Dirty money from the Isle of Man

Dirty money from the Isle of Man

By Paul Cristian Radu

In the shadow of some very famous Romanian businesses there are various Russian oligarchs, hidden behind some off-shore companies. All too often, these companies are involved in transactions with Russian criminal groups, in money laundering, drug traffic or blackmail.

Our story begins on a small island in the Irish Sea, between Great Britain and Ireland: the Isle of Man. With a surface of only 572 square kilometres, the Isle of Man or Manx, as the locals call it, is one of the places where a significant part of the world’s financial capital is concentrated. The Isle of Man is one of the main off-shore areas and one of the favourite places of the Russian oligarchs who want to conceal their influence and money.
On this island we have managed to identify several companies which have business affairs with some companies in Romania. One of these off-shore companies is called Best Associates Limited and its shareholders are Gabriel Bivolaru, ex MP, who is currently in jail for embezzling the BRD (Romanian Bank for Development), his spouse, Mona Socec de Freitas, a certain Alexandru Constantin Covrig and a British citizen, John Szepietowski.

THE ISLE OF MAN: A famous tax haven.
CRJI has written several times about Mona de Freitas, a person who seems taken from a detective novel. A woman who, even since the 80s, with the complicity of the Security, changed her identity very frequently, assumed all kinds of nobility titles and performed fraudulent activities in various countries of the world. Mona de Freitas was also under penal prosecution, along with Bivolaru, in the BRD fraud case, but her file still remains unresolved.

The name of Szepietowski has also been mentioned several times by CRJI. He is one of the head members of the group Freitas-Bivolaru, and he has been involved in businesses with Freitas, both in England and in Romania.

Thus, according to some press releases, Szepietowski was involved, in the middle of the 90s, in an attempt to fraud Amidon Glucoza Fructoza Drojdie (AGFD – Starch Glucose Fructose Yeast) in Tandarei. Bivolaru illegally sold this society to Mona de Freitas, who, in turn, sold the assets of the society to John Szepietowski and the land to Mihaela Ene, who is Bivolaru’s sister but also a founding member of VGB Invest (the company that took over RAFO Onesti from Iacobov, by means of Balkan Petroleum).

The same Szepietowski sold an apartment in Bucharest to the lawyer Ion Neagu, ex-chairman of the Juridical Committee of the Chamber of Deputies in the former legislature. The apartment, located on the Unirii Boulevard, was given to Szepietowski by Mona de Freitas and was sold by her right in the period when she was under penal prosecution for embezzling the BRD.

In England, Mona de Freitas and Szepietowski are associates in the companies: Magazine Limited; Asterix Travel Limited; Classic Hotel UK Limited and others.

DRUGS TRAFFIC AND MONEY LAUNDERING. Szepietowski’s name became very important in the equation of the businesses ran by the couple Bivolaru-Freitas in August 2005, when the Assets Recovery Agency of the British government announced that they had put under distraint £1 million worth assets, because these goods had been purchased by means of drugs traffic and money laundering.

John Szepietowski’s name is mentioned in the ARA press release, as manager of the Countess Investments Limited and representative of Heritage Investment Trust.

According to ARA, the Countess Investments Company has its headquarters in 33 Monument Green Square, in the British town Weybridge. The reporters of Jurnalul National went to this address, in the county of Surrey, last year, when we revealed the connections between the RAFO business, Frank Timisi and the group VGB-Bivolaru-mentioned above. In the company Classic Hotel UK Limited, Mona de Freitas, under the name Lady Mona Bradley, is listed as living precisely 33 Monument Green, Weybridge.

FRIDMAN’S LADIES. But let’s come back to the island in the Irish Sea and to the company Best Associates Limited. As we have mentioned, a certain Alexandru Constantin Covrig is currently involved in this company. Covrig is also an old partner of the group Bivolaru-Freitas. He has been a partner in several Romanian companies with Bivolaru, Freitas or with Mihaela Ene, the founder of the VGB Invest group.

However, the head managers of Best Associates are two citizens of the Isle of Man: Gillian Norah Caine and Susan Christine Cubbon. These two ladies are also mentioned in a process currently under way in America. We are referring to the NOREX case, tried by the Justice court of New York. In this process, Caine and Cubbon are accused of being accomplices to money laundering and bribing some officials of the Moscow government together with Mikhail Fridman, one of the most powerful Russian oligarchs, and with the latter’s business group, ALFA BANK.

This isn’t the first time when Fridman and the ALFA group prove to have connections with organized crime activities. An FSB (the new KGB) report quoted by the American organization Centre for Public Integrity, mentions that the ALFA group has been heavily involved, at the beginning of the 90s, in laundering money resulted from drugs traffic in Russia and Columbia. The same report says that drugs from the Far East have been imported to Europe through this network.

ISKANDAR MAKHMUDOV. This summer there have been rumours saying that the RAFO refinery in Onesti, the centre of so many scandals lately and one of the main debtors to the state budget, had been overtaken by the Alfa Oil group, a group which includes the companies Expanet Trading Limited, Calder-A International BV and Raglam Overseas Ltd.

The documents obtained by CRJI prove who is behind this mysterious business group. Thus, the most important company of this holding is Calder-A International BV. This company, registered in Rotterdam, Holland, has as sole shareholder another Austrian company called KRU Holding. KRU Holding is in fact Kuzbassrazrezugol, one of the biggest Russian companies in the field of coal exploitation.

According to the information provided by the Austrian Trade Register, the main shareholder of KRU Holding is Iskandar Makhmudov. The latter is, according to Forbes magazine, one of the most mysterious Russian businessmen. He was born in Bukhara, Uzbekistan and he has served the Soviet army in Iraq and Libya. He is currently the leader of the UGMK group, the second biggest on the Russian non-ferrous metals market.

THE RELATION WITH THE ALFA BANK. An interesting fact is that Makhmudov’s company, Calder-A International, has been financed lately by the means of the very ALFA group of Mikhail Fridman.

Thus, in 2003, Calder obtained a loan of almost $125 de million, which was guaranteed by Alfa Bank.

International Children Adoption

San Antonio Express-News (Texas)

Concern isgrowing over poorly regulated foreign adoption programs.

BYLINE: Paul Cristian Radu

Adoption Services Associates director Linda Zuflacht says in her complaint that adoptive couples spend $10,000 to $12,000 in countries where they are adopting children to cover legal work, government fees, drivers, translators and gifts to orphanages. On top of that, former international adoption director Orson Mozes received $7,000 per placement, and parents paid Adoption Services Associates $1,750 or $3,500 in fees, depending on the age and needs of the adopted child. Zuflacht said the money parents spent overseas disappeared without an accounting from Mozes. ; Pg. 1B

LENGTH: 1499 words



A San Antonio adoption agency has handled hundreds of foreign adoptions since the Iron Curtain fell a decade ago, saving children who were abandoned in decrepit orphanages and helping families adopt children in Eastern Europe. But the agency, Adoption Services Associates, also became involved in the same problems that caused the Romanian government to suspend foreign adoptions this summer. In a lawsuit filed in March, the nonprofit agency accuses its former director of international adoptions of failing to disclose medical problems of children to adoptive couples, mistreating and threatening prospective parents, separating siblings without informing the adoptive parents, and costing the agency $300,000 in damages. During three years, according to the lawsuit, Adoption Services Associates "received at least one complaint a week, every week, calculating to approximately 156 complaints," against the international adoption director, Orson Mozes. Mozes, one of the leading brokers of foreign adoptions in the United States, handled foreign adoptions for ASA for 10 years before agency director Linda Zuflacht fired him in March. Based in Santa Barbara, Calif., Mozes continues to coordinate foreign adoptions as the international director of Life Adoptions International.

