ReportAuthor: Iurie Chirinciuc, Member of the Parliament of the Republic of MoldovaAbout the situation at Banca de Economii, Banca Sociala and Unibank. Chronological reconstitution of the events and exposure of the hidden interests and the backstage actors.

2015

Iurie Chirinciuc Member of the BEM Investigation Committee

23.03.2015

Table of contents:

The history of BEM problems ...................................................................................................... 2

Following the report of the 2013 Reidman Investigation Committee ..........................................10

Integrity of the members of the „Investigation Committee for examining the procedure of

administration of the State shares at BEM and the measures undertaken for the stabilization of

the exchange rate for the Moldovan leu.” 2015........................................................................... 12

Deputy Chirinciuc’s proposal regarding the „Investigation Committee for examining the

procedure of administration of the State shares at BEM and the measures undertaken for the

stabilization of the exchange rate for the Moldovan leu.” 2015....................................................13

BEM Committee 2015. The situation of BEM, BS (Banca Sociala), and Unibank in the period

2014-2015 and the causes of the crisis on the financial and currency market in 2013. .............. 14

Conclusions and recommendations ............................................................................................. 18

1

The history of BEM problems

"Failures and missed opportunities during the modern times of Republic of Moldova would be caused by the corruption and Groups interests”

Mark Horton, ex representative of the IMF in the Republic of Moldova

Regardless of government, BEM („Banca de Economii” from Moldova) was always a temptation

for those at power!

In 1994 the State had a very comfortable situation in the structure of the shares of Banca

de Economii. Based on a secret „Sangheli Government” decision (HG no. 797 from November

1994), under the reason of necessity to redress the situation from the thermo energy sector, a

State credit is granted to the corporation Moldenergo. This credit was meant to be used for the

purchase of oil fuel for the cold season. Without any tender, Moldenergo signs an agreement

with the off-shore NefteGazGroup(NGG), based in Malta, which commits to deliver to

Moldova energy resources with total value of 50.000.000 USD (These resources were never

delivered to our country).

It is important to mention that at that period the representative of NefteGazGroup(NGG)

in Moldova was Mr. Grigore Cușnir..

Further, the off-shore NGG has created 3 new satellite companies: „TransWorldInvest”,

„Compas Inter” and „M-credit”.`

Based on a Government Decision (within „Sangheli Government”) no. 906 from 14

December 1994, which was NOT published in the State official newspaper „Monitorul

Oficial” and, therefore, illegal, the Ministry of Finance transfers on the account of the NGG

from „Union Bank of Switzerland Lugano”, the sum of 11.880.000 USD, and on 22 of December

1994, the sum of 15.000.000 USD. These and other Moldovan transfers were immediately

transferred to NGG and transferred immediately to the accounts of „TransWorldInvest”,

„Compas Inter” and „M-credit”. With the received money, the 3 companies create

„Petrolbank” (today EuroCreditBank) and fully acquire the 3rd emission of the BEM, finalized

at 22 of September 1995. In this way, on the State money, during a terrible financial crisis, the

shares of BEM were bought, and the States stay with only 14,19% from the shares of the bank.

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After the 3rd emission of the BEM, the joint venture „M-Credit” had 23,33 % of the

BEM shares, „Transworld-Invest” company with foreign capital - 28,33% and the insurance

company „Compasinter” - 8,03%, all the 3 of them being controlled by NGG company.

As a result of the illegal emission, the State totally loses the control on the Banca de

Economii, the President of the Council of the Bank becomes Mr. Grigore Cușnir, who had

before the function of President of the Supreme Economical Council of the President Petru

Lucinschi (The president of Moldova who have organized political coverage for the businesses

of Miron Shor. During the governance of Petru Lucinschi, Miron Șor was making money laundry

with fabulous sums, by using Duty Free type shops.). The vice-presidents of the BEM Board

were named Vadim Popov and Serghei Golic, citizens of the Russian Federation.

We want to stress out that Mr. Grigore Cușnir was a key element in the robbery of the

State and in BEM case from 1994, but he didn’t get any punishment.

In BEM and Petrolbank cases An Investigation Committee was initiated (déjà vu). This

Investigation committee has mentioned that the next officials are guilty of the BEM situation and

many other illegalities committed within the process of the construction and operation of the

mentioned financial institution:

- Andrei Sangheli, ex-prime-Minister of the Republic of Moldova;

- Leonid Talmaci, the governor of the National Bank of Moldova;

- Dumitru Ursu, vice-governor of the National Bank of Moldova;

- Ion Prodan, vice-governor of the National Bank of Moldova;

- Constantin Bulgac, ex-president of the Banca de Economii;

- Nicolae Surdu, ex vice-president of the Banca de Economii;

- Ceslav Ciobanu, ex Minister of Privatization and State Property Administration, today

Ambasador of the Republic of Moldova in USA;

- Valeriu Chițan, ex Minister of Finance;

- Andrei Cucu, today deputy Premier, ex-prime-deputy Minister of the Privatization and State

Property Administration;

- Iurie Badar, ex Minister of Privatization and State Property Administration, today adviser to

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President of the republic.

