These abuse in such contracting procedures. weaknesses, however, are not accidental, and arise from a more serious problem - social capture226. In The integrity eco-system of the public this state of governance, public procurement system in Croatia is resources (financial and power- seriously undermined by the common related) are highly politicized and used practice of contracting consortiums for the purpose of capturing that consist of state-owned traditionally independent sectors such enterprises and privatized entities as privately owned economic subject to political influence. Although operators, NGOs and the media, in several successful bidders among the order to exercise full control over not top ten contracts were also political only horizontal accountability party donors (through financial mechanisms (law enforcement and contributions), this direct, formal way control mechanisms) but vertical of political party funding is not the accountability (the electorate) as well. one that is most frequently used and The issue is that in comparison to abused. Political parties wield Romania, Croatian public procurement extensive influence over state-owned exposure to politicization is at a enterprises and privatized entities. similar level to the national one, since The fact that over 80% of the value of Croatia does not have CVM EU funds related public procurement mechanisms and strong EU controls. has been allocated to consortiums Therefore, the practice, although it including these entities suggests it is may formally differ, has the same deliberate, rather than accidental, and outcome as procedures at national ubiquitous on the Croatian economic level procurement. In such an scene. In addition almost all the environment, it is difficult to propose participants in EU funds related public adequate measures for mitigation. procurement have been publicly accused of engaging in corruption and political favoritism schemes, which The political party financing and public undermines the trust of economic procurement regulations cited are operators. Consequently, in the long strong and aimed in the right run, there may be fewer economic direction. Enforcement of the act www.expertforum.r operators willing to engage in such however, especially in the area of tenders, and this should be closely imposing sanctions, is weak, if not observed in the future. The data almost absent as a serious barrier to
o 226 PSD concept of social capture that represents an evolved concept of state capture 113
Policy Brief No. 61
corruption and politicization. Therefore, it is necessary to rethink the institutional framework for enforcing the acts on political party funding and public procurement. As the institutional framework in place obviously does not produce the desirable impact, significant changes must be considered in the near future. External control and monitoring mechanisms for monitoring public procurement and political actors (the media, CSOs and independent solutions such as integrityobservers.eu database) must be strengthened and taken to another level in order to respond to this reform-resistant governance regime.
www.expertforum.ro
114
Money and politics: the links between public procurement and political parties
Contracting Place of Value of Tenderer Place of Type of authority registr./ contracts registr./ ownership/ Contracting (HRK) Tenderer Tenderer authority
Hrvatske Ceste Zagreb 161.888.677,19 Viadukt d.d.* Zagreb Privatized d.o.o. enterprises Ministry of Zagreb 154.639.448,53 Zagrebgradnja Zagreb Privatized Entrepreneurship d.o.o.* enterprises and Crafts Geoprojekt d.o.o. * Petrinja Private enterprises
Međimurske Čakovec 132.369.116,69 Tegra d.o.o. * Čakovec Private vode d.o.o. enterprises
Đurkin d.o.o. * Čakovec Private enterprises
Hidrotehnika d.o.o. Čakovec Mixed ownership with more than 50% of private equity
Međimurska Savska Ves (Near Private hidrogradnja d.o.o. Čakovec) enterprises
Aquatehnika d.o.o. Varaždin State owned * enterprises
Proton d.o.o. Gornji Kneginec Private (Near Varaždin) enterprises
Vodogradnja d.d. Varaždin Privatized Varaždin enterprises
Ministry of the Zagreb 119.450.311,50 AgustaWestland Italy Private Interior enterprises
Odvodnja Poreč Poreč 71.124.984,55 Aquaterm d.o.o. * Karlovac Private d.o.o. enterprises
Brodska Posavina Slavonski Brod Privatized d.d. enterprises
Vodogradnja Rijeka Kukuljanovo Privatized d.o.o. enterprises
Međimurske Čakovec 60.290.759,66 Končar Inženjering Zagreb Mixed vode d.o.o. za Energetiku i ownership with Transport d.d. * more than 50% of private equity
Palir d.o.o. Zagreb Private enterprises
Hidroinženiring Ljubljana, Private d.o.o. Slovenia enterprises
Ministry of the Zagreb 25.275.259,60 Gradnja d.o.o. Osijek Privatized Interior enterprises
Cestorad d.d. * Vinkovci Private enterprises
Komunalac Županja 19.756.935,09 Sokol d.o.o. Vinkovci Private www.expertforum.r d.o.o. Županja enterprises
Aquaterm d.o.o. * Karlovac Private enterprises
Croatian Zagreb 12.216.214,93 Monte-mont d.o.o. * Osijek Private Conservation enterprises
o Institute Izgradnja d.o.o. Crikvenica Private enterprises 115 Vodovod Grada Vukovar 8.498.437,50 Institut IGH d.d. * Zagreb Privatized Vukovara d.o.o. enterprises Safege d.o.o. Zagreb Private enterprises
Policy Brief No. 61
Appendix 1. Tenderers winning the top 10 EU funded contracts by the place of registration type of ownership
Source: Author’s calculations based on
data from the Integrityobservers.eu database and Financial Agency (FINA)
Nota bene: Tenderers with a star mark (*) are entities media repeatedly reported about in regards to political donations and patronage, corruption and conflicts of
interest.
www.expertforum.ro
116
Money and politics: the links between public procurement and political parties
Maps of clientelism (2004-2016) http://expertforum.ro/clientelism-2016/
Map of migration of mayors (2012-2016) http://expertforum.ro/primari-clientelari/
www.expertforum.r
o
117
Policy Brief No. 61
www.expertforum.ro
118
EXPERT FORUM www.expertforum.ro [email protected] (+40) 21 211 7400 7 Semilunei, 2nd District, Bucharest, Romania
This project is supported by the European Union Programme Hercule III (2014-2020). This programme is implemented by the European Commission. It was established to promote activities to combat fraud affecting the EU’s financial interests, including cigarette smuggling and counterfeiting (for more information see http://ec.europa.eu/anti_fraud/about-us/funding/index_en.htm).
This notice reflects the author’s view and the European Commission (OLAF) is not liable for any use that may be made of the information contained therein.