Identifier
Created
Classification
Origin
05BUCHAREST1123
2005-05-12 13:46:00
CONFIDENTIAL
Embassy Bucharest
Cable title:  

BASESCU AND HIS GOVERNMENT TACKLE CORRUPTION

Tags:  PTER PGOV PREL KDEM ECON SOCI KCRM RO 
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C O N F I D E N T I A L SECTION 01 OF 04 BUCHAREST 001123 

SIPDIS

DEPT FOR EUR/NCE - WILLIAM SILKWORTH

E.O. 12958: DECL: 05/06/2015
TAGS: PTER PGOV PREL KDEM ECON SOCI KCRM RO
SUBJECT: BASESCU AND HIS GOVERNMENT TACKLE CORRUPTION

REF: A. A) BUCHAREST 1003


B. B) BUCHAREST 0835

C. C) BUCHAREST 0658

D. D) 04 BUCHAREST 3293

Classified By: POLITICAL SECTION CHIEF ROBERT GILCHRIST FOR REASONS 1.4
B AND D

C O N F I D E N T I A L SECTION 01 OF 04 BUCHAREST 001123

SIPDIS

DEPT FOR EUR/NCE - WILLIAM SILKWORTH

E.O. 12958: DECL: 05/06/2015
TAGS: PTER PGOV PREL KDEM ECON SOCI KCRM RO
SUBJECT: BASESCU AND HIS GOVERNMENT TACKLE CORRUPTION

REF: A. A) BUCHAREST 1003


B. B) BUCHAREST 0835

C. C) BUCHAREST 0658

D. D) 04 BUCHAREST 3293

Classified By: POLITICAL SECTION CHIEF ROBERT GILCHRIST FOR REASONS 1.4
B AND D


1. (SBU) Summary: Four months into its tenure, Romania's
center-right government has taken cautious but concrete steps
towards combating Romania's widespread corruption, its key
campaign pledge. This includes passing anticorruption
legislation and indicting several businessmen allegedly
involved in notorious corruption cases, who experts claim
were previously shielded from prosecution by the former PSD
government. Despite these initial steps, critics point out
that a major anticorruption case has yet to be prosecuted
under the new leadership. President Traian Basescu and his
team will be challenged to reform Romanian institutions and
fundamentally change a political and economic culture in
which corruption is an integral and even expected component.
Their job is all the more difficult given that the EU may be
obstructing some needed reforms. End Summary.

Fighting the Corruption Battle: Matching Words.....
-------------- --------------

2. (SBU) Throughout Romania's 2004 electoral campaign, then
presidential candidate Traian Basescu and the leading members
of his Liberal-Democratic (PNL-PD) alliance made corruption
the central plank in their platform. Recognizing the strong
concern corruption remained to voters and the vulnerability
of the then governing Social Democratic Party (PSD) on the
issue, PNL-PD insiders told post that Basescu made a point of
raising corruption in "every stump speech and at every press
appearance he could." When he met cheering crowds on
December 13 to announce his impending electoral victory, he
stated that "corruption is a threat to national security,"
and promised to make anticorruption the top priority of his
government. In his inauguration speech on December 20, he

stated: "We cannot talk about joining, with dignity, the EU,
without solving the major problems of Romania: corruption and
poverty.... Today, high-level corruption is one of the
greatest dangers to national security." Basescu made this
anticorruption commitment repeatedly to the international
community. He pledged to the foreign diplomatic corps
January 18 to "solve Romania's persistent corruption,"
finally translating "words into deeds." Prime Minister Calin
Popescu-Tariceanu and others in the new cabinet have
similarly used strong language to underscore the importance
of the anti-corruption fight.


3. (SBU) Among Basescu's early stops as president were the
key institutions charged with combating corruption -- the
Intelligence Services, the Ministry of Interior, the National
Anticorruption Prosecutor's Office (PNA),and the Supreme
Magistrate Council (CSM). At each stop, Basescu reiterated
that anticorruption was his top priority and instructed the
institutions to improve their efficiency and interagency
cooperation. He told the Romanian Intelligence Service that
it must provide substantial information about corruption
sources and share such information with anticorruption
agencies if it is to be effective in eliminating corruption
from the Romanian government. In addition, Basescu has
expressed his desire to establish an "intelligence community"
in Romania, so as to enhance interagency information sharing
on corruption and other domestic national security concerns.
He told the PNA it must concentrate efforts on tackling
large-scale cases, lamenting that the majority of those
pursued were insignificant when compared to the magnitude of
Romania's corruption problem.

