Godfather Gets to Control Romania’s Finances

 

SAR and the Coalition for a Clean Romania protest in the strongest of terms with respect to the recent duo of appointments of Mr. Dan Rusanu (Godfather) and Mr. Gelu Stefan Diaconu (Godson) to the positions of heads of the Financial Services Authority and the Fiscal Agency, respectively. One year ago, the current coalition and representatives of the civil society signed a series of agreements. One of these agreements stated that the CV of aspirants and holders of key positions should be accurate and publicly inspected, and parties should cease the vicious practice of appointing opaque political figures in key institutions dealing with financial control. 

The Coalition for a Clean Romania has also addressed an open letter strongly requesting that Prime Minister Ponta revoke his decision to appoint Mr. Diaconu as head of the Fiscal Agency. It is unprecedented that three strongly correlated positions, key to the state’s financial infrastructure are being run by so closely associated people. Both the Minister of Finance, Mr. Chitoiu and the future head of the Fiscal Agency are godsons of current liberal vice-president, Mr. Rusanu [1], himself appointed by the Parliament as the head of a complex agency which regulates €10 bn worth of business – in the stock market, insurance and private pension sectors[2].  Furthermore, we are asking that the Prime Minister look into allegations issued by the Fondul Proprietatea concerning appointments following political criteria, such as the recent ones within Nuclearelectrica and CFR. We are also requesting him to refrain from taking any similar steps in the future.

Concerning the plea of this letter, we have compiled a basic history of Mr. Rusanu’s leverage on key financial and economic positions within the Romanian government during the past decade.  Mr. Rusanu has recently been appointed by the Parliament as the head of the Financial Services Authority and his fortune was unofficially estimated at $60 million in 2006, while also being a shareholder in 12 companies – although some of the share are held in the name of his wife [3].

Mr. Rusanu’s professional career started in 1990 as the head of Centrocoop, the post-Communist co-operative system, followed by his promotion to a governmental inspector position. During the 1992-1996 period, he was General Director for the Fiscal Authority of Bucharest, the starting point of his professional rise to power. The World Bank considers the Fiscal Authority in Romania to be one of the most corrupt entities in the state administration, a fact which is firmly backed by public perception indexes, whether measured by Transparency International or other NGOs. This is reflected in the following staggering statistic regarding the tax collection rate in Romania: even though taxation in Romania is roughly similar with the European average, the actual collection rate is lower than in most Central and Eastern European countries [4]. In 1997, Mr. Rusanu was Secretary of State in the Ministry of Finance and afterward president of Eximbank.

In 2004, following the controversial privatization of S.C. Chimpex S.A. Constanta, along with further elements brought forward to the legal bodies by the former director of the same company, the prosecutors of Constanta Tribunal have formulated a referral on the name of Mr. Rusanu. Also, The National Federation of Port Trade Unions has made a petition on similar aspects to the then president of Romania, as there were several suspicions drawn against the Rompac company, which was the controversial acquisitor of S.C. Chimpex S.A. Firstly, the five year conditions associated with the privatization contracts were not respected. Secondly, a joint venture was formed between the new privatized entity and another company where Rompac was the majority shareholder. As a result, the pooling of resources left the patrimony of the former state entity. Thirdly, Danys Metcom Srl, an obscure ltd owned by Mr. Rusanu’s wife, was accused of obtaining some assets belonging to S.C. Chimpex S.A. for a price of less than $ 0.7 m, although normally evaluated at $ 5 million.[5] The fraud investigation was started against Mr. Rusanu, but in the end it proved to be futile.

