Some of you may be familiar with the fact that last week the chairman and one of the most powerful business people from Romania - Dinu Patriciu - was questionned for two days for allegedly tax evasion and money-laundering.
The story in short goes like this: before last year's elections the president at that time, Iliescu, received via the Romanian secret services (headed by Ioan Talpes) a report on allegedly muddy waters regarding Rompetrol's practices while and after acquiring some state-owned factories (Petromidia and Vega specifically). After Basescu replacing Iliescu the president took a strong position against the corruption claiming that Justice should use all the evidences on all the cases it has, regardless the political colour of the people involved in dirty business. Now, incidentally, Patriciu is one of leaders of the Liberal Party, which is one of the two-party coalition (DA) having won the elections last year and now playing a major role in the government.
So last week Patriciu gets called for interrogations which lasted more than 20 hours after which he had been told he would be arrested. Now, there's been a lot of speculations about the procedures corecteness of Patriciu being arrested and all related events lately, I will just present some contextual facts:
1. Basescu is in the position in which he actually even asked the Justice to show results of big corruption cases even though they may come from political parties forming the DA coalition (which runs the government)
2. Romanian Justice institutions are under tight observations given a) the corruption accusations coming from all over the place as a result of worst industry practices similar or close to the 15-years ago times; b) EU putting a lot of pressure on the Romanian government for reforming the Justice system; and c) Monica Macovei, the Justice minister, taking strong action for just doing that and facing a lot of rejection and inertia from a system that basically validated anything that was/is corrupted in Romania.
Consequently, some notoriuos results such as arresting Patriciu may look as success stories for creating a more favourable context for their bad image.
3. Patriciu claims that several procedures while being arrested were not respected and that everything is a political play of the muddy interests the Romanian politics has plenty of.
4. Patriciu is running the second largest oil company from Romania and has one of the strongest management team from around - that includes high profile expats Ivy League graduates. As such I find it hard to believe they did something so stupid as tax evasion, even though Enron is still a recent example of how things can be cooked up.
5. More interestingly is that Patriciu actually claimed that he is going to sue the Romanian institutions for the above-mentioned bad practices and will ask for several hundreds millions dollars damages coming from the broken image, lost opportunity costs et all. And my feeeling is that he has a case and that he may win -- and that would mean actually the defeat of the Justice system and having to adjust to Monica Macovei's reforming plans (people from within are very strongly against - rumours say that PSD, the ex-communists and former governmental party, is behind it - again a very reasonable theory given the corrupted PSD label)
As such, I would be glad that this would be the case - The Romanian government has to pay hundreds of millions of dollars in damages and this will have to lead to some forceful measures that the people involved in the Justice department will have to deal with. However, such a trial may take years and we cannot afford that much. Call me a naive but it could be more plausible than one man in a fragile coalition (Monica Macovei) against a system ossified in more than 50 years.
More on the context here.
Patriciu wants to sue the Romanian state (hence the gov) for the damages. However there is a clear obvious division between the gov and the Justice (who's actions caused damages to Rompetrol). I don't think he will make much out of such an action, just a lot of noise and a PR stunt. I bet they will try also to make the case look similar to Russian's Yukon case. Petromidia, while is a succes story, in another way, is also a typical 'privatisation' Romanian scheme. They bought the refinary and took the responsability to bring their own USD 15 mil to invest in it. However, they didn't had that and insted used Petromidia's own resources to keep up to their promises through a series of money laundry schemes. I heard on TV that through several fiscal paradises (I don't recall the names). They didn't respected the law and the responsabilities the took. I don't care if he is in TOP 100, part of the coalition, etc. They didn't respect the law and the should pay for this. Unfortunatly, more affected will be the investors who trusted their reputation as 'good' guys.
I really doubt that the investors will be affected. Except for these short term drops in value, Rompetrol is doing better and better and will probably continue to do so. What I find annoying is that our justice system is retaining these guys for X days and then lets them off for "lack of evidence". [Iacobov, Tender, Iskandarani, etc.] If you lack evidence, why on earth have you retained the guy in the first place? Get your evidence straight and nail him. End of story.
True David, that's the case of Patriciu as well actually, nobody has any evidence whatsoever, and I doubt that if he did anything he was so stoopid not to cover it up. Honestly I doubt that it is the case though also considering my own experiences with the former FPS, AVAS or other governmental organizations they just stick with idiotic arguments just for the sake of having one. Darian, nobody knows that "he didn't respect the law" that's what's it says on TV or in the newspapers and it doesnt mean it's true. On the contrary, as those dudes are most of the time either clueless or produce news out of their own interest. Justice is the only one to decide, as simple as that. Finally a trial against the ROmanian government would matter more than as a PR case, since few hundreds million of $$ are not to be neglected in a budget that has enough wholes in its own. And the loss maker should either change dramatically for preventing it to happen again or pay for the mistake, but the Justice department is not a profit center. :)