Mozes declined to respond to Zuflacht's charges in several requests for an interview. He referred questions to his lawyer, who also declined to respond. Zuflacht, a San Antonio lawyer who founded Adoptions Services Associates in 1984, said her agency has arranged about 1,000 adoptions from Romania and Russia for U.S. parents, including some in San Antonio, since the early 1990s. The number of foreign adoptions in San Antonio is unclear, since no single U.S. government agency regulates international adoptions. But Sue Hall of San Antonio, who belongs to a Russian adoption support group, said 150 to 200 local families have adopted foreign children, with most coming from Russia and Romania. The falling-out between Adoption Services Associates and Mozes reflects the growing international concern over poorly regulated adoption programs in Eastern Europe and the brokers involved in the industry. Since the fall of the Soviet Union a decade ago, the number of orphans adopted every year from Eastern Europe has more than doubled, to more than 16,000 annually, according to the State Department. Most of the adoptions are successful and pair needy children with U.S. parents who often are compelled to rescue orphans from filthy, crowded facilities where toddlers sometimes are tethered to cribs by overworked caregivers. But problems with brokers and corrupt orphanage directors have been widespread. The Romanian government has suspended foreign adoptions several times, with the latest suspension in June after a scathing international report was issued. In her report, Baroness Emma Nicholson, the European Parliament's special envoy for Romania, accused that country's adoption system of "persistent abandonment of children, child abuse and neglect and child trafficking." She complained of endemic corruption in the system, and expressed concern for 240 Romanian orphans who could not be traced. Three weeks after the report, the Romanian police directorate for organized crime said elements of the adoption industry were run by criminals who pocketed donations intended to improve orphanages. In one case, police charged the "My Child" program with misusing about $500,000 donated by several U.S. adoption agencies. In the Adoption Services lawsuit, Zuflacht said one adoptive couple was threatening to sue her after adopting three siblings from Russia through Mozes. "The three children have a 17-year-old sister who was left behind in Russia. The older sister was viewed as a parental figure to the three younger children. The adoptive couple claims (Mozes) was aware of the older sister and proceeded with the adoption and subsequent separation of the children without advising them," the suit claims. "This separation has caused the three children to be hostile and violent with the couple." The parents wanted the three children removed from their home, according to the lawsuit, contributing to the growing problem of disrupted adoptions from Eastern Europe. From 1994 to July 2001, U.S. parents returned at least 136 children adopted from overseas because of problems with the children, according to figures compiled by Tressler Lutheran Services, a leading U.S. adoption group. Most of the children in failed adoptions came from Russia and Romania. Zuflacht says in her complaint that adoptive couples spend $10,000 to $12,000 in countries where they are adopting children to cover legal work, government fees, drivers, translators and gifts to orphanages. On top of that, Mozes received $7,000 per placement, and parents paid Adoption Services Associates $1,750 or $3,500 in fees, depending on the age and needs of the adopted child. Zuflacht said the money parents spent overseas disappeared without an accounting from Mozes. "Without such an accounting, ASA is unable to verify whether these cash amounts are being spent to further adoptions and help the orphanages, or whether it is taken by Defendant," the lawsuit says. According to Romanian and Russian laws, the only fees required for an adoption are document fees. Agencies usually also make direct donations to orphanages. Translators and drivers are paid according to the local standards of the countries, where the average monthly salary is less than $200. Financial records on file with the Internal Revenue Service do not show any gifts or donations made to orphanages by Adoptions Services Associates between 1997 and 1999. As a nonprofit organization, ASA is required to make the records available to the public. The financial reports show ASA earned $1.79 million to $1.97 million a year between 1997 and 1999. As the executive director, Zuflacht earned between $70,000 and $158,000 a year for running the agency and providing legal services to adoptive parents. Mozes has been affiliated with foreign adoptions for more than a decade. He was mentioned in a December 1990 Los Angeles Times article about planning to escort couples to Romania to adopt children. At the time, he worked through the Romanian Club of Santa Monica, Calif. Later, the Romanian Club became a Russian Club and Mozes started doing adoptions from Russia when Romania imposed its first moratorium on foreign adoptions. In 1996, Mozes and Adoption Services Associates were temporarily banned from performing adoptions in Romania, according to a former Romanian Adoption Committee official who asked to remain anonymous. The former official said Mozes tried to adopt a Romanian orphan for a Mexican couple, which was illegal because Mozes was working for a U.S. agency and Mexico is a "children donor" country like Romania. Parents in children donor countries are not supposed to adopt foreign children, because the countries already are overburdened with orphans awaiting adoption. Several parents contacted by the San Antonio Express-News said they had complaints about their experience with Mozes and Adoption Services Associates, but they asked to remain anonymous out of concern for their children. One woman said she and her husband tried to adopt a Russian girl through Mozes this year after seeing the girl's picture on Mozes' Web site. "Before I dialed the phone I prayed, 'Lord, make it clear if we are to work with this agency.' My hands shook as I dialed the phone. I was calling to say, 'Yes, she is our daughter.' "Before I even finished getting the words out of my mouth, this man - the agency director - demanded that we immediately Federal Express three checks to three separate addresses totaling a very large amount of money if we wanted them to hold this child for us," the woman wrote in a lengthy Internet message, which she verified in a telephone interview. "I began to question him about the large amount of money (that we didn't have) and the three separate addresses," she said. "He became irate. He yelled and called me names and his final words were, 'Somebody will pay this much for that little girl!' Slam! He hung up the phone." Adoption Services Associates fired Mozes soon after the incident. The couple said they subsequently had similar problems trying to arrange the adoption with Zuflacht. Zuflacht said that, despite problems with Eastern European adoptions, her business is going well. "I'm thinking that I'd like to have something to fall back on in case also Russia closes down and there would be nothing. I'm thinking about Guatemala, where the adoption process is still simple, and about China: there are tons of girls in China."

The Muzzling of the Romanian Media

Wednesday, October 2nd 2002: The Muzzling of the Romanian Media

Commercial and political pressures have left Romanian journalism at its lowest ebb since the demise of communism.

RCJI

When journalist Silvia Vranceanu began investigating a tycoon from the ruling Social Democratic Party, PSD, in the north-east town of Focsani, local powerbrokers warned her to stop. Vranceanu, a local correspondent for the national daily paper Evenimentul Zilei, refused to back down and went on to publish a series of hard hitting articles. But she paid a price for her persistence. Soon afterwards, a Bucharest TV station acquired and broadcast a tape of a teenage Vranceanu stripping in front of her boyfriend.
Undeterred, Vranceanu has continued to probe local issues, but her experience is one example of the pressures that have left journalism in Romania at its lowest ebb since the demise of communism.
The media in Romania have certainly proliferated since the fall of Ceausescu in 1989. Today, there are 15 national daily newspapers, hundreds of local titles, over 50 private television stations and more than 100 radio stations.
The early 1990s saw an explosion of investigative reporting, but the concentration of media ownership in the hands of local elites, interference from central government and an increasingly corrupt working environment, have combined to chip away at basic standards of truth and accuracy among journalists in recent years.
Shifts in media ownership, with increasing numbers of publications owned by politicians, businessmen or former security service officers, have played an important part in this decline.
Not that outright ownership is always necessary to establish some degree of editorial control, according to Manuela Proteasa of the financial paper Capital. "Huge amounts of money were transferred from state companies to private media companies, through advertising contracts or even offshore bank accounts," she said. "Control can also be exercised through the provision of subsidies, direct or indirect shareholding and tax. Large TV companies depend on official goodwill to endlessly reschedule their tax liabilities, instead of ever paying up."
The only independent, locally-owned network is the North East group which currently comprises four newspapers in the towns of Iasi, Roman, Bacau and Focsani. The newspapers are owned by the journalists who established them - and in 1998 the group numbered 18 titles.
Despite problems in distribution, intimidation of advertisers and accreditation problems for the journalists, the founder of the group Andi Lazescu hopes to extend the group again, as a way of expanding the independent media.
Otherwise, newspapers which exercise the greatest editorial independence tend to be those have some level of foreign ownership. These include the national daily Libertea, owned by Swiss media company Ringier, Evenimentul Zilei, which is 51 per cent owned by the German Bertelsmann company, and Romania Libera, also partly German owned.
Timisoara, in western Romania, had a particularly effective local press during the 1990s. Local journalists uncovered an oil smuggling racket run by customs and secret service officers during the war in former Yugoslavia, and conducted other investigations into the local authorities and security services which seem remarkable now.
"Back then, we were able to uncover and publish that kind of thing, because the links between newspaper owners, the local authorities, security services and organised crime were nothing like they are now," said a local journalist who did not want to be named.
Today, the local branch of the PSD owns one of the Timosoara newspapers and attempts to exert indirect control over journalists working for the other local papers, according to Mircea Opris, a local correspondent for Romania Libera.
"I know a number of journalists here who are manipulated,” he said “ They are forced to write articles - mainly on political and economic issues - which are then used to extort or blackmail businesses or the opposition parties. The directors and owners of the publications quietly bank the pay off, while continuing to pay their reporters a pittance."
The use of newspaper reports as a form of blackmail is increasing. Although the articles are essentially intended to extract bribes, some do get published. At the end of the summer, several national titles ran "investigations" into multinational companies. Flimsy stories were used as an excuse for misleading front-page headlines. Part of an attempt to extort greater advertising revenues from the companies targeted, the articles stopped when the American Chamber of Commerce and the International Advertising Association complained vigorously.
But while some journalists are ordered to write damaging articles, others find themselves more subtly manipulated. "When my boss handed me some interesting files, I followed up the various leads and ended up exposing a gross misuse of public funds,” said an experienced investigative journalist in Craiova, the largest town in southern Romania.
“Only after I left the newspaper did I learn that my article was intended to damage one of his commercial opponents. My boss didn't give a fig about the public money which had been stolen."
When journalists try to expose anything that local powerbrokers don't want uncovered, however, it is quite a different story. The ruling clique in Craiova, a group of former intelligence officers who use their access to secret files on local judges, prosecutors and officials to control the local authorities, do not take kindly to inquiring journalists.
In September 2001, Loredana Chimoiu, Craiova correspondent of the Antena 1 TV station, began investigating police corruption and a war between the town's two main criminal groups. When she received a call about a car accident on the outskirts of the city, she drove to the location, only to be pulled out of her car by an unknown assailant, who then used a knife to cut off part of her hair.
In some areas, information is even collected in advance, so that pressure can be applied as soon as a journalist steps out of line. A report obtained by IWPR from the Transylvanian town of Cluj, listed the names of journalists, their sources, and details about their private lives. The report was compiled by former police secret service officers.
While organised crime and local politics continue to account for much editorial interference, some journalists have found themselves muzzled in the "national interest". Raico Cornea, an experienced journalist who has worked both for public television, newspapers and radio, says that he came under pressure over his coverage of the Kosovo conflict. "They tried to modify reality. They told me to be careful about what kind of article I produced because Romania wants to join NATO," he said.
Indeed, NATO entry fever has become a pretext for all manner of control, said Mircea Toma, president of Freedom of Expression, FREEEX, a Bucharest NGO that monitors press freedom. "Everyone is being told to shut up at the moment, until we get into NATO."
In 1999, Romania's invitation to apply for EU membership prompted much-vaunted media reforms and legislation to improve access to information, but the laws were of little practical use to journalists. On certain occasions, the authorities have refused to apply them, which has not been properly publicised.
Another raft of legislation, including a controversial law covering classified information, have served to limit freedom of information. Moreover, dozens of journalists have faced libel suits based on outdated legislation, which has never been removed from the statute books.
Apparently dissatisfied with existing levels of control over the media, the PSD followed its election victory in 2000 with the creation of a ministry of information. Quickly dubbed the "ministry of disinformation" by the press, it has made various attempts to manipulate news coverage, most recently with a secret document exposed in August by the Bucharest daily Ziua.
Entitled “A Public Communication Strategy for the Romanian Government”, the document advised government officials on how to manipulate public opinion during the quiet summer months. Officials were encouraged to fabricate stories in order to counter the "extreme aggression" of journalists. "Otherwise this empty space might become a platform for challenging the authorities. The ministry's communications team is therefore to function proactively," it read.
More worrying than central government's often clumsy attempts at covert manipulation, are growing signs of personal corruption among individual journalists. "If you look close at any media outlet you will find either political or financial pressure - or both," said Toma.
Financial pressure can take a number of forms, as Toma who is also a reporter on the leading Romanian weekly Catavencu, explained, "A few years ago we had to sack a colleague from our magazine, when we discovered he was receiving regular payments from one particular bank. We found his name on a list along with 20 other journalists from different publications. They were all on the bank's payroll, keeping people there informed of what was going on. "
A recent private survey supplied to IWPR by FREEEX also showed an alarming lack of initiative among journalists. An analysis of the main media outlets in Transylvania revealed that up over 80 per cent of articles published over the period examined were either verbatim transcripts of press conferences, or news agency copy.
Less than 20 per cent of reports showed any original work on the part of the journalist. "I'm worried. I was expecting that the generation who showed up after the fall of communism would be different. But no, they're dinosaurs, they're following the same old paths," said Ioana Avadanei, head of the Romanian Centre for Independent Journalism, ICIJ. "The enthusiasm and the education gained in more than a decade of freedom haven't made a difference yet. It seems that we'll have to wait."
In the meantime, various media-development NGOs are working to improve the training of journalists, which is currently university-based and overly academic. But even training initiatives can attract unwarranted attention. "In 1999, we initiated a programme for journalists interested in cross border investigations, and we funded a few journalists to attend," said Cristina Guseth, director of the Bucharest office of the US NGO Freedom House. "After that, we received phone calls from high ranking officials, warning us to stop one of the investigative projects. I realised then how dangerous things can get."
Indeed, Ioana Avadanei, director of the Centre for Independent Journalism, believes that reporters who "step outside" the Romanian system face discrimination. "Some of our journalists have attended courses or training programmes abroad, where they gained a broader perspective," she said. "They find themselves rejected for jobs they apply for here, and working journalists who win places on such courses are not allowed to go."
But in an increasingly bleak landscape, there is hope. More than 300 journalists have registered themselves with the Romanian Online Editors Association, AEPO, an NGO which has set up a website for stories which could not be published.
"We publish journalists from Bucharest and from all over the country. They come to us out of frustration," said AEPO president Ioan Margarit. The stories are checked by AEPO staff and then published online. “One of our latest scoops was about a minister trying to influence the supreme court over a ruling. The story and the documents verifying it came from a journalist who couldn’t get it published by the newspaper he works for in Bucharest.” Amidst intimidation, corruption and lethargy, it seems a small but determined band of journalists are striving to keep the investigative spirit of the early 1990s alive.