In 2005, after the surprising victory of the right-wing coalition, following an 11-hour win of President Basescu, which turned around the parliamentary majority, Calin Popescu-Tariceanu became Prime Minister of Romania and was reported to have offered the lead for the Ministry of Finance to Mr. Rusanu. Nevertheless, on the account of fearing that a high profile public position would bring him negative publicity and, ultimately, the re-ignition of the scandals dating from the 1997-2000 governmental period and 2004, he refused the offer. However, as detailed below, he did appoint key figures in all spheres of the financial institutions. First, he appointed his god-daughter, Doina Elena Dascalu, as the Secretary of State for the Budget, who held office for a period of 4 years, although in the meantime Romania had three ministers of Finance. Second, he appointed Emil Negut as the head of the Prime Minister’s Control Unit. Third, he appointed Carmen Radu as the head of Eximbank. Fourth, he wanted to control the Fiscal Agency as well, but, at the time, this was run by Mr. Sebastian Bodu, now a Euro-MP and then the protégé of the PDL second-in-command and former mayor of Bucharest, Adriean Videanu. Therefore, Mr. Chitoiu was appointed Vice President of the Fiscal Agency. Eventually, following the exclusion of the PDL from the governing alliance– an action foreshadowed by the previous eviction of Sebastian Bodu from the agency- he did become the president of the Fiscal Agency. [6]

Moreover, Mr. Diaconu, Mr. Rusanu’s other godson, was head of the Customs Agency, then a separate institution inside the Fiscal Authority. Concerns about the non implementation of security practices within the Customs Agency have always represented a key issue when tackling Romania’s intention to join the Schengen Space. Customs is systematically seen as one of the most corrupt entities of the Romanian state. For instance, in 2011, 150 customs agents at several customs points were arrested in a dramatic bribe case, which had a pyramid structure, going all the way to the top of the agency; although the case documented the ever-present infringements which happen at the Romanian customs points, the investigation was not comprehensive enough and currently not making any progress.[7] Mr. Diaconu remained the head of the Agency until 2008, when followed by Mr. Blejnar. Also, during his previous stint in the Ministry of Finance, Mr. Diaconu was a key member of the commission within the Ministry of Finance in charge with VAT refunds to big contributors. Stories of corruption swirled for years around this entity, but no case has ever been prosecuted. Mr. Diaconu declared in his wealth statement the sum of €105.000, which was won as a result of a trial case following his dismissal from Eximbank, something which he argued against in the Court.[8] Recently, he was appointed head of the Fiscal Authority only days after his godfather and chief political supporter, Mr. Rusanu, was named as the head of the Financial Services Authority. This was a new authority consolidating the oversight bodies of the stock market, the private pensions and the insurance industry, companies with a combined estimated total turnover of €10 bn.[9]

Likewise, in 2006, following a widely known friendship (which extended to joint business interests) with Mr. Rusanu, Ovidiu Ispir was proposed by the Tariceanu Government and endorsed by the European Parliament as member of the European Court of Accounts. Obviously, the vote itself in the European Parliament was quite controversial. There were political accusations at the time which stated that there was a formal investigation conducted by DIICOT (the Organised Crime and Corruption Unit within the Prosecutor’s Office) into the links between Mr. Rusanu and Mr. Ispir, but it remained ineffectual.[10] In 2008, also helped by Mr. Rusanu, Mrs. Doina Dascalu, the former Secretary of State for the Budget became the Vice President of the Romanian Court of Accounts. In her new capacity she was overseeing the verification of expenditures made in the past by the government, including expenditures in which she herself was deeply involved as the Secretary of State for Ministry of Economy and Public Finance.

Similarly, in 2012, Mr. Chitoiu was proposed for the Minister of Finance position in the first Ponta Government, but in view of Romania’s agreement with the IMF, the Deputy Head of the Central Bank and former Minister of Finance, Florin Georgescu, was preferred to hold the office. Nonetheless, Mr. Chitoiu was given the lead of the Ministery of Economy, shortly followed by Mr. Diaconu, Mr. Rusanu’s other godson, as his Chief of Cabinet.[11] Naturally, in the second Ponta administration, Mr. Chitoiu did become the Minister of Finance.