- Nicolae Luchian, deputy Minister of Finance.

Also based on the Report of this Investigation Committee, in 1998, at 17 of December,

the Government Ciubuc, with the deputy Prime Minister and Minister of Economy Mr. I. Sturza,

and Mr. A. Arapu as the Minister of Finance, approves Government Decision no. 1214e and

Government Decision no.78 from 2 February 1999, through which the State becomes the

majority owner of BEM having 56,1% of the shares. (Annex 1 and Annex 2). Government

Decision 1214e and its execution are being challenged on 30 of August 2012 by the communist

members of Parliament: Serghei Sîrbu, Oleg Reidman și Vladimir Vitiuc at the Constitutional

Court. (Annex 3).

Through this action the members of the Parliament are going against the State interests,

by challenging its right to have 56.1% of the shares. (But about this case we will go into details

in another chapter – about the integrity of the members of the Investigation Committee 2015).

In 2004, Mr. Gr. Gacikevici is taking over the lead of the BEM. He is an ex member of

the Board Directors and chief of the Market Operations Department within Investprivatbank

(bank that becomes, later, target of a forced insolvability and in 2009 is took over by BEM), and

who, together with its team from Invstprivatbank is executing the orders of his „stage directors”

which are the same regardless of who is in power.

We have to mention here that the BEM is the only bank where the State has a majority of

shares, and the representative of the State is the president of the Board of the Bank. Thereby,

BEM is used by the representatives of power as a tool for schemes of illegal taking over of State-

owned enterprises, bad loans and money laundry.

At 14.06.2005, Mr. Oleg Reidman, as an adviser of the President of the country on

economic matters, sends to President V. Voronin the secret letter 31 c/CE (made public later)

(Annex 4), through which he recommends the President Voronin to create a working group for

the modification of a large number of laws, in order to relax the legislation on the circulation of

money through the financial-banking system the Republic of Moldova. Thereby, here are some

proposals made by Mr. Reidman:

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The modification of the rules of opening and keeping accounts of non-resident entities

(modification that would facilitate money laundry through the banking system of

Moldova);

The modification of the law on money laundry (the movement of money through the

accounts of non-residential should not be a matter of control for our control bodies, they

have to be controlled only on request of the control bodies from the owner of the

account’s origin country and even in this case, only in case of a limited number of

arguments);

The liberalization of the requests for creation of the reserves for the accounts of non-

residents;

The approval of the special bank activity licenses for the Institutions that would serve

only the accounts of non-residents. The conditions for issuance the licenses have to be

simplified and without many claims about the amount of the capital.

All these modifications proposed by Mr. O. Reidman are facilitating the money laundry

through Moldovan banking system, transforming the system into a „regional laundry”.

After the positive answer of the President V. Voronin, Mr. Reidman proposes the list of

the members of the working group for the „problem of the financial system” from Republic of

Moldova. (the fact that it was difficult to make money laundry in the country before 2005 – was

an issue for some politicians). Thereby, based on Annex 4, we can see the members of the group:

Tarlev V.; Lupu M.; Lazări V.; Bondarciuc N.; Talmaci L.; Pop M.; Reidman O.; +Z. Grecianîi.

The members of this Working Group are the implementers and executors of the dirty plan of Mr.

Reidman.

This working group generated in 2006-2008 massive changes to the financial-banking

law, but also changes in the internal regulations of the NBM about the bank sector supervision,

about the security norms on tracking suspicious cash flows, also the Law about the National

Bank of Moldova and the Law on Financial Institutions. And by elimination of the Income tax

by the Minister of Economy up then - Mr. I. Dodon, the commercial banks escaped the only

tax they were paying. Thereby, canceling the income tax for legal entities lead to non-

reporting about suspicious transactions with „migration” of financial means of suspicious

origin – the best way to lose track of the money laundry transactions.

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Another modification made by the working group Reidman was the elimination in 2008

from the article no. 251 of the Penal Code of the word „pledged”. (article 251, old version: The

assimilation, alienation in cases not allowed by law, and concealment of the pledged goods,

leased goods, seized or confiscated goods, or their usage in other purposes, done by a person

that was in charge of those goods, by law, is subject to a fine from 1.000 to 1.500 conventional

unities or prison up to 3 years, in both cases with (or without) the right to have some functions or

any activity during the 3 years, and the legal entity is subject to a fine between 1.000 to 3.000

conventional unities without the right to have any activity). So, through entering into force of

this modification, those who assimilate, alienate or hide the pledged goods – are not anymore

under penal responsibility for their actions. The spirit of this law was immensely modified. If

hiding a leased and unpaid good is still a violation of the Penal Code, then why hiding a

pledged good is not ?