.... With Deeds
--------------

4. (C) By declaring corruption a national security concern,
Basescu thereby brought the issue under the purview of the
presidency and the Supreme Council of Defense (CSAT) -- the
interagency council comprised of the President, the Senior
Advisors, the Ministers of Defense, Economics, Foreign
Affairs, Interior, and the Chairs of the intelligence
services. The parliament's adoption of a National
Anticorruption Strategy ) which Basescu has stated he will
put before the legislature by the end of June ) will serve
to firmly anchor corruption legally as a national security
concern. Furthermore, as an issue within the CSAT, Romanian
intelligence services can now be tasked to collect
information domestically on potentially corrupt individuals
(Ref A). (Note: This is a controversial issue within
Romanian society, and as such, Basescu appears to be moving
cautiously. Transparency International Romania (TIR) has
argued against using intelligence services to combat
corruption, arguing that the services themselves are likely
afflicted by corruption. TIR opines that using intelligence
services will actually complicate the prosecution of
corruption cases by introducing additional procedures to an
already lengthy prosecution process. End Note.)


5. (SBU) The new PNL-PD led coalition under the direction of
Prime Minister Tariceanu made passage of key anticorruption
legislation a centerpiece of its first 100 days in power.
That effort included:

-- A bill introduced on 3 March to revise the wealth
disclosure procedure for more detailed picture of total
income and income sources for all public officials. The
Senate, largely due to efforts of opposition PSD members,
drastically weakened the proposal on 21 April. The bill has
now moved to the Chamber of Deputies, where additional
changes are expected. (Note: The Senate's act was symbolic,
as full authority for this measure rests with the Chamber of
Deputies. See septel. End note.)

-- An emergency ordinance * passed by the Chamber of
Deputies on 29 March * to eliminate penal immunities of
former ministers. It is now before the Senate for approval.

-- A law passed by both chambers as of March 31 to eliminate
penal immunities that public notaries had previously enjoyed.


6. (C) While the former PSD government similarly passed
extensive anti-corruption legislation, PNL-PD Minister for
Parliamentary Relations Bogdan Olteanu asserted to PolChief
that "the big difference now is that the current government
actually plans to enforce the laws." Critics reply that it
is still too early to tell if PNL-PD will emerge with a
better legislative record on corruption than the PSD. Other
proposed legislation currently under discussion include
judicial reform, specifically the monitoring and verifying of
public officials' wealth and interest declarations. The
government has expressed hope that this mechanism will be in
place by July 2005 (See para 14).

A New National Anticorruption Strategy
--------------

7. (SBU) At the same time the new cabinet, to comply with an
EU requirement, established on March 30 a government-wide
National Anticorruption Strategy (NAS) for 2005-7. Defining
corruption as bribery, influence peddling, and receiving
undeserved money or goods, the NAS was designed to be the
official roadmap of the government's anticorruption goals.
The NAS establishes the standards by which the EU will
measure Romania's anticorruption progress from now until
November 2005, the month in which the European Commission
will publish Romania's country report. If this report deems
Romania's progress insufficient, the European Commission has
stated that it will delay Romania's EU accession by one year
under a clause especially included in Romania's accession
treaty. Understanding the importance of the NAS as the
yardstick by which the EU will measure progress, Basescu has
told government agencies that he wants specific individuals
named responsible for the various aspects of implementation,
so as to bolster accountability. He has pledged to follow up
with these appointees.


8. (SBU) The NAS prioritizes a list of comprehensive
anticorruption initiatives and establishes a list of
responsible ministries and the date by which tasks are to be
completed. These task include increasing transparency and
integrity in public administration, preventing corruption in
business, organizing anticorruption campaigns and educational
programs, strengthening and improving the efficiency of the
judicial system and reducing the number of governmental
agencies involved in anticorruption, so as to centralize
efforts.