Paul Cristian Radu (paulradu@crji.org), Sorin Ozon (sorinozon@crji.org) and Dan Badea are members of the Romanian Center for Investigative Journalism.

Freedom at Midnight-Rescuing Sex Slaves

Friday, January 10th 2003: Freedom at Midnight: Human Trafficking in Romania

Undercover investigation reveals how young girls are being beaten, abused and sold for a few hundred of dollars in Bucharest’s back streets.

Paul Cristian Radu paulradu@crji.org

"Can I be sure you're not giving me back to them?" Diana whispered from the backseat of the car. "I’m scared.”
The trembling figure, huddled in a blanket against a cold Bucharest night, had only minutes earlier been just one of the legion of girls for sale in Romania’s human-trafficking market. Driven by fear, her words tumbled out, “They hit me. He stabbed me with a knife. You want to see the wound? I'm hungry. Do you like me? You want sex with me? Can I have your kids afterwards?
“I'll be a good wife. Do you want to marry me? You know, they starved me. Do you want me to take off my blouse? I need to eat something! Promise I will never be starved ever again? I want to smoke, too. And don't forget to buy me chocolate."
Diana - her name has been changed for the purposes of this story -cost us 400 US dollars. As part of a joint investigation by IWPR and the Romanian Centre for Investigative Journalism, RCIJ, we had just purchased her from a trafficker. A few days before, she had passed New Years Eve chained and freezing in a dog cage.
Now she was on the way to a shelter for victims of the sex slave trade. She could scarcely believe it - from a life of terror she was headed for a hot meal, warm bed, long bath and some human understanding, plus a chance for a new life.
Plucking Diana so dramatically from one world to another was the culmination of an extended investigation into the crime of forced prostitution and human trafficking in Romania. Driven in many cases by dire financial need, young women, such as Diana, are coerced into nightmare lives - tormented and tortured in Romania and sometimes sold on to indentured lives abroad in countries where they cannot speak the language or find any help. Only the extent of the crime compelled us as journalists to cross the line, rescue one of the victims and, in so doing, provide first hand evidence of the brutal trade.
Diana is also mentally retarded. She can’t read or write and suffers from what is termed the "street kids' syndrome" - not knowing when to stop eating. Before she was handed over to a women’s shelter, she consumed three Big Macs, two chocolate bars, three large sodas and then asked for more. But a few days on from her escape, her wounds - at least on the outside - were healing.

GOING UNDER.
Early last December, as part of a team of journalists, we attached hidden cameras to our bodies and entered the hidden world of the traffickers.
The idea for the project was to investigate the culture of police secrecy and complicity whereby glamorously code-named operations inefficiently targeted the human trafficking business, which seemingly continues to thrive in Romania. Despite tough laws against it, prostitution is booming in Bucharest. Newspapers, internet sites, city nightlife guides and many of the city's 10,000 taxi drivers all point you towards places where you can buy what they call "paid love".
Evenimentul Zilei, a Romanian daily paper, was planning to air a new investigative TV programme on the topic. RCIJ members who had worked for the title had already learned much about human trafficking, and were participating in a broader IWPR regional study into the issue. Information had been gained through law enforcement agencies, published reports and interviews with underworld figures involved in trafficking and with traffickers themselves.
The aim of this joint investigative would be to spark real public debate - and response - by focusing on the individual suffering caused by the crime, from a victim’s point of view. So a plan was devised to go undercover and record the whole story. One journalist would play the role of a foreigner and pretend to buy a girl. The foreigner ruse eased our entry into the world of the pimps, traffickers and middlemen. The foreigner needed a translator and so I took on this identity myself.
To the underworld figures we contacted through the course of the investigation, I was just another guy on the make, trying to get by. Two other two journalists were assigned to follow us unseen. They had the key role of watching over both of us, and monitoring the traffickers' movements.
More practically, we had to worry about our equipment, including hidden cameras, recorders and wires of various kinds, all of which had to pass unnoticed. At the same time, we would have to change videotapes and batteries from time to time, which limited our freedom of movement and sometimes spelled serious trouble.

THE SEARCH.
Our first encounter began with a taxi driver.
"Hi mate,” I offered. “My friend is a foreigner and he'd like to have some fun with girls tonight. Can you help us?"
"Sure, sir. Hop in. I know a girl you will like a lot,” the driver replied. “She's not one of those working the streets. No sir, she's a friend. She lives in a flat close by, near the national football stadium. She chooses her own clients. She's clean and young and she charges 800,000 lei (25 dollars) per hour at most. You can tell your friend that if he doesn't like this girl, we can go see some others."
The taxi driver was not aware that his car was being followed by another member of the RCIJ team, who was supposed to interfere if the situation got ugly.
But the situation didn't get ugly. The taxi driver was happy to take the money for the ride, even though the foreigner said he did not fancy the girl. The driver was only sorry he couldn't reach a friend who had other girls available. The pimp's mobile phone was turned off.
After visiting a few other places where prostitutes were available, we felt we had taken enough footage for the night. But we had nothing new. On videotape, Bucharest was just another illegal version of Amsterdam's famous red-light district. We tried to find cab drivers who would offer underage girls, but they all said this was too tricky.
Over the following days, we had similar experiences with hotel security men from four expensive Bucharest hotels. They all offered prostitutes and a discount price for the hotel room if we took the girls they offered. The girls were either in the hotel lobby or bar or just a telephone call away. The men said it was no problem if we brought in girls they did not know, though we would have to pay the full price for the room.
After a few nights, it was time to move from the streets and the front men to confront the system’s key figures: the traffickers themselves.

THE TRAFFICKERS.
The police car was just in front of us. For a moment, we thought we had been unlucky. We knew the Matasari neighbourhood, near central Bucharest, would be packed on a Friday night with pimps offering their services on street corners. And now the car bearing the number plate of the 8th Bucharest police station was just in front of us.
But to our surprise, the group of pimps on Pache Protopopescu Street did not vanish when officers pulled over, only 15 metres away.
Our curiosity grew, and we stopped the car when we noticed someone get out of the police car and join the pimps' gang. We stopped our vehicle too and the same man - the one who had got out of the police car - asked us if we would like a prostitute.
"Hi man. Would you like to try one for yourself,” he asked. “It's cheap and you'll be satisfied. Don't worry about the police. They're my friends." After briefly repeating the story about my foreign friend seeking some fun, I insisted the police car might get in the way. It had not moved, however, and the cops seemed uninterested in our conversation. At this point, the pimp wanted to deal directly with the foreigner. Tired of my complaints about the police presence, the pimp then called a friend who could speak a little English.
"Police. No problem. Police friends," the woman said, while urging us to follow her to an adjacent street where she and the pimp were minding the girls.
By now the group of pimps started shouting at us, so we had no choice but to let them get into our car and follow their directions. After a short drive through dark, narrow streets, they told us to stop. In front of an old rusty iron gate, we were told to wait.
One by one, the girls started coming to our car. They were shivering from the cold. The expressions on their faces were utterly indifferent, as if they could see through us. From then on, I noticed the same look on all the prostitutes' faces.
We decided to call the show off.
"Look man, you have really nice girls here,” I said. “But we have to go eat and we'll come back later. OK?"
"Sure. I can recommend you a restaurant just around the corner. You can take the girl there, too," the pimp said. He looked disappointed when we turned down the offer.
We took off in a hurry. It was enough for the night. We had decided Matasari was the right place to look for trafficked women, and returned a few days later. The first thing we had to do was avoid the same street corner where the pimps hooked us last time. We decided to head down the back streets and avoid the main boulevards.
Our plan paid off. We noticed a bearded little man smoking in front of what once had been a beautiful house in the "Little Paris" of pre-Second World War Bucharest. Now the house was only a memory of former times and the little man in his thirties, like the owner, probably did not care about architecture or history. We suspected that he was a pimp and trafficker, and made our approach.