Together with the Penal Code modifications, another important part in the list of the

modifications (against the interests of the State) was the repeal of the Law on „State secret”

no. 106-XIII from 17.05.94 and its replacement with the Law on State secret no. 245-XVI from

27.11.2008. Thereby, the Law on State secret from 17.05.1994 chap. III, article 6(3) says:

considering an information secret is about establishing the rational character of the securitization

of some concrete information in order to avoid the endangering of the security of Republic of

Moldova.

Based on this provision all the information about the situation of BEM, BS and Unibank,

NPL, and beneficiaries would not be possible to be made secret, because this securitization is not

preventing, but is threatening the security of the Republic of Moldova. In article 12 (1) letter d),

of the law on State secret, from 1994 is forbidding the securitization of acts of Law violation,

inactivity and illegal actions of the State bodies and of people with responsibility functions in

State, if the disclosure will not endanger the security of the Republic of Moldova. In the context

of the 1994 Law the information presented to the Investigation committee ....would not be made

secret.

Through abrogation of the Law on State secret in 1994 and its replacement with the Law

245-XVI from 27.11.2008, the spirit of the Law is dramatically modified. Thereby, based on

the Law from 2008, chap. 2, article 6 (3) the augments for considering an information Sate

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secret are about establishing the rational character of the securitization of some concrete

information, of the eventual economical and other consequences of these actions, taking into

account the balance between the main State , society and citizen interests.

Next line (4), is also a non-sense formulation and it goes like this: the opportunity of the

attribution of information to State secret is about establishing some restrictions about the

access and spreading of those information be it while receiving/creating the info, or in

advance.

In the Law from 2008, in general the notion State security is missing, and the

securitization is not done not for avoiding the endangering of the State security, but for insuring

„the balance” between the interests of the State and the citizen.

Only now we understand the „reason” of this Law – covering the corruption activities and

endangering the State security. Only now we can understand fully the reasons of replacement of

the Law from 1994 with the Law from 2008.

This and other modifications of legal documents lead as a consequence to the situation

when economical operators affiliated with political people have access to some credits at BEM,

which only in 2011 are being classified as bed loans. (Annex 5).

NPL and the free transit of cash flow of suspicious origin is becoming an international

worry. Thereby, in 2012 CCCEC (today NAC – National Anticorruption Center) receives a

request (Annex 6), from Hermitage Capital Management LTD, company where the lawyer

Magnițki used to work – the person who have discovered many fiscal frauds in the Russian

Federation, about the investigation of the cases when Banks registered in Moldova were

implicated into cases about „money laundry at regional and international levels”.

In December 2012, the director of NAC have confirmed the initiation of prosecution and

also of facts exposed into the request letter, but he confirmed to be skeptical about solving the

„Magnițki” case in Moldova (Annex no. 7). From Chetraru’s words (annex 7), without the

intervention of the National Bank of Moldova, the Ministry of Finance of the Republic of

Moldova and other institutions, the implication of Moldova in this big case would of been

impossible.

At 06.02.2014, on www.anticorupție.md, having the main source on: www.deschide.md,

there is an investigation information about the connection between the case Magnițki and the

companies of Ilan Shor (especially insurance company „Moldclassica”), which, by chance or not,

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are registered on the same address with the company Introstyle Solutions LTD which holds

Știri Media TV (Publika TV station), but also some companies like: Nomirex Trading

Limited and Meridian Companies House LTD, implicated into money laundry between Russian

Federation and Moldova. (Annex 8).

As a result of various schemes of money laundry and NPL given by BEM, the institution

reaches critical cash insufficiency. Thereby, at 22 February 2013, through Parliamentary

Decision no 16, „an Investigation Committee is created to examine the administration process of

the State shares in „Banca de Economii” LTD and the situation from financial-banking sector of

the Republic of Moldova”. The president of the Committee is named Oleg Reidman, the person

who, in August 2012 was against the right of the State to hold 56% of BEM shares.

At 21 June 2013, there were discussions in the Parliament, within a closed meeting, about

the pseudo-report of the Committee, which was illegally published on the web page of the

Parliament and in mass-media on 26 June 2013. Without mentioning the very bad quality of the

report, one can see that the up-mentioned report doesn’t have any annexes, any signatures of

the members of the Investigation Committee, any registration number (these were the

reasons why we formulated many requests in order to find an authentic report).