All in all, we hope to have given you the necessary information in this matter and we trust that, after careful consideration, you will take the appropriate course of action. We further reiterate that our sole purpose is to promote the principles of good governance and we firmly believe that for becoming a successful state, Romania needs a strong bond of trust and respect between the citizens and their elected politicians. 

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


[1]     Pantazi, Cristian. “Cum Isi Exercita Dan Radu Rusanu Influenta Asupra Institutiilor Financiare.”HotNewsRo. N.p., n.d. Web. 22 May 2013. http://www.hotnews.ro/stiri-opinii-14681626-caracatita-dan-radu-rusanu.htm.

[2]     Ibid.

[3]     Badea, Dan. “Averea Lui Dan Radu Rusanu.” HotNewsRo. N.p., 6 Nov. 2006. Web. 22 May 2013. http://www.hotnews.ro/stiri-arhiva-1144997-averea-lui-dan-radu-rusanu.htm.

[4]    Apostol, Monica. “PwC: Tax Collection Rate in Romania Much below EU Level.” Nine OClock RSS. N.p., 30 Jan. 2013. Web. 22 May 2013. http://www.nineoclock.ro/pwc-tax-collection-rate-in-romania-much-below-eu-level/.

[5]     Badea, Dan, Ioan Alexandru, and Eduard Pascu. “Deputatul Liberal Dan Radu Rusanu, Partas La Devalizarea Chimpex Constanta.” Dan Badea. N.p., 10 Apr. 2006. Web. 22 May 2013. http://www.danbadea.net/2006/04/10/deputatul-liberal-dan-radu-rusanu-partas-la-devalizarea-chimpex-constanta/.

[6]     B., I. “Dan Radu Rusanu Despre “caracatita Rusanu”” HotNewsRo. N.p., 4 July 2006. Web. 22 May 2013. http://www.hotnews.ro/stiri-arhiva-1169764-dan-radu-rusanu-despre-caracatita-rusanu.htm.

[7]     “Cum Au “explodat” Cazurile De Coruptie in 2011. Am Inceput Cu Descinderile Din Vami S™i Terminat Cu Spagile De La Finante.” Adevarul.ro. N.p., 31 Dec. 2011. Web. 22 May 2013. http://adevarul.ro/locale/timisoara/cum-explodat-cazurile-coruptie-2011-an-inceput-descinderile-vami-terminat-spagile-finante-1_50acf9d67c42d5a6638cf326/index.html.

[9]     Andrei, Cristina, and Alexandru Moise. “Anunţul Lui Ponta: Gelu Ştefan Diaconu Primeşte şefia ANAF. Cine Este Noul şef Al Fiscului.” Gandul.info. N.p., 25 Apr. 2013. Web. 22 May 2013. http://www.gandul.info/financiar/anuntul-lui-ponta-gelu-stefan-diaconu-primeste-sefia-anaf-cine-este-noul-sef-al-fiscului-10795793.

[10]    Baias, Ionut. “PPE Nu-l Va Sustine Pe Ovidiu Ispir Pentru Curtea De Conturi a UE.”HotNewsRo. N.p., 29 Nov. 2006. Web. 22 May 2013. http://www.hotnews.ro/stiri-arhiva-1603745-ppe-nu-sustine-ovidiu-ispir-pentru-curtea-conturi.htm.

[11]    Pirvoiu, Claudia. “Daniel Chitoiu a Predat Atributiile Sale De Ministru Unui Secretar De Stat. Vezi Cum Au Ajuns Fostii Sefi De La Vami Sa Conduca Ministerul Economiei.”HotNewsRo. N.p., 18 July 2012. Web. 22 May 2013. http://economie.hotnews.ro/stiri-energie-12827284-daniel-chitoiu-predat-atributiile-sale-ministru-unui-secretar-stat-vezi-cum-ajuns-fostii-sefi-vami-conduca-ministerul-economiei.htm.

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