THE DWARF.
"Do you have girls?" I asked.
"Yes, I do. Who's asking?" the man replied.
"This might be a little unusual. But I'm here with this foreigner and he is interested in taking a girl home for the holidays. You know Christmas, New Year's Eve. What do you say?" I said.
"So he wants her for a couple of months? Okay. Nice. Call me the ‘Dwarf’. Friends call me this. We could do good business. Come inside. I might have something for you," said the short, bearded fellow, pointing to a narrow corridor.
We followed him into a small, dark room that had no door but only a curtain leading off it. We were told to wait, until the Dwarf re-appeared from another room with a blonde girl in a miniskirt.
"Ask him if he likes her. She has no marks, no plagues. Tell your friend to touch her breasts to see they are firm," he said, slapping her bottom. The blonde did not say a word, though a bitter smile flashed across her face for a moment. I felt the poor girl had been humiliated enough and told Dwarf to go outside to discuss business. He let the girl return to the other room.
In the meantime, a taxi driver, who had parked his company cab in front of the house, came in and followed her. He was there for what Dwarf called a "quickie".
"You know what? Your friend can try her, too. I tell you she's good," Dwarf said, describing what she was capable of doing in graphic terms.
We had heard and seen enough. We told Dwarf we would return with money. But back in the car we found our battery, wires and recorder were not working, so that we had only poor quality images and sound on the mini-DV tape. We would have to go back. This time a third RCIJ member accompanied us, posing as the landlord of the apartment that the foreigner was renting and claiming he also wanted to see the girl.
Dwarf agreed and showed us the girl again.
"Hey, me and my wife have decided something. We are going to give you the girl for good. We're going to sell her to you for 300 US dollars. You pay the money and can do whatever you want with her," he said, looking straight into my eyes.
"Well,” I hesitated. “Let me ask my friend. We could be interested.” I enquired about her age, where she was from and whether she had identity documents.
"What do we do if the police question us about her? How do we take care of her? You need to tell us,” I said. “We're beginners and could learn a lot from you."
Feeling proud that he could teach us something, Dwarf started talking and this time the electronic recording equipment was working properly.
"If anyone questions you about the girl's age, you just say she's 18 and she has no documents because they were stolen. Just feed her, keep her in your apartment and don't let her outside unaccompanied. You'll have no problems. I didn't have any problem so won't have any either," the trafficker insisted.
After a further lecture about handling the girl, we told him we'd go get the money and be back in no time. As Dwarf and his wife approached our car, another RCIJ member - who had not left the car - got into conversation with Dwarf, asking if the girl he wanted to offer us was the one standing next to him.
"No, this is my wife," Dwarf replied coldly. The tension eased when I asked if he wanted payment in Romanian lei or dollars. He said it did not matter.
"Just don't make me wait too long," he said. "I'm not going to offer her to clients for two hours. This means I lose money if you don't come back." We took off and left Matasari. We had no intention of coming back.
It was still December, and we spent the next few days investigating in other parts of Bucharest. We talked to pimps, and almost every one had girls for sale.
A trafficker in the main Bucharest railway station wanted to sell us a girl for 1,000 dollars - indicating the price with broad marks sketched with his foot in the thick snowdrift.

RETURN TO MATASARI.
After the New Year, the logical next step for the investigation was, inescapably, to go through with a “purchase”.
No professional reporter would want to cross legal bounds or provide funds directly to criminals participating in the trade. But to get to the heart of the trafficking story, and provide images that could drive home the enormity of it all, we would have to return to Matasari.
For this purpose, the editor of Evenimentul Zilei handed us the equivalent of 600 dollars. We consented with mixed professional and personal feelings. But we felt the public interest, as well as that of the girl herself, were overriding. The girl, it was agreed, would be immediately released into the care of the NGO Reaching Out, which tends to prostitutes and sex slaves.
The final part of the plan was laid in place when Iana Matei, the director of the organisation, confirmed that she was ready to take in any girl we were able to rescue.
The NGO, which had started work in 1998, had so far taken in 74 victims of trafficking. Each spent about a year in a shelter, attending courses and gaining qualifications. The programme has been a success story, as only five girls have since returned to prostitution. One is now a psychology student at university.
A few days later we found ourselves back in Matasari, Dwarf's turf. This time, though, we hired two bodyguards to protect us.
I knocked on the door but nobody answered. Dwarf was not at home. But we located him not far away, on the street corner together with other pimps and prostitutes.
"Hi Dwarf! How are you? Get in the car!" I told him. With a superior smile on his face, Dwarf hopped in. The rest of the guys stared enviously, as Dwarf was driven away. The foreigner, Dwarf and I sat in the back.
"Hey man I waited for you two weeks ago. You said you'd come and you didn't? What happened? I lost money that night," the trafficker said, with a serious expression.
I cut in, "I apologise, something unexpected. . . . Anyway the past is the past. Let's get back to business. Do you still have the girl?"
"No man, I don't. I sold her,” he said. “And yesterday evening I sold another one. But what is this. Who is the driver? Is he a cop? I can sense he's a cop. What's wrong with you man? I liked you the last time. You came to me by yourself, no problem. But now? What's this?"
Dwarf was nervous. In a sense, he was right. The driver was an ex-policeman in the special action unit who’d left his job for a better salary in the private sector. I assured Dwarf that everything was all right and he had nothing to fear. Finally, he relented.
"It's God's will man. I put myself in your hands. I trust you because you seem all right. But I don't have a girl for sale tonight. Maybe you can come some other time. Just give me your phone number and I'll call you up when I have something," he said.
I insisted that the foreigner had the money on him and wanted to buy a girl that same night. Convinced, Dwarf agreed to take us to a few places where girls might be on sale.
"We'll start first with the place where I sold a girl the other night. Maybe I can get her back,” he said. “ You must come with me alone, without the driver or the foreigner, and you don't say anything. You'll pay me 400 US dollars for the girl and you don't care how much I pay myself for her. Agreed?"
I accepted and we set off. Unfortunately, these traffickers had sold her, too. But they told us who had bought her and we drove to another house, still in the Matasari neighbourhood.
We entered a house and an almost surreal scene presented itself. Dwarf introduced me to Bila, a drug dealer also in the human trafficking business. Bila was lying on a sofa with a needle in his left arm. He was so high he could hardly shake hands. He said he didn't know about the girl we were looking for.
"See man. I don't do drugs. Drugs make you look stupid. Isn't it better to just drink a good vodka and get drunk like hell?" Dwarf asked, nodding his head with disapproval.
The trail had gone dead, so I asked Dwarf if he knew other traffickers who might have girls that night. After a moment of hesitation, he said we'd better go to the main railway station area. We stopped our car very often in this new area and Dwarf, who seemed to know everyone on the street, finally came up with a lead.
"We'll go to Buric,” he announced triumphantly. “He has a girl on sale."

FINDING DIANA.
Minutes later, we met Diana inside Buric's house. She was on sale.
"The competition is so tough lately. They are bringing in beautiful girls from Ukraine and I'm losing my business," Buric's wife complained to Dwarf. She was carrying a baby in her arms. "Nobody wants my girls anymore. They'd rather pay extra and go with those long-legged girls. We're living hard times."
She talked very openly, as Dwarf explained that I was a good friend and that he wanted to buy the girl for himself. "OK, Dwarf, do you want her or not?" the woman asked, pushing Diana forwards into the light. She looked about 16 but the woman insisted she was 19. "She's not sick. The only thing is that she eats too much. She always asks for food," Buric's wife added.
We returned to the car, took some of the money and Dwarf paid the woman for Diana.
The temperature outside was minus five degrees Celsius and the girl was wearing only a thin skirt, high heels and no socks.
"Please give her a jacket or something. It's too cold outside for her," I told the woman who was counting her money after handing the baby to Dwarf.
"We don't have any other clothes for her. Don't you see we are poor? She won't die. She's used to cold," the woman replied without even a glance. Happy with the money she had got, she told us she could sell us some other girls, too.
We held Diana's hand going back to the car because the narrow street was covered with ice and she was stumbling in her high heels. She was confused and kept asking us what we were going to do with her. Dwarf assured her that she was going to be OK and that “her stars had just changed”.
We left the grateful trafficker in front of the railway station after he counted his money on our hidden camera. With the money in his hands he seemed relieved.
"Wow. Good. Good business. I was so afraid I'd be arrested. Give me your phone number and I'll call you when I have another girl on sale," he said. We declined and headed off.