We want to remind, that after the audition of this „Report”, the Parliament have adopted

the Decision no. 152 from 21.06.2013 (Annex 9). In this decision, in Article 4 it is mentioned

that: the Report of the Investigation Committee is being send to the General Prosecutor’s office

and the National Anticorruption Center, and they will, after further examination, report in

plenary. It is important to mention that until today this Article has not been executed not by

Prosecutor’s office, neither by the NAC (annex 10, the answer of the NAC on the request of

Member of Parliament - Chirinciuc and annex 17, the answer of General Prosecutor’s office on

the request of Member of Parliament – Chirinciuc).

Immediately after the publishing of the Reidman Committee Report in mass media, at

26.06.2013, the next day - 27.06.2013 the minority shareholders of BEM present the „offer” for

the bank recapitalization through the elimination of the State.

On 11.07.2013 there is a meeting of the Commission for developing commercial and

investment contests for privatization of public property, by the minutes (no. 34) of which comes

the decision:

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1. To accept the additional closed emission of shares without the participation of the State,

in sum of 80249700 lei, in the following conditions:

Granting by the minority shareholders of a loan of 600.000.000 lei;

Redemption by the minority shareholders of the NPL, together with the pledged goods

in total sum of 300.000.000 lei.

2. To make the task of the Ministry of Finance and the Agency of Public Property to sign an

agreement about granting the execution of the mentioned engagements under penalty of

nullity, with a strict supervision on respecting all the conditions.

We also want to remind that the meeting and the minutes of the Commission for developing

commercial and investment contests for privatization of public property were not legal because

BEM was not in the list of public property proposed for privatization.

At 12 July 2013, Friday late night, the Parliament adopts a list of modifications to the

Law 121-XVI regarding the administration and denationalization of public property;

modifications that were meant to give legal framework to all the illegalities towards the majority

of the shares belonging to the State. These modifications enter into force the 24 of August

2013 (important!).

Also at 12 July 2013, the Extraordinary General Meeting of BEM decides that the State

stys only with 2 members in the Board instead of 5, despite the fact that it had 56,1% from the

total of shares.

At 15 July 2013, Monday: the National Bank of Moldova confirms the new component of

the BEM Administration Board.

The same day, 15 July 2013, the Agency for Public property, near the Ministry of

Economy is expressing its approval about the increase of capital of BEM through additional

closed emission. The decision taken by the Agency can be considered illegal because Law 121 –

XVI was not yet into force, and Government Decision 414 approved on 21 June 2013 and

applied in BEM case could not be used without the modification provisions to Law 121.

Then on 2nd August 2013, it is decided the increase of capital of BEM through emission

of shares with nominal value of 5 lei per share (not even the inherent value of 35 lei), without

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the State participation, meaning that the State loses with the vote of the State the majority of the

shares in favor of a minority group of shareholders.

Following the report of the 2013 Reidman Investigation Committee

In the news and on the parliament’s website one can find a 17 page pseudo-Investigation

report assigned to the Reidman Commission. This so-called report doesn’t have either signatures,

a registration number, or an annex. These circumstances forced me to look for the document in

the Parliament’s Archives. Therefore, on 26.02.2015, in response to my request, the director of

the Informational Analytical department of the Parliament informed me that the reference

materials, including the Report of the Investigation Committee for examining the procedure of

administration of the State shares at BEM were never brought into the Archives for storage and

preservation (Annex 11). Under the circumstances in which the reference materials of the 2013

Reidman Investigation Commission are not in the Parliament’s Archives, I sent a request to the

Parliament’ Secretariat. On 03.03.2015, Madam Secretary Ala Popescu replied that „the

Secretariat doesn’t hold the documentation on the activity of the Investigation Committee for

examining the procedure of administration of the State shares at BEM, because it was never

brought into the Parliament Archives for storage and preservation.” (Annex 12)

To make sure that the reference materials of the 2013 Investigation Commission weren’t

classified, I sent a request to the person responsible for the Secret Service of the Parliament. As a

result, on 11.03.2015, Alina Iacub, HR manager, responsible for maintaining the secrecy regime,

answered: „the Parliamentary Decision no 152 from 21.06.2013, as well as the results of the

Investigation Committee for examining the procedure of administration of the State shares at

BEM weren’t submitted to the HR Department in order to be registered as sensitive secret

material.” (Annex 13).

Under these circumstances, I sent a request to the President of the Economy, Budget and

Finance Commission, the institution which was supposed to ensure the parliamentary control on

the implementation of the Parliamentary Decision nr. 152 from 21.06.2013 and which had to

have the materials of the Investigation Committee. As a response to my request no 8, Ștefan

Creangă, the President of the Economy, Budget and Finance Commission, replied under CEB 72

10

from 16.03.2015. Through this document I am informed that „the activity of the Investigation

Committee for examining the procedure of administration of the State shares at BEM and of the

financial-banking situation of the Republic of Moldova (2013) was classified and access to the

resulting documents is granted only to the Investigation Committee members.” (Annex 15)

This answer contradicts the one given by the person responsible of the secrecy regime in

the Parliament, who informed us that the documents and the report of the Investigation

Commission were not classified.