A Few Big Arrests
--------------

9. (SBU) The early months of the new government have also
been characterized by arrests in several major corruption
cases. Although our law enforcement contacts point out that
these cases had been under investigation for quite some time,
the arrests nonetheless added credence to Basescu and
Tariceanu's claims that they are serious in the
anti-corruption fight. Indeed, independent analysts point to
a link between the new government taking power and a relative
flurry of arrests of individuals who had long been under
investigation, but left undisturbed due to apparent shielding
from prosecution. Although there has yet to be a prosecution
in a large scale corruption case, one journalist opined to
PolChief that the difference now, is that there finally
appears to be some momentum.


10. (SBU) The most dramatic arrest occurred in January soon
after the new government took office. Bucharest papers
carried front-page headlines when police handcuffed and
escorted RAFO refinery boss and PSD moneyman Corneliu Iacubov
to the Bucharest central jail, where Iacubov shouted, "This
is from Basescu! What he gives is what he will get!" The
Prosecutor General's Office accuses Iacubov of large-scale
money laundering and financial fraud. Similarly, the PNA
indicted in April petroleum king and PNL Senator (and
financier) Dinu Patriciu on charges of money laundering, tax
evasion and fraud. This indictment is particularly notable
in that it defies allegations that the government would use
the anti-corruption battle only against the opposition.


11. (SBU) Other recent high profile cases include the April
13 indictment of former National Securities Commission
President Gabriela Anghelache for "abuse of position" in her
role in the privatization of the bustling downtown Bucharest
Bucur Obor market complex. PNA alleges that Anghelache
temporarily lifted a trading ban on the company's shares to
allow one of its main shareholders, Laurentiu Postavaru, to
purchase additional shares. Postavaru is also under
investigation by the PNA.


12. (SBU) Corruption again made the front pages in connection
with the March 29 kidnapping in Iraq of three Romanian
journalists and their American-Iraqi guide. On April 5,
Romania's General Prosecutor's office arrested Syrian-born
businessman Omar Hayssam, whom the press (and some in
government) believed orchestrated the kidnapping (ref B).
Hayssam, one of Romania's wealthiest individuals, was
formally charged with fraud resulting in a combined loss of
1.8 million euros to four different companies. In following
days the media linked him to a wide swath of Romania's most
senior opposition politicians. This included former
President Ion Iliescu, former PSD Vice President Viorel
Hrebenciuc, and former PSD deputy and member of communist
securitate Ristea Priboi. Iliescu reportedly included Hayssam
on a number of official delegations, including to the United
Arab Emirates, Vietnam, the Philippines, Japan, Singapore,
Uzbekistan, China, Russia and Kazakhstan. In addition to the
charges already filed, Hayssam is also being investigated for
numerous other acts of fraud, tax evasion, money laundering
and organized crime, not to mention acts related to his
alleged involvement in the kidnapping. One PSD political
advisor told PolChief that many in the PSD are "seriously
worried" about how far these investigations will go. The
scandal involving Hayssam is also attributed to influencing
the results of the April 21 PSD internal elections, in which
Iliescu, Hrebenciuc, and other stalwarts were ousted from the
party leadership. (Ref B).

Changing the Institutions
--------------

13. (C) Basescu and his team have repeatedly acknowledged
that essential in the fight against corruption is a
fundamental change in government institutions, both in terms
of personnel and of how the institutions carry out their
functions. Basescu vowed that no individual who had been
tainted by credible corruption allegations would be appointed
to the cabinet, a promise he and Tariceanu largely kept. The
most notable appointment was new Justice Minister Monica
Macovei, a largely apolitical figure from an important local
human rights NGO. Early on Macovei confessed to visitors
that she had "no idea of where to start" in cleaning up a
Justice Ministry she described as riddled with "old communist
bureaucrats" and "PSD political plants." She was
simultaneously challenged with implementing EU-mandated
reforms, more sweeping in Justice than in any other sector.
Nonetheless, by mid-March many government interlocutors and
NGO contacts reported that Macovei appeared to be "hitting
her stride."