GIMME SHELTER.
In the car, Diana burst into conversation. "Are you sure you're not giving me back to Buric? Who's going to marry me? Buric and his wife beat me, “ she said. “ He cut me with a knife. He kept me in the dog kennel on New Year's Eve. They forced me in there naked and it was so cold. I don't want to return there. Ever. Why did he turn this way? You're driving back to Buric. I'm scared. Please, don't give me back."
Diana continued to voice her fears throughout the one-hour journey to the women’s refuge in Pitesti. She was so confused that she couldn't believe she was on her way to a shelter where she would be taken care of. Sitting in the back seat, she offered the one thing she was forced to surrender continually while in the traffickers’ hands: sex.
She couldn't believe her eyes when we stopped at a petrol station and bought chocolate, sodas and cigarettes. She didn't even smoke but wanted to see if we would buy her everything she asked. I knew she did not smoke when she asked me to buy a cigarette brand that had vanished a long time ago. She ate the chocolate in seconds and asked for food.
Finally, we met Iana Matei. It was after midnight. She let Diana finish her Big Mac and fries before introducing herself. Then we all went to an apartment owned by the shelter organisation. It would become Diana’s home, shared with five other girls picked up from the streets, but - to her delight - including her own bed.
At the shelter, Diana started telling us her story. She had been on the streets for years since disaster struck her family in Timisoara, in western Romania and she was separated from her brother and parents. While working as a prostitute, a client had promised to marry her.
"But he never came back. I don't know why. I wanted to take care of him. I want to wash for my man. I want to cook for him. And I want six children. Twins." Diana said, while showing us the wounds from the chain with which she was beaten.
The shelter director explained that her story could be exaggerated. "It's normal that she would lie. Everybody lied to her and took advantage of her. Why would she even believe me when I tell her I want to help her?" Iana asked.
"Lots of people told her the same thing and they didn't keep their promises. I do believe what she said the pimps did to her. The chain wounds are there. In my experience, these girl only lie about their identity and background, not about what happened while being forced into prostitution," she said.
Diana is one of the toughest cases the shelter has handled. "She doesn't know to read or write. I cannot put her in a school. She never went to school in her life. She's also mentally handicapped so we're looking for a programme for children with special needs,” Iana said. The organisation is continuing to search for an appropriate full-time programme to care for her needs, while also working with the Timisoara police to try to track down her real identity.
The scale of human trafficking is immense. A recent OSCE-sponsored meeting in Skopje, Macedonia, heard how an estimated 200,000 women in the Balkans are victims of human trafficking each year, with the US State Department itself estimating last year that between 700,000 and four million individuals were bought, sold, transported and held against their will worldwide.
According to its latest Trafficking in Persons Report, published in June last year, the State Department found that while the Romanian government has improved its efforts to combat the cross-border crime “it still does not yet fully comply with minimum standards for the elimination of trafficking”.
It notes that Bucharest’s efforts to investigate and prosecute public officials involved in trafficking “remain limited”. And according to a Human Watch Report last year on Romania, the government’s response to both domestic violence against women and trafficking was “inadequate”.
For now, Diana is doing well at the shelter. She's helping the other girls with the cleaning and the cooking. Her case has not been solved entirely, but for the first time perhaps in years she is at last safe from abuse and is not being traded as if she were an animal.
Paul Cristian Radu is a member of the Romanian Centre for Investigative Journalism and coordinator of an ongoing IWPR investigative report on human trafficking across eight countries in the region.

The RAFO CONNECTION

Wednesday, October 8 2003: Organized White Collar Crime

The RAFO CONNECTION

By Paul Cristian Radu (paulradu@crji.org) and Valentin Zaschievici

The collapse of the BANCOREX, one of the leading Romanian state owned banks, in the late ‘90s, meant over 2 billion US dollars losses for the pockets of the Romanian citizens. Nowadays, the same people, the experts that led BANCOREX to disaster, regrouped and initiated new financial scams that led to enormous losses for Romania.
Our investigation went from Romania to Vienna, Austria, where, after the 2000 political election, the persons behind the BANCOREX collapse regrouped under the umbrella of a company that is active in the oil business. The results: a brand new hole, of thousands of billions lei, in the Romanian economy, two oil refineries on the edge of the bankruptcy and another bank that collapsed.

It’s a beautiful September morning in Vienna. The old Viennese Stock Exchange building opened up its gates for the people that arrive here, on bikes or in latest models of Mercedes, to start their business day. The corridors are invaded by people that stroll through the walls, through metallic plates that lead them to the offices of world’s most famous companies. On the right there’s Symantec, one of the leading anti-virus software’s producers, on the left it’s Reuters, leader on the news market, upstairs is Nikkei, the Japanese business symbol. The corridors on the ground floor lead us, though, to a wooden massive door, behind which lie the answers to Romania’s worst financial disasters. Behind the door there’s a decade of corruption and a group of people that masterminded the collapse of a big chunk of the economy. Next the door there’s a metallic plate on which it is inscribed:

*RAFO GMBH

The RAFO GMBH company has been established in November 2000, only one week after the PSD(which was the ruling party between 1989-1996) won the parliamentary elections and one year before the RAFO Onesti refinery(one of the biggest refineries in Romania, situated in the city of Onesti) was officially privatized.
The year 2000 was a very rough year for the RAFO Onesti workers. At that time, the refinery was still state owned and the workers were out on the streets, marching and shouting: “We want to work!; Onesti, don’t forget, RAFO is your chance!”. The conflict situation culminated when the revolted workers blocked a national road.
In the meantime, quietly, one thousand kilometers away from the protests, a deal, involving big names and big money, was done.

The Band of Ten in Wien

According to records from the Austrian Chamber of Commerce, the RAFO GMBH company has been established on the 20th of November 2000 and has its headquarters in the center of the Austrian capital, at Schottenring 16, in the building of the Vienna Stock Market. The president of the company, that has a social capital of 281,000 EURO, is the Austrian citizen, Levente Solyom. Also, in the company, there are: Corneliu Iacobov, Razvan Temesan, Andrei Serban, Toader Gaureanu, Gheorghe Chealfa, Marin Marin, Bogdan Iuliu Dumitrescu, Costel Bancila si Ioan Teodor Caramizaru. Together with them, in the RAFO GMBH, there is associated, as a juridical person, the RAFO Onesti, the Romanian refinery. In fact, RAFO Onesti holds 49 per cent of the company, while the majority, of 51 percent is held by Iacobov, Temesan and Comp.

The Financial Disasters Experts

Corneliu Iacobov. The Moldavian businessman is the owner of the RAFO Onesti refinery, that currently has 6,000 billion lei worth debts to the Romanian state. This is one of the main “black holes’ in the Romanian economy. Iacobov, also, led to disaster another refinery, the Darmanesti refinery, that had to close its gates because it has 3,000 billion lei worth debts to the state.
But Iacobov is one of the main sponsors for the ruling party, the PSD. He, officialy, contributed to the PSD 2000 electoral campaign with 75 million lei.
Despite the debts he has to the state, Iacobov is the owner of the only five stars hotel in Romania and is organizing the RAFO auto rally.

Razvan Temesan. He is nicknamed the “Bancorex Undertaker” but is considered by the Romanian president, Ion Iliescu, “one of the best qualified managers that the Romanian banking system ever had”. Temesan’s name is associated to the biggest banking collapse in the history of Romania that led to the disintegration of Bancorex and to the biggest financial loss in the history of the country: over 2 billion US dollars. Temesan had to do, as well, with the collapse of another bank, Banca Romana de Scont(BRS), for which he was the main financial consultant. The BRS file is currently pending between Supreme Court of Justice and the National Anti-Corruption Prosecution.

Levente Solyom. The name of the president of RAFO GMBH is linked to a loan that was taken, after Iacobov’s intervention, from Temesan’s Bancorex. The money was never returned.

Andrei Serban. His name is connected to a 300,000 US dollars loan taken from Bancorex on the same way like Solyom. Serban is also a PSD sponsor and Iacobov’s right hand.

Bogdan Iuliu Dumitrescu. He was a director of the Unirea bank and had to do with the collapse of this bank. The Unirea bank has been established by Iacobov, while he was the president of the Private Property Fund II(FPP II, the FPPs were early forms of privatizations in Romania, the FPP were established in order to manage the so-called “property coupons” that were given to all Romanian citizens and that meant the citizen is a shareholder of the State property.

Marin Marin. He was, until August 2003, the head of APAPS Bacau (this is the state agency that supervises the privatization process), the representative of the Romanian state. In 2001, when RAFO Onesti was bought by Iacobov, the state decided to erase the debts that RAFO had to pay. The state erased 3,000 billion lei debts and the refinery was, practically, given as a gift to Iacobov. This move can be better understand if we take into consideration the fact Marin Marin, the State representative, has been an associate of Iacobov even from 2000 when they established together RAFO GMBH. Despite this, right now, RAFO Onesti has more than 6,000 billion lei debts to the state.

Toader Gaureanu. He was, until three weeks ago, the general director of RAFO Onesti. Right after we questioned him about the RAFO GMBH affaire, Gaureanu left his position. He now works for a company that imports oil for RAFO.

All the Others. Are very colse to Iacobov’s businesses. They are all tied to the structures created around RAFO Onesti.


*A Complete Cycle of Corruption

The RAFO GMBH is one of the clearest examples of how the Romanian state is defrauded without anyone being made responsible for it. In fact, RAFO GMBH is the foreign link of a complete corruption circle.


THE FIRM. Our investigation found that the president of RAFO GMBH, Levente Solyom, has established a number of companies in Romania. Among these we identified the AUSTROM 95 SA, a company from the town of Tusnad, Harghita county, of which Solyom was a majority shareholder and president. According to the document 8.5.1.6 from the SIF Moldova(former FPP II, that was headed by Iacobov), AUSTROM 95 SA borrowed, few years ago, 470,000 US dollars from the Temesan’s Bancorex. The money was given to Solyom’s company after the FPP II guaranteed, under Corneliu Iacobov’s signature, for the AUSTROM 95 SA’ solvability. The money was never returned to the Bancorex and the bank collapsed because of the never repaid loans(of which lots were given under Iacobov’s signature) of the same kind.
THE BANCRUPTCY. Nowadays, the Romanian state sued the SIF Moldova(former FPP II) in order to recover the Bancorex money. There’s a little problem though: the AUSTROM 95 SA company has disappeared a while ago. It went bankrupt. This situation and the fact that Solyom is now associated with Razvan Temesan and Corneliu Iacobov in the RAFO GMBH company, points out the direct connection between the former BANCOREX president, the unpaid loans from this bank and the fact that Temesan is still compensated for his services. In fact, during Temesan’s presidency hundreds of loans were given to PSD officials, military and police officers and companies with strong ties to the PSD.
CLAIMS. It should be said that Razvan Temesan was arrested four short times for the Bancorex collapse. This happened during 1996-2000 government. He was tried in 17 cases. After the PSD came back in power, in 2000, Temesan was cleared in all this cases in a clear political move. After that, Temesan even declared that he’s going to sue the Romanian state to the European Court in Strasbourg in order to be repaid for the damages he suffered. So far, though, the compensations come through RAFO GMBH.