Meanwhile, I sent a request to the General Directorate of Parliamentary Documentation,

for them to provide us with a copy of the materials distributed to the Deputies meeting on

21.06.2013, during which meeting the Report of the Investigation Committee was presented and

Decision no 152 was taken. I didn’t receive any document, and the head of the Directorate, Mr.

Ganaciuc, informed us that „during the plenary meeting of 21.06.2013 it was decided that the

Decision no 272 from 18.06.2013 and the Report of the Investigation Commission should be

declassified and published on the website of the Parliament, thus all materials can be found

online.” (Annex 16).

Therefore, Mr. Ganaciuc confirms that the Report presented to the deputies is identical

with the one on the Parliament’s website. We want to remind you that the Report found on the

Parliament’s website is 17 pages long, doesn’t have a signature, a registration number, a stamp or

an annex and is identical with the one released in the press on 26.06.2013.

Given these circumstances and given the lack of materials and of the Investigation

Commission’s Report in the archives of the Parliament, we can conclude that a report signed by

all members of the Commission or at least by the president never existed, and the reference

materials of this Commission, as well as the reports of the institutions involved and the minutes

of the Commission meetings are gone and nowhere to be found.

Under these obscure circumstances, the question is how is it possible, in an institution

like the Parliament of Moldova, for the materials of a Commission that worked for 4 months to

investigate the situation at BEM in 2013, to just disappear?

These circumstances show the direct interest of the members of the Commission to

conceal the true situation of the BEM and the financial market situation in Moldova as a whole.

11

For these reasons, we believe that members of the 2013 Investigation Commission,

Mocanu and Reidman, do not have the moral right to be part of the „Investigation Committee for

examining the procedure of administration of the State shares at BEM and the measures

undertaken for the stabilization of the exchange rate for the Moldovan leu...”

Integrity of the members of the „Investigation Committee for examining

the procedure of administration of the State shares at BEM and the measures

undertaken for the stabilization of the exchange rate for the Moldovan leu.”

2015

First of all, I must mention that I repeatedly requested that members of the 2015

Investigation Committee sign an affidavit confirming the lack of conflict of interest. The request

was vehemently rejected by the members, especially by O. Reidman and S. Sîrbu, and the

President of the Commission, Mr. M. Răducanu, refused to put under vote deputy Chirinciuc’s

proposal.

As regards the integrity of the Commission’s members, we conclude the following:

O. Reidman and S. Sîrbu are the initiators of the 2012 complaint to the Constitutional

Court, contesting the State's right to hold 56.1% of BEM shares and wanting to cancel the

Government Decision from 1998 and to restore the 1995 situation, when the state held only

14.19% of the shares. Therefore, there is an obvious conflict of interest, which makes impossible

their membership in the 2015 Investigation Commission.

G. Mocanu was part of the 2013 Investigation Commission, a commission which

completed its work without a report signed by its members and which aimed to cover up the real

situation at BEM, and finally to deprive the State of the majority shares.

Ștefan Creangă, along with G. Mocanu, is a member of the Liberal Democratic Party,

the head of which is suspected of involvement in the money laundering schemes of 2013 -2014,

proved by the Liberal Democratic Deputy Mr. Ioniță in the findings of the Economy, Budget and

Finance Commission on 15.02.2014, no 472 (Annex 14). Therefore, there is an obvious conflict

of interest, which makes impossible their membership in the 2015 Investigation Committee.

12

Igor Dodon, as Minister of Economy, participated in amending the legislative framework

that allowed transforming Moldova into a regional money laundering system. Igor Dodon was

the one that eliminated the income tax for legal entities, the only tax paid by the banks in

Moldova, and by eliminating this tax banks were not obliged to prove their sources of income,

thus taking money laundry to a higher scale. Ms Z. Grecianîi, President of the Socialist Fraction,

was the one who, as Prime Minister, allowed Investprivatbank’s takeover by BEM, thus helping

significantly to hide irregularities committed by Investprivatbank and load BEM’s balance with

toxic assets. At the same time, Z. Grecianîi was part of O. Reidman’s working group on

transforming Moldova into a transit for money "traveling the world". In conclusion, Mr. Dodon

is in an obvious conflict of interest.

Accordingly, we conclude that an overwhelming majority of committee members are

directly or indirectly interested in hiding the real situation and manifest a conflict of interests.

The presence of compromised members in the Investigation Committee and the fact that

the majority of Commission meetings are closed, and the documents received by the

Commission are stamped "Secret", makes me even more convinced that the results of this

Commission are doubtful.