14. (SBU) On 7 April Macovei appointed Prosecutor Doru
Dobocan as head of the General Department for Protection and
Anti-Corruption within the Ministry of Justice. The press
has dubbed Dobocan as a "pit bull" in the fight against
corruption. Macovei is also developing in the Ministry a new
investigative body * the Agency for Integrity and Statements
of Wealth * which would investigate the veracity of public
officials' asset declarations.


15. (SBU) Also fundamental in the anticorruption fight is the
National Anticorruption Prosecutor's Office (PNA),which was
established in 2002 as an independent entity to prosecute
major corruption cases. Although the PNA budget is ample by
Romanian standards and its prosecutors are among the best
trained, it has yet to prosecute a major corruption case to
conclusion. Embassy Resident Legal Advisor notes that the
delay in concluding such trials is at least partially due to
Romanian jurisprudence practices, which do not facilitate
swift justice. Some Embassy contacts have confided that
Basescu and Tariceanu may seek to replace PNA Director Ion
Amarie, despite the fact that the latter's tenure is not due
to expire until 2008. Minister Macovei has stated that
Amarie should take responsibility and resign for what she
views as the PNA's poor anticorruption record. (Note. Post
will report more on the current debate over the PNA septel.
End note.)


16. (SBU) The Ministry of Interior has also taken a series of
positive steps in efforts to root out internal corruption.
It has established its own anticorruption office, which is
charged with investigating and preventing corruption within
the Ministry of Interior. In recent months, the Ministry has
replaced police directors, border police and customs
officers, citing corruption as the reason for their removal.
The Ministry of Interior has announced that their
replacements will be selected via a process of open and fair
competition.

Comment: A Good Start, But the Task is Big
--------------

17. (C) Basescu, Tariceanu, and their team have amply
demonstrated their commitment to fighting corruption, in word
and (at least early on) in deed. Their National
Anti-Corruption Strategy earns high marks from the EU and the
Embassy team. A real test of anticorruption efforts will be
whether the PNA and courts are able to prosecute major cases
to conclusion without political interference. Preserving the
judiciary's independence while fostering a get-tough on
corruption environment will likely prove a difficult
balancing act for the new government. An even bigger
challenge will be fundamentally altering a culture of
corruption that has strong historical roots and permeates
virtually all levels of Romanian political and economic life.
According to Transparency International, Romania ranks as
one of the most corrupt countries in Europe (only Albania
ranks worse). On the latest worldwide index of 145
countries, Romania is tied for position 87 with the Dominican
Republic and Iran.


18. (C) Perhaps even more frustrating to the current
government are the seemingly mixed signals from the EU
concerning domestic anti-corruption efforts. Several State
Secretaries, as well as Minister of Finance Ionut Popescu,

SIPDIS
have expressed deep frustration with the corruption in the
middle levels of the government bureaucracy. Currently, it
is nearly impossible to remove a civil servant from his/her
job without a judicial finding of malfeasance, or even to
move them permanently to another, equal position elsewhere.
This hampers the current reformist government's ability to
root out corrupt bureaucrats and replace them with hopefully
more honest employees. In response to Econ Chief's direct
query about a civil service overhaul that could rid the
government of the corrupt and incompetent in one fell swoop,
Minister Popescu replied that the EU has signaled that the
GOR should not do this, ostensibly out of fear that it would
"demoralize" the bureaucrats or appear to be a political
purge. He also expressed frustration that on some occasions
in the past, the EU has intervened to prevent individual
personnel changes in the ministries.


19. (C) In sum, by electing Basescu and his PNL-PD led
government, Romanians made clear that they want a serious
effort to diminish the country's endemic corruption. Four
months is little time for any government to make a
significant dent in such a large problem, but it appears that
the center-right government is serious about the problem and
its initial steps, while limited, have been in the right
direction.


20. (U) AmEmbassy Bucharest's Reporting telegrams, as well as
daily press summaries, are available on the Bucharest SIPRNet
website: www.state.sgov/p/eur/bucharest
DELARE