It should also be mentioned here that, while Corneliu Iacobov was the head of FPP II, he guaranteed for companies that took more than 20 million US dollars from Bancorex. This money was never returned. The money went on the same path as the money taken by Solyom’s Aust-Rom 95 SA. All the other companies erased their traces just like Solyom’s company so that the state can recover nothing.
THE SCHEME. As a conclusion we can say that RAFO GMBH is the place where the creditor-Temesan meets the debtor-Solyom and the intermediary-Iacobov. The three of them, backed by the state representative-Marin Marin, created a dirty business scheme that targeted BANCOREX, RAFO Onesti, the Darmanesti refinery, FPP II and other banks and finally defrauded the Romanian state of huge amounts of money.

*”It’s none of your business”

Very few of those involved in the RAFO GMBH affair wanted to speak about it. Corneliu Iacobov declined all our invitations and never answered his mobile phone. Our attempts to contact him through his business associates hit a stone wall, too. We managed to get on the phone Razvan Temesan but he told us that journalists should know that they should take into consideration “auto-censorship”. He told us that he is convinced that the investigation on RAFO GMBH is sponsored by his rivals. Temesan refused to tell us about the circumstances that led him to entering the business with Levente Solyom.
Levente Solyom declined to talk to us even when we went to Vienna. He told his secretary to tell us that he is on a business trip despite the fact that we saw him in Vienna. The night before he was in the courtyard of his fancy villa in the 19th district, the most expensive neighborhood of Vienna.
Marin Marin said he has nothing to tell us.
Andrei Serban said that, indeed he is associated in RAFO GMBH, but that he doesn’t know anything about this company.

Toader Gaureanu. The former general director of RAFO Onesti told us that our work is in vain because no newspaper will publish the story because the paper for newspapers is made at the Letea factory.(the Letea factory, the only factory for newspaper paper is owned by a person that is related to Corneliu Iacobov)

Private Interests

By Paul Cristian Radu

WASHINGTON, January 25, 2005 — Iosif Dan, a top advisor to Romanian President Ion Iliescu, explained in a recent interview with the Center for Public Integrity why he had accepted money from a petroleum company vying for a piece of the country's oil-privatization action.

"I have taken some money from these boys, as a loan, and this seems perfectly okay to me," Dan said. "Should I have gone to a bank that would give me money with … interest instead of going to these people? They are my friends."

The frank and surprising interview took place in the Cotroceni Palace , the headquarters of the Romanian Presidency. Dan is just one of several top Romanian officials who have connections to the oil industry.

With proven crude oil reserves of about 950 million barrels and with the largest refining capacity in Central and Eastern Europe , Romania , a nation of 22.6 million people, plays an important role in the European oil economy.

From the end of the Second World War until December 1989, when Romanian communist dictator Nicolae Ceausescu was executed, the Romanian oil industry was entirely State-run. Since then, it has been gradually privatized and restructured and its refining capacity downsized.

Romania is scheduled to join the European Union in 2007. Privatizing the country's main oil company, the National Petroleum Society, Petrom, is considered a vital part of that process.

Petrom is the biggest national oil company in central and eastern Europe. It is the main crude oil producer in Romania and accounts for roughly a third of Romania 's natural gas needs. It also has 700 retail stations and 146 depots, part of a national network that accounts for more than half of the total number of gas stations in Romania .

In 2003, Petrom's annual revenue was more than $2.7 billion. The company also does oil-field exploration in Kazakhstan , Iran and India and has a chain of gas stations in Hungary and the Republic of Moldova .

"Whoever owns Petrom has an important word to say in the economy, and whoever has an important word to say in the economy also has an important word to say in politics," Adrian Nastase, Romania's prime-minister, told the Mediafax news agency.

Not surprisingly, the privatization process, along with the country's standing as one of the biggest markets in Central and Eastern Europe, and its on-shore and off-shore oil and natural gas potential reserves, made it an attractive target for a slew of companies, including Gazprom, Shell, Halliburton , Lukoil, Total and Amoco, along with a handful of other smaller companies set up abroad by Romanian citizens.

Romania 's government announced plans in the summer of 2003 to privatize the company; the country received 15 bids. In the end, the Austrian oil giant OMV won the bid.

Running Petrom means navigating in one of the most corrupt business environments in Europe . In 2004, the international watchdog group Transparency International called Romania a country with "rampant corruption" and ranked it on the same level as the Dominican Republic and Iran , slightly ahead of Russia , Albania and Sierra Leone .

The report cites oil as one of the country's main corrupting factors. In fact, hundreds of investigations into financial fraud and political corruption have exposed the involvement of the post-communist government in the oil business and the direct involvement of Romania 's various intelligence-gathering services in the oil industry.
Petrol is Political Power

The privatization process in Romania was a tangled tale all its own, complete with plots and subplots that illustrate the intrigue of the country's oil politics. It involved the shadowy participation of a NATO officer ultimately convicted of forgery after other charges were dropped. In addition, one of the major bidders had apparent ties to the Romanian intelligence community, while a Romanian Foreign Intelligence Service officer seemed to be associated with the possible formation of privatization bidders. The cast of characters involved-sometimes with one another, sometimes acting on their own-clearly saw many opportunities for side deals in the privatization process.

Nothing particularly unusual occurred in the bidding process until the early spring of 2003, when a well-connected businessman, Ovidiu Tender-who controls a few major Romanian companies active in the oil services business and often accompanied the previous Romanian president in his official visits abroad-announced in an interview with the Romanian weekly, Capital , that his group of companies, Tender SA, would participate in Petrom's privatization. Tender also mentioned the two partners he would bring to the table: the U.S.-based company Halliburton and Willem Matser, a Dutch officer working in NATO's Office of the Special Adviser for Central and Eastern Europe and an author of studies on NATO-Russia relationships.

The announcement of Matser's involvement came as a surprise.

At the time, Willem Matser was known in Romania simply as a high-ranking NATO official who had chaired a meeting in September 2002 between intelligence officers from the defense alliance's member nations and from candidate-countries. As a NATO official, one would not normally consider Matser a potential investor in the country's economy.

In fact, however, the intelligence meeting, although announced as a NATO conference, was sponsored by private Romanian companies and businessmen. The meeting had been held in Snagov, near Bucharest , the Romanian capital. Among those sponsors two names stood out: Ovidiu Tender and his partner, Vasile Frank Timis, a businessman connected to companies active in the oil and gold mining industries in Romania .

Timis told the Center for Public Integrity that Tender had introduced him to Matser. He also mentioned he had contributed $50,000 towards the meeting, for which he got a receipt.

But what made Matser's involvement strange was not just that he was a NATO official. Days after Ovidiu Tender announced his interest in Petrom and his partners in this venture, Willem Matser was arrested in Brussels on suspicion of criminal conspiracy and money laundering, as well as forgery and fraud. Matser was subsequently charged with laundering $200 million of drug-trafficking money, alleged to be kept in a Colombian bank, along with the related fraud and forgery offenses.

Ultimately, the prosecution dropped the money laundering charge and failed to prove criminal conspiracy charges. The judge sentenced Matser in January 2004 to more than a year in jail for forgery. He was then released because the judge took into consideration that he had already spent roughly two-thirds of the sentence in pretrial detention.

The investigation of Matser led Dutch prosecutors to Romania , where prosecutors interviewed Ovidiu Tender about his business dealings with Matser. The inquiry revealed that Matser possessed forged bank documents related to Tender SA and had misused the name of the company in the transactions under investigation.

The Dutch investigation also revealed that Tender had strong ties to the Romanian intelligence community.

In written testimony to Romanian prosecutors obtained by the Center for Public Integrity, Tender described his connections to Matser:

"In April 2002, I was contacted by the head of the Presidential Administration, General Ioan Talpes, who is also the counselor on national security of the President of Romania and he told me that there is a high NATO official in the country who is willing to meet powerful Romanian businessmen...I agreed to meet Mr. Matser and Mr. Talpes arranged a meeting for me and Matser. We had dinner at the Hilton Hotel. This meeting was attended by myself, a general from the Romanian Intelligence Service and one general from the Romanian Foreign Intelligence Service."

General Ioan Talpes was, between 1994 and 1997, the head of the Romanian Foreign Intelligence Service. After that, he became State Minister for the Coordination of National Defense, European Integration and Justice.

According to Tender's testimony, Matser expressed interest in becoming a shareholder in Tender SA at the Hilton Hotel meeting. Following this meeting, Tender testified, he drafted a contract for Matser's review by which Matser would purchase an interest in the Tender SA companies. However, the Matser-Tender deal was never concluded.

Though the Tender SA transaction fell through, Matser still did business with the Romanian intelligence services. The Dutch company Tranwood NL, of which Matser is a shareholder, acquired 80 percent of the shares of a newly established Romanian company called Delta Holding SA. One of General Ioan Talpes's main advisors, Larry Watts, a historian and security issues analyst, also became a minority shareholder in the company.

According to Romanian officials, Delta Holding was set up after Matser vowed he would bring significant amounts of money to the Romanian economy.

"The secret services and high level politicians thought Matser was a blessing for Romania . They were so blind they didn't even check him. The fact he was working for NATO was a more than enough guarantee," an intelligence officer who asked for anonymity told the Center for Public Integrity.
A Triple Alliance

After Matser's arrest, the Tender SA-Halliburton joint venture continued its efforts to play a role in privatizing Petrom, without Matser. (In an e-mail sent to the Center for Public Integrity, Halliburton says that it has "no familiarity with Willem Matser, even by name.")

By the summer of 2003, a joint venture among Tender SA, Halliburton and the British company Regal Petroleum was set up to pursue participation in the privatization of the Romanian oil company.

Regal, a company listed on the London Stock Exchange's alternative market, was established by Vasile Frank Timis, the company's executive chairman. As mentioned earlier, Timis was one of the sponsors of the intelligence officers' meeting held in Snagov and chaired by Willem Matser.