Deputy Chirinciuc’s proposal regarding the „Investigation Committee

for examining the procedure of administration of the State shares at BEM and

the measures undertaken for the stabilization of the exchange rate for the

Moldovan leu.” 2015

As a member of this Investigation Commission I brought forth numerous proposals, all

rejected by the other Committee members without being considered for voting. Among these

proposals are the following:

1. Proposal regarding the timeline investigated by the Commission. I insisted that

the period be extended at least from the Reidman Commission to the present day.

The proposal was dismissed, thus the investigated timeline was established

between 2014 – February 2015

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2. Proposal to all Commission members to sign an affidavit confirming the lack of

conflict of interest

3. I asked for a hearing with Kroll company representatives, for them to explain their

purpose and the objectives they had set for themselves in their work on the 3

banks

4. In accordance with the Parliamentary Regulation on Investigation Commissions,

Article 36, paragraph 1, it was requested to invite in the Commission Mr

Veaceslav Negruta - ex. Minister of Finance, and Veaceslav Ioniță – ex.

President of the Parliamentary Economy, Budget and Finance Commission, as

people who have information about facts or circumstances that may serve to

research the case. M. Răducanu, the President of the Commission, dismissed the

proposal and refused to put it under vote

5. Investigation Commission hearing of the present Minister of Economy (Stephane

Bride) and owner of Grant Thornton, the company which audited BEM, Social

Bank and Unibank in 2014, and approved the balance sheets of these institutions

BEM Committee 2015. BEM, BS and Unibank situation between the years

2014-2015 and what caused the crisis on the financial currency market in

2013.

Although the Supreme Court of Justice has decided at 27 of November 2014 the taking over by

the State of the 56% of the shares of BEM, anyway, these modifications were not operated into

the State Real Estate Register. Although BEM was completely robbed, through the decision of

the Court, the State has to give back the sum of 80,2 million lei to the Russian investor –

Vneshkombank..

In order to identify the causes of the crisis from the financial-currency sector in the

Republic of Moldova from January - February 2015, we have studied a large number of

documents. The most relevant are being presented here, together with the rigor remarks and

conclusions.

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At 16 April 2014, the president of the country - N. Timofti is being informed about the

conclusions of foreign experts (experts of the IMF) about the problems form the financial-

banking system of Republic of Moldova. Thereby, the President was informed about the

observations of the experts:

Moldovan banks are exposed to major risks because of the violation of crediting rules

established by the National Bank of Moldova about big exposure of the banks;

The measures against money laundry are totally missing within the banking system and

during one year through Moldovan banks suspicious operations to off-shore zones have

been carried out with a total amount of 1000 billion lei). This sum came out of the Anti-

Corruption Center service of money laundry, but was not confirmed by the National Bank

of Moldova (they say about a sum of 250 billion lei);

State enterprises have loan agreements and are in this context in danger. We speak here

about enterprises like: Railway, Cricova, Aroma, Apă-Canal, etc;

80% from the bank market in Republic of Moldova is concentrated in the hands of

Russian Federation financial environment or related to it and big financial attacks can

be created in these circumstances, with great impact on the national economy. In the

same time, in the document it is mentioned that taking into account the intention of

Vneșeconombank to purchase 25% form BEM shares, the up-mentioned risk becomes

very real.

At 3 December 2014, The Premier is informed about the fact that BEM doesn’t have liquidity

for its normal activity because about 6 billion lei were converted into foreign currency and were

placed into the Russian Federation’s banks.

At 13 of January 2015, Iurie Leancă is informed about the stages of the scheme about

robbing the 3 banks. Thereby, first the money from the 3 banks are placed into the financial

institutions of Russian Federation, then the transfer of all the placements from Russian

Federation to Social Bank (Banca Sociala) is performed, the total amount only from BEM being

10,8 billion. Later, on 25-26 November 2014, the interim president N. Rahuba grants credits in

sum of 13,6 billion lei to affiliated companies of Ilan Shor: Danmira SRL, Davena- Com SRL,

Voximar-Com SRL, Contrade and Caritas Group. The National Bank of Moldova (BNM) did not

intervene in order to stop the inter-banking placements from 25-26 of November offering the

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following reason for that: beginning with 25.11.2014 Banca Socială had stopped the daily

reporting. In those conditions, the BNM had an excuse, but no excuse for the Money laundry

prevention and fighting Service within the National Anticorruption Center, which had to block

the currency transfers.

Immediately after granting the credits, the money of the mentioned companies „went” to the

off-shore „Fortuna United LP” (from Great Britain). Then, the total credited amount was

transferred to off-shore jurisdictions. And in order to remove all traces, the file with financial-

banking documents is being destroyed ( files about crediting, credit agreements and other papers

referring to the placements to Russian Federation) by setting fire to the car (transporting the

documents) belonging to the company „Klassica Force” ( Ilan Shor company, the link-ul).

After these schemes, the possible prejudice for BEM, Banca Socială and Unibank goes up to

17.6 billion lei.

At 28.11.2014 the Board of the national Bank of Moldova has decided to name a special

administrator of the bank – Mr. Ion Ropot. We have to mention here that Mr. Ion Ropot was

suggested by the Liberal Democrat Party of Moldova in the position of deputy-governor of the

National bank, but he became the chief of the Special Administration department at the national

Bank. He is the son of Mr. Nicolae Ropot – chief of the department of LPA in the Council of

Sangerei Raion, also member of LDPM.

It is being said that Mr. Ion Ropot was the person who (while being special administrator of

the Investprivatbank) insured the selling of the headquarters of Investprivatbank to a business

partner from Iasi (Romania) of Mr. Vlad Filat.

At 17 February 2015, the President of the Parliament - Adrian Candu is informed about the

real causes of the „huge” depreciation of the national currency. Thereby, as main causes the

following arguments are brought:

1. Suspicious transfers in 2014 from the Russian Federation in sum of more than 100 billion

Russian rubles to Commercial Bank „Moldinconbank”, which were later converted into

USD and euro and then transferred to off-shore companies and then back to Russia;

2. Suspicious credits granted to Ilan Shor companies in total sum of 13,6 billion lei; money

that were converted into foreign currency and transferred later to off-shore companies.

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3. The migration of the deposits from Moldovan lei intro foreign currency and the

speculations of the currency exchange points that were refusing to sell liquidity (even if

they had the money available).

The sum of all the big exposures of the 3 banks during October - November 2014 is

exceeding 5 times the Total Regulatory Capital. The National Bank’s Regulation about big

exposures (approved in 09.12.2013) says that: exposure means any asset or/and any extra

balance element reflected into the balance or/and outside the balance which can be subject of a

risky credit (the risk that the debtor or/and the contracting part would not be able to fulfill

the obligations towards the bank).

The Board of the national Bank of Moldova approves on 27 of November 2014 the

decision to grant an emergency credit to BEM (5,273 billion), Banca Socială (2,8 billion) and

Unibank (1,353 billion). This decision was taken based on the minutes no 2/2014 from 7

November of the National Committee for Financial Stability and based on the Secret

Government Decision from 13 November 2014.

So, the urgent credit was granted by the State and the obligations emitted by the Ministry

of Finance are due on 27 of March 2015.

Referring to this, we can suppose that on the due date (27 of March 2015) the sum of

9434 million becomes a public debt with an interest rate of 13% annually.

If to speak about solutions for the 3 banks, there are 2 options: recapitalization or

liquidation. Thereby for:

BEM

1. Recapitalization can be done with a total sum of 12,5 billion lei

2. Liquidation cost - 10.5 billion lei

For Banca Sociala

1. Recapitalization can be done with a total sum of 18 billion lei

2. Liquidation cost - 3 billion lei

For Unibank

1. Recapitalization can be done with a total sum of 2,6 billion lei

2. Liquidation cost - 2,4 billion lei

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From the above mentioned we can suppose that for the recapitalization of the 3 banks, we

would need approximately 33,1 billion lei, and the liquidation of the 3 banks would cost us 15,9

billion lei.

Conclusions and recommendations:

Based on the study of the presented materials and the auditions within the Investigation

Committee, we can formulate the following conclusions:

1. BEM problems start in 1994, when, through Sangheli Government Decision the State

stays with only 14.19% of the BEM shares and with the granted credits (by the National

Bank) in sum of 14,33 million lei (1dollar = 3,5 lei);

2. Non-performing credits and money laundry through the bank system of the Republic of

Moldova start to grow already in 2005 and coincide with the reforms proposed by the

economic adviser of the President V. Voronin – Mr. O. Reidman. (Annex 4);

3. BEM and other banks from Moldova and senior officials are implicated into money

laundry schemes including into Magnițki case;

4. The additional emission for BEM, organized in summer autumn 2013, was made with

severe violation of procedure and of Law into force, including under the cover of some

State institutions;

5. The Report of the Investigation Committee created at 22 of February 2013 and lead by

Mr. O. Reidman and also the documents related to it are not to be found in the Archives

of the Parliament;

6. Parliamentary Decision no. 152, article 4, about the Reporting in Plenary of the

representatives of the General prosecutor’s office and of the Anticorruption Center about

the Investigation Report was never executed;

7. The members of the „Investigation Committee for examining the procedure of

administration of the State shares at BEM and the measures undertaken for the

stabilization of the exchange rate for the Moldovan leu...” 2015 are in a high conflict of

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interest and at least from the moral point of view they don’t have the right to be part of

this Committee;

8. Robbery of BEM, BS and Unibank represents a continuation of the money laundry

scenarios and bankruptcy of the Bank Institutions, planed long time ago;