Earlier in the year, in March 2003, Guenter Nolte, the managing director of Halliburton Europe, left the company to serve as chief executive in Regal Petroleum. Halliburton told the Center for Public Integrity that this move was not part of Halliburton's strategy for Petrom.

Regal and Tender were equity partners in the joint venture. According to Halliburton, it would have provided only technical, management and operational assistance, as well as organizational experience and assistance. The Halliburton-Tender-Regal offer was one of four bids rejected by the Romanian government in the first round.

Regal Chairman Vasile Frank Timis is a key person in Romania 's mining and oil industries. He was born in Romania , but fled the country during the Ceausescu regime and established himself in Perth , Australia , where he was twice convicted in the 1990s for possession of heroin with the presumption of intent to supply. In the mid 1990s he set up a few companies in off-shore havens including Jersey , the Channel Islands and Barbados , and came back to Romania to invest in the gold-mining industry.

The Regal company name appears in another chapter in Romania 's privatization saga, albeit only tangentially. A company that was once a Regal subsidiary, Central Europe Petroleum, became involved in the privatization of a refinery-a process that highlighted the connections between Romanian politics and control of the Romanian oil industry.
Privatized company, public debt

In March 2004, a former member of the Romanian Parliament and of the ruling party PSD (Social Democratic Party), Gabriel Bivolaru, was sentenced to five years in jail for embezzling about $70 million from Banca Romana pentru Dezvoltare (Romanian Bank for Development), a Romanian state-owned bank, now owned by French company Groupe Société Générale.

One month after his arrest, in May 2004, a Romanian group of oil companies, VGB, publicly acknowledged that the former MP was working for the group but "never was a shareholder in the group's companies." However, one of Bivolaru's close relatives and a former associate of his were shareholders in the group. The VGB group also stated, in the same public announcement, that, if Bivolaru could resolve his personal difficulties, he was welcome to join the group again.

The VGB group is associated with Ovidiu Tender's company, as well as with the daughter of Iosif Dan and with Dan's assistant (each of these two holds a ten percent interest in one of the VGB group companies).

The VGB group's name emerged in the autumn of 2003 when the company became, through a British company Balkan Petroleum, the largest shareholder of one of the biggest Romanian oil refineries, Rafo Onesti.

The refinery, previously owned by the state, went private in 2001 and currently owes more than $500 million to Romania , to Petrom and to other private companies.

Rafo's privatization is regarded as one of the biggest failures in Romania 's post-communist privatization record. The refinery was bought from the state by a group of companies led by a member of the ruling party.

Eventually, Balkan Petroleum (BkP) became the refinery's main shareholder and vowed to resuscitate it. The company notes that Rafo's debts were inherited from previous owners of the refinery.

According to BkP, the plan is to reorganize the refinery by transforming its debt to shares that would be handed over to the creditors. If the plan is approved, the Romanian State would again become the majority shareholder in the refinery that it privatized just a few years ago.

Company records obtained by the Center for Public Integrity show that BkP's shareholders are as follows: the Romanian VGB Invest SA, part of the VGB group with 50 percent of the shares, Central Europe Petroleum, an off-shore company from the Channel Islands , with 25 percent, and the London-based Acornline with the remaining. Central Europe Petroleum's previous name was Regal Petroleum Services, a company that was part of the Regal group of companies established by Vasile Frank Timis.

Timis, however, no longer owns Central Europe Petroleum. "It was a company that I established in the past and I have no connection with BkP," Timis told the Center for Public Integrity. "Mr. Tender asked me to help the representatives of Balkan, some banks and two to three businessmen from Romania, to incorporate the company. I sold them the company. I put them in touch with David Grannell." David Grannell, a British accountant, afterwards became a director of the BkP, a position he left after a few months.

Company records show that David Grannell is a chief financial officer of European Goldfields, a company Timis established, and is also associated in a British company, Inktrend PLC, with a former business partner of Timis.

BkP representatives denied having any business relationships with Timis and said in a letter sent to the Center for Public Integrity that "we have some business relationships with Mr. Tender."

Meanwhile, in the spring of 2004, the VGB group and Ovidiu Tender emerged in yet another chapter in Romanian privatization.
A National Security Issue

Early in 2004, the Romanian National Security Department issued a report "on the privatization and the present situation of the S.C. Petromidia S.A."

Petromidia is another leading Romanian refinery that was bought in 2000 from the state by the Rompetrol Group N.V., a company based in the Netherlands whose chief executive officer, Dinu Patriciu, is a leading member of the Romanian National Liberal Party (PNL). This is one of the main opposition political parties that challenged the ruling party, the PSD, in the November 2004 general elections.

The very lengthy report, of which a copy was obtained by the Center for Public Integrity, is signed by General Ioan Talpes, then head of the National Security Department.

The report followed an October 2003 emergency ordinance of the Romanian government stipulating that the more than $600 million-debt that Rompetrol, the biggest private company in the oil business in Romania, owed to the state budget be converted to bonds.

Representatives of the Rompetrol group said the $600 million represented "historical debt" that was inherited from the previous owner of the refinery-the State-and to which penalties were added.

The NSD memorandum stated that "Romania's government illegally converted the amount of over 600 million US dollars in bonds. ... Through the Government Emergency Ordinance 118/2003 the government accepts as legal an absolutely abusive and illegal privatization contract which has huge financial implications ... the government consents to selling a jewel of the Romanian industry at a very cheap price."

The NSD report calls on the Ministry of Finance, Ministry of Justice, Ministry of Economy and the Public Prosecution to analyze the Petromidia case and, eventually, to discuss the report on the Supreme Council for the Country's Defense, an organization that only gathers when Romania's security is at risk.

Shortly after the NSD report was issued the National Anti-Corruption Prosecution Office started an investigation in the Petromidia case.

Company records show that 25 percent of the Rompetrol group is owned by OMV, which is the Austrian company announced in May 2004 as the majority purchaser of Petrom, the national oil company. OMV in October announced plans to divest itself of its stake in Rompetrol.

The NSD report ignited a scandal, widely published in Evenimentul Zilei and other leading Romanian newspapers, when Rompetrol's CEO, Dinu Patriciu, said, at a press conference that Ovidiu Tender and the representatives of the VGB group had proposed to him that his company merge with the Rafo refinery in order to save Rafo from bankruptcy. He also claimed that he was also told that, if he didn't agree to the merger, there would be investigations of his companies that would lead to the Rompetrol group's destruction.

In a letter responding to questions asked by the Center for Public Integrity, Ovidiu Tender and the VGB group denied Patriciu's claim. They filed a lawsuit against Patriciu for suggesting that they had blackmailed him. That case is still pending.
In the President's Backyard

Iosif Dan, until recently a State Counselor and aide to former Romanian President Ion Iliescu, closely monitors the twists and turns in the Romanian oil industry.

"The day will come when these tensions will disappear and the parties that fight now will sit down and talk," Dan said in an interview with the Center for Public Integrity. "There's plenty of room for everyone under the sun and for us in the shadow with a steak and a cold beer."

He spoke openly about his political ties to the VGB group and to the oil business.

"These boys have gained a good position on Romania's oil business and this is very disturbing to others," he said.

He also added that he has never used his position in order to favor the VGB group, but said he went once with VGB representatives to an international bank. "I went once to Monte Carlo, and we talked with the president of the bank, not to get some money but to get a letter from them to prove our good behavior on the financial markets." He also said he had mediated a meeting between VGB and the representatives of the Ministry of Industry.

Iosif Dan's regard for the VGB group goes even further.

"The VGB group helped many, many poor families," he said. "There were desperate people who had serious illnesses or couldn't pay their rent. ... Considerable amounts of money were donated. This is not an excuse for the VGB group. It is, maybe, just the human side of this group."

"They are asked by me to help because, see, here come many requests for social help," he added. "There were very many cases when the Presidential Administration made investigations and concluded that people couldn't solve their social problems. These are people that went to various banks to save their situation and were denied and the Presidential Administration, through the president, doesn't have unlimited funds for social assistance. There is this mentality of people who say we will go to the president because he solves everything. They don't know that the president doesn't have these abilities, these rights. ... The VGB group were not the only ones to help. Many of my businessmen friends helped."

The previous Romanian President, Iliescu, didn't answer a Freedom of Information request, under the Romanian 544/2001 law, about the matter.

"We consider that this aid offered to people in need is not a subject to be used for propaganda," the BkP VGB Group said when asked by the Center for Public Integrity about their involvement in assisting the presidency in this matter.
Iosif Dan was voted in as a senator on the Social Democratic Party's slate for the November 2004 Parliamentary elections.

The Energy Moguls

Paul Cristian Radu - paulradu@crji.org

London. February 2005. The British Serious Fraud Office (SFO) inspects the headquarters of the London companies EFT and GML and confiscates some of their documents. In the meantime, the SFO investigation also begins in Luxembourg and Bosnia-Hercegovina.

Bucharest. December 2002: The Romanian Government closes a contract with the GML company for recovering Libia's debts towards Romania; these debts were accumulated through the exterior commerce activities with Romania during the Communist period and are evaluated to aproximately $152 million.

Bucharest. December 2002. A Romanian company and EFT close a contract for delivering the electric power produced by S.C. HIDROELECTRICA S.A, at Portile de Fier.

Portile de Fier. February 2005. The hydro-electric plant on the Danube goes partly out of order. The Ministry of Economy evaluates the damages at almost $4 million.

The range of events we have previously mentioned are mere reflections of a hidden world. But after a long investigation we are able to introduce you into this world where the tension reaches its highest peaks; a world where cards are held by a small number of people, who are fighting for the energy markets in the Balkans . This series of articles is meant to represent a radiography of this world where major business interests of the Balkan governments have entered the dealings of some very controversial individuals.

The exploitation of poor countries

An article published in the February issue of the British daily The Guardian made public some information that shocked the world of electric power commerce: a British company activating in the electric power field has been accused of exploiting poor countries in the Balkans and is investigated by the Serious Fraud Office for involvement in a potential case of corruption.