9. All the State Institutions (The President of the country, the Prime Minister, the national

Bank of Moldova, the Minister of Finance, the National Committee for Financial

Stability, the Agency of Public property) were informed in time and constantly about the

risks in the financial and banking sectors of the country, but they did not fulfill their

obligations in order to prevent the robbing of the banks;

10. The general view on the events from November 2014 related to BEM situation is the

following:

7.11.2014 – the secret meeting of the National Committee for Financial Stability

where it is decided the allocation of a credit granted by the State for BEM, BS and

Unibank;

13.11.2014 – Leancă Government adopts Government Decision no.938-11 ss

(based on the Law about State secret this Decision was declared as secret for a

period of 25 years) through which the Ministry of Finance grants with obligations

emitted for 4 months a credit of 9,434 billion lei;

On 25 and 26 November 2014 - BEM, BS and Unibank allocate credits in total

value of 13,6 billion lei;

27.11.2014 – the Supreme Court of Justice takes the decision about the State

reentering into possession of the 56,1 % of the shares and must return the sum of

80.2 million lei;

27.11.2014 – the Board of BNM decides upon the emergency credit;

27.11.2014 – The fire accident of the car transporting documents regarding the

credits from 25-26 November 2014. (Reminder: the car belonged to „Classica

Force” – Ilan Shor’s company).

This chronology makes us conclude how well were „directed” all the actions that happened at

this bank. We see the implication of important State people in this case as a danger for the

National Security.

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11. At 25-26 November the situation of BEM, BS and Unibank was already critical (at 7

November the National Committee for Financial Stability is confirming this fact and on

13 November the Government decides to grand an emergency credit), despite this, none

of the State’s Institution intervene for blocking the 13,6 billion lei credit;

12. Later, the massive purchase of currency by the credited companies was not blocked and

also the transfers to off-shores were done with no impediments;

13. The credited companies are related or in possession of Ilan Shor. And also these

companies are the ones places huge requests of foreign currency in the period October

2014 – February 2015. Nevertheless the transactions were not stopped;

14. The companies Provolirom LTD, Caritas Group LTD and Dracard LTD are present in the

schemes from November 2014 and in the schemes presented by Mr. V. Ioniță within the

Meeting from 15 September 2014, registered under number CEB 472 (annex 14). Based

on the date provided by Mr. V. Ioniță, the up-mentioned companies were credited in

June, July 2014, and later, through the off-shores the money reached in the account of the

company „Caravita Co” LTD, belonging to the nephew of Vlad Filat. Thus we can

suspect that also in the case of the credits from November 2014, together with Ilan Shor,

Vlad Filat is also implicated;

15. The crediting files and agreements, but also other documents about money movement to

Russian Federation – all was destroyed in the fire car accident (belonging to „Klassica

Force” insurance company of Ilan Shor);

16. The prejudice of all these schemes can be much higher than the sum of 17,6 billion lei,

indicated in the information presented by the Security Service office. We can say that the

total prejudice would be 33,1 billion lei (sum needed for the recapitalization of the 3

banks);

17. In non-performing crediting schemes also other Moldovan banks can be implicated; their

credits could not be correctly classified taking into account their risk degree;

18. The real cause of the national currency depreciation between January and February 2015

is the high and sudden number of requests for foreign currency conditioned by the

crediting granted in November 2014 in total sum of 13,6 billion lei, but also by money

laundry of the 100 billion rubles through „Moldinconbank”, during the year 2014. One

more reason is the massive conversion of lei deposits in foreign currency deposits;

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19. The high vulnerability of the banking system in the Republic of Moldova is conditioned

also by the direct and indirect possession of the Russian Federation of 80% of the assets

of the local banks. However, this argument did not prevent the State from ceding in

autumn 2013 25% from BEM’s shares to Russian bank Vneșeconombank;

20. There is yet not clear why the National Bank of Moldova admitted the creation of panic

on the currency market and why the 50 million USD intervention placed on the market

coincided with the day when the new Gaburici Government was voted;

21. Because of the fact that the problems from the banking system of our Republic are still

not solved, we can witness some repeated currency shocks, maybe even bigger than in

January – February 2015;

22. Making the information about the Committee’s activity and the BEM situation secret has

the purpose to cover-up the illegalities committed. Also this was the reason to cancel in

2008 the Law on State secret from 1994;

23. There is a necessity to investigate the implication also of „NefteGazGroup”, the company

that damaged the State budget in the `90 and pretends in 2012, based on a Decision

signed by the Government in 1994, the rights for a field of 25ha from the Municipality of

Chisinau in Grenoble Street;

24. We can conclude that the robbing of BEM was the main reason for taking out from

Governance the Liberal Party, determining the creation of a coalition with the

Communist Party.

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