According to The Guardian, the SFO's investigation included searches at the headquarters of the companies EFT and GML. EFT is in fact an abbreviation of Energy Financing Team, while GML stands for Growth Management Limited. These two companies are related by the fact that they develop business in the Balkans, but also because a few years ago EFT separated from GML, a company that draws up financial projects.

EFT is, in fact, the main company that intermediates the electric power business in the Balkan area. EFT has contracts with the state companies that administrate energy in countries such as Romania, Greece, Serbia or Bosnia-Hercegovina and it intermediates the electric power sales in these countries . For instance, the electric power produced in Romania can arrive to Greece or Serbia if these countries have problems during some periods of the year (a.n.-for example, in times of drought, when the electric power plants run at low capacity) with producing the quantity of electric power necessary for covering the domestic needs.

SFO began their inquest in this case because EFT and representatives of the Electric State Company of the Srpska Republic (a.n.-region of Bosnia-Hecegovina where most of the inhabitants are Serbian) are allegedly involved in the embezzlement of $11 million. This amount of money represents the aid granted by the US government for supplying electric power to the Republic of Srpska (RS). The investigators of SFO and OHR (Office of the High Representative) claim that the money went illegally to some RS officials' bank accounts in off-shore areas such as Jersey and Channel Islands .

The investigation started off due to the initiative of the High Representative of the United Nations in Bosnia , Lord Ashdown. According to the article in The Guardian , the latter requested evaluations and audits, which mention the fact that some electric companies' officials have been bribed in order to close advantageous contracts of electric power exchange with some private companies.

EFT representatives declared: “EFT has not been contacted by the investigators during the inquest, nor have they been solicited to provide information for this inquest. Our company hasn't been given the possibility to answer to the problems raised by the investigators or to explain our business activities. EFT has become aware of the object of the investigations only by means of the mass-media.” In fact, EFT representatives claim that the investigators do not wish to clarify things by collaborating with their company. Moreover, they added that they have accused in court the inquest performed by SFO.

The Romanian partner

The documents that have been obtained (see the facsimile) show that EFT is led by the Serbian citizens Vuk Hamovic and Vojin Lazarevic together with the British James Gregor Nye. Lazarevic is an ex-minister of the government in Muntenegru, James Nye is a financial expert, specialised in risk management, and Vuk Hamovic is one of the energy moguls in the Balkans, a man who has very good relationships with persons in the governments in former Yugoslavia, but also from our country. These three men are in fact “white collars”, individuals who play with hundreds of millions of dollars throughout the world.

Moreoever, according to the documents that we have in our possession, Vuk Hamovic and James Nye have activated until 2003 and 2002 respectively in the executive board of the British company GML (Holdings) Ltd, which is a company also supervised by the inquest of the British authorities.

Both companies are also involved in business activities in Romania, where they have as partners either the State or some controversial persons. Among these business activities we can also mention the energy export to Greece, energy that is produced by Hidroelectrica SA.

Therefore, one of the most important partners of EFT in Romania is Energy Holding, which intermediates more than half of the energy sales of Hidroelectrica SA on the free market. The shares of Energy Holding are divided between the Swiss company Energy Consult SA and Atell Investments from Cyprus.

Documents of the Swiss Register of Commerce show that the sole manager of Energy Consult SA (a company founded in Fribourg at the end of 1997) is Nicolae Bogdan Buzaianu, a man with Romanian-Swiss citizenship; this company declares that its activity consists in: “counselling the companies and the governmental institutions, from Europe but not only, especially in the field of electric power.”

Buzaianu, one of the richest Romanian multi-millionaires in dollars, declared to us that he had indeed had business affairs with EFT and he also added that Serbians are very reliable businessmen, who have always complied with the terms established in the contract.
EFT also confirmed that they have ongoing contracts with Energy Holding in Romania and that they have also had such contracts with Entrade, Rom Electro and ATEL.

Buzaianu-Sorin Ovidiu Vantu-BID

Nevertheless, it would be very interesting to analyse Buzaianu's business connections. With respect to this issue, one of his companies in Switzerland has been co- shareholder with the company of the controversial man Constantin Iavorski in the management of Seven Trust. At the time when this partnership was taking place, Buzaianu was represented by HT Swiss Hydropower Technologies, a company that changed its name on several occasions, and is currently known under the name Aspell Magnus.

Iavorski, another mogul on the market of electric power commerce is an ex-minister of the Republic of Moldavia and a former associate of the Russian oligarch Roman Abramovich (who is, among others, the owner of the Chelsea London footbal team). Iavorski has been Abramovich's employee for the Swiss company Runicom, a company that has been accused of having embezzled European funds.

On the other hand, Buzaianu is a shareholder within a company in Great Britain, Medrose Limited (a consultancy company in the energetic field), along with two Cyprus citizens who are connected to other controversial affairs. Buzaianu is associated in Medrose with Maria Hassabis and Vaso Hadjiconstanti. According to “Adevarul”, Mrs. Hassabis has purchased the shares that the controversial businessman Sorin Ovidiu Vantu had had at the Bank for Investment and Development (BID), at a time when Vantu's accounts in Romania were locked up.

In 2003, one issue of Adevar ul mentioned that Vantu had sold 1,600,000 shares, which represents the almost 89% share that he owned at BID. At this point, we also need to mention that Ioana Maria Vlas, the mother of FNI (National Investment Fund), declared that Vantu had used the FNI money in order to found BID. Moreover, Vantu was sentenced to two years of prison for the BID affair, at the beginning of the summer. However, the Court of Justice subsequently decided that this case should be tried once again.

The same Mrs. Hassabis is a shareholder in the British company Bostina & Associates, a law firm that has its Romanian correspondent in Bostina and Associates. This law firm provides counseling for the modernization of the hydro-electric plants Portile de Fier 1 and 2.

Bostina and Associates haven't responded to the invitation of discussing with the press.

During interviews, Buzaianu claimed that he had no knowledge of any association whatsoever with Mrs. Hassabis. When faced with the documents that certified the association within Medrose , Buzaianu requested a one-week respite in order to clarify this issue. He subsequently requested another two more weeks. Nevertheless, the lawyer hasn't stated nor provided evidence for his position with respect to this case so far.

At this point we should say that Buzaianu also represented VA Tech, a company that ensures the modernization of the hydro-electric plants Portile de Fier, a process which faced a lot of setbacks until now, because the hydro-electric plant at Portile de Fier 1 has partly stopped working since the beginning of the year.

Moreoever, the modernization contract with PF is also under observation, since the sums contracted with VA Tech initially have been greatly exceeded.

Sorin Ovidiu Vantu claims that he does not know Maria Hassabis. He says that he has had various business deals which were assisted by several law firms. Vantu also added that he knows how the Romanian press works, claiming that this journalistic material is directed against him .

Libia's debts towards Romania

We shall now come back to the Serbian Vuk Hamovic, Buzaianu's business partner, and to the business that his companies have had in Romania.

On the 12 th of December 2002, the Romanian governement issued a decision signed by Adrian Nastase, prime- minister at that time. The government decision HG 1383/2002 stipulated that GML International Limited was commissioned with recovering the debts that Libia had towards the Socialist Republic of Romania. With that end in view , the government closed a contract with GML. According to the Ministry of Finance, the sum would add up to approximately $152 million, which represents an amount that Libia owes to Romania since the 80s.

In accordance with the law 544 of 2001 regarding the free access to public interest information, we have applied a petition to the Ministry of Finance in order to find out the current situation with respect to recovering these debts, as a consequence of GML's intervention. The Ministry replied that, during the 24 th and 25 th of January 2005 , the third meeting of the Romanian-Libian Financial Committee took place in Bucharest and that there have been discussions about the situation of Libia' debts towards Romania. The Ministry of Finance mentioned that during this meeting they noticed “the Libian authorities' attitude of denial with respect to some documents concluded between the two governments, a desire to postpone the negotiations for regulating the financial debts towards the Romanian government and, recently, making claims, without any justificatory documents, which could change the status of Romania from a creditor into a debtor state.”

T he Ministry of Finance says, two years after closing the contract with GML for recovering Libia's debts towards Romania, that Romania runs the risk of becoming itself indebted to Libia. It is a surprising step and we tried to solve the mystery by addressing a new petition to the Ministry, a petition in which we request a copy of the contract signed between Romania and GML. The authorities have put forward the fact that this contract represents classified information. The Ministry of Finance communicated to us that publishing this contract might “cause serious damage both to the Romanian state, as well as to the assisting c ompany, rendering thus the process of recovering the debts more difficult.”

A final key issue

At the same time that the reporters of the “Romanian Center for Investigative Journalism” were working at this investigation, more precisely on the 4th of May 2005, the company Energy Financing Team Romania SRL was founded in Romania. The company deals with “the distribution and sale of electric power” and it has as sole shareholder the Danish company EFT (Holdings) APS. The documents provided by the register of companies in Denmark show that the persons involved in EFT (Holdings)APS are: James Gregor David Nye, Svetislav Bulatovic and Bertil Bak Wogensen. The founder of the very same company is no one else but Hamovic.

Nigeria 's debts

Within the context of GML's involvement in recovering Libia's debts towards Romania , we should also mention another noteworthy episode, when GML was involved in recovering some Nigerian debts, which lay at the basis of the greatest scandal of this African country very rich in petrol . In 2000, the publication Africa Confidential mentioned the fact that the ex-president of Nigeria, general Ibrahim Babangida, was said to be involved in an operation of canceling the debts that Nigeria was having towards several countries and international institutions, an operation which made the members of the Babangida regime very rich , after a large sum of the 6 billion dollars entered into their accounts in Austria or Switzerland.
The same publication states that the operation had been led by two Americans: Robert Minton and Jeffrey Schmidt, who also appealed to GML during the transactions . Of greatest importance is also the mention made by Africa Confidential in March 2000 of the fact that Jeffrey Schmidt and Babangida met during some negotiations regarding the debts that Nigeria had towards Romania.