Identifier
Created
Classification
Origin
06BUCHAREST111
2006-01-20 17:55:00
CONFIDENTIAL
Embassy Bucharest
Cable title:  

FORMER PM NASTASE FACES CORRUPTION ALLEGATIONS IN

Tags:  PGOV PHUM KJUS KCRM SOCI ECON RO 
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VZCZCXRO7530
PP RUEHFL RUEHKW RUEHLA RUEHROV RUEHSR
DE RUEHBM #0111/01 0201755
ZNY CCCCC ZZH
P 201755Z JAN 06
FM AMEMBASSY BUCHAREST
TO RUEHC/SECSTATE WASHDC PRIORITY 3473
INFO RUEHZL/EUROPEAN POLITICAL COLLECTIVE
RUEAIIA/CIA WASHDC
RUEAWJA/DEPT OF JUSTICE WASHDC
RUEKJCS/SECDEF WASHINGTON DC
RHEHNSC/NSC WASHDC
C O N F I D E N T I A L SECTION 01 OF 04 BUCHAREST 000111 

SIPDIS

SIPDIS

STATE FOR EUR/NCE BILL SILKWORTH

E.O. 12958: DECL: 01/20/16
TAGS: PGOV PHUM KJUS KCRM SOCI ECON RO
SUBJECT: FORMER PM NASTASE FACES CORRUPTION ALLEGATIONS IN
"AUNT TAMARA" SCANDAL


Classified By: Charge D'Affaires Mark Taplin. Reasons 1.4 (B) and (D)

C O N F I D E N T I A L SECTION 01 OF 04 BUCHAREST 000111

SIPDIS

SIPDIS

STATE FOR EUR/NCE BILL SILKWORTH

E.O. 12958: DECL: 01/20/16
TAGS: PGOV PHUM KJUS KCRM SOCI ECON RO
SUBJECT: FORMER PM NASTASE FACES CORRUPTION ALLEGATIONS IN
"AUNT TAMARA" SCANDAL


Classified By: Charge D'Affaires Mark Taplin. Reasons 1.4 (B) and (D)


1. (C) Summary. Former PM Adrian Nastase, whose reputation
for shady dealing was already well-established with the
Romanian public, is now caught in a political scandal that
threatens both his political career and has set off more
fierce infighting within the Social Democratic Party (PSD),
Romania's main opposition grouping. The so-called "Aunt
Tamara" scandal involving a highly suspect inheritance of one
million Euros from an elderly aunt of Nastase's, has led the
former Prime Minister to "temporarily suspend" himself from
party duties. It has also strengthened the hand of Nastase's
political foes, including PSD President Mircea Geoana,
re-igniting smoldering tensions among rival factions within
the PSD. Prospects for a criminal conviction in the short to
mid-term remain slim given the arduous process for
prosecuting such high profile cases in Romania. However,
Embassy contacts assert that if the case against Nastase
continues to gain momentum, the former premier could
ultimately face conviction and become the poster child of
Romania's heretofore lagging anti-corruption efforts. End
Summary.

Nastase's "Wealthy Aunt" -- A Dubious Inheritance
-------------- --------------

2. (C) Chamber of Deputies president and former PM Adrian
Nastase on January 16 announced that he would "temporarily
self-suspend" himself from his position as Executive
President of the PSD while prosecutors investigate his
suspicious inheritance from a recently deceased aunt. As
Executive President, Nastase holds the number two position in
the party, after the PSD presidency currently held by former
FM Mircea Geoana. The issue of the inheritance surfaced when
the government released publicly in early January the wealth
disclosure statements of all elected politicians and senior
bureaucrats. The aunt -- actually a relative of Nastase's

wife -- had apparently lived modestly throughout her life but
left the Nastase's nearly one million Euros in cash and other
assets. When questioned by journalists as to how the aunt
obtained the sum, Nastase claimed she had brought jewelry
with her from Georgia and Moldova when she immigrated to
Romania decades before. According to Nastase, the aunt sold
much of the jewelry in 1999 to a "close family friend" and --
at the age of 91 -- "invested the fortune wisely."


3. (C) While many details of the case remain obscure, the
broad outlines of what the press has dubbed the "Aunt Tamara"
scandal includes the purchase of properties at a fraction of
their market price and a series of complex business
transactions purportedly conducted by the elderly aunt.
Observers noted that the aunt's "prescient" decision to
invest in real property occurred within two months of her
decision to bequeath her entire estate to Nastase's wife,
Dana. In addition, the largest transaction involved the sale
of jewels to a Nastase "family friend," a classic indication
of money laundering according to many analysts. Indeed, some
aspects of the case had been under investigation by the
National Anti-Money Laundering Office since 1999 - but the
file was reportedly closed when Nastase became PM in 2000.
The office reopened the investigation this January, but --
adding a new wrinkle in the deepening scandal -- media
reported January 19 that key documents from the case,
including documents regarding the source of USD 400,000
obtained by Dana Nastase from Aunt Tamara from the proceeds
of the jewel sales, had mysteriously "vanished." With the
"Aunt Tamara" scandal on the front pages, other allegations
against Nastase have also resurfaced, with newspapers
printing complex diagrams of links between the Nastases and
other "close family friends" who allegedly served as
intermediaries for suspect financial transactions and real
estate purchases. Many of the individuals were rewarded with
senior government positions and/or lucrative government
contracts while Nastase was prime minister.


4. (C) Revelations of the inheritance sparked a flood of
media coverage, which included televised news footage of the
aunt's small flat in a communist era apartment bloc and
recollections by her neighbors of occasional visits by the
Nastases in chauffeur-driven limousines. Former President and
PSD founder Ion Iliescu joked to the press that "he himself
had many aunts" but "regrettably no rich ones." However, once
the initial cynicism over the revelations settled, both the
press and many average Romanians reacted with indignation and
calls for a full investigation and possible prosecution.
British Ambassador Quayle, in a widely covered interview with
a Romanian wire service, questioned rhetorically how it was

BUCHAREST 00000111 002 OF 004


possible "that Romanian politicians were not corrupt," while
"their relatives had become very rich without explanation."
Respected news analyst Mircea Dinescu commented that
Nastase's fortune was probably "much greater than reported."



5. (C) Although some international media reported Nastase had
actually resigned from his senior party position, he in fact
did not. PSD interlocutors tell us that the party's internal
regulations include no provision for what Nastase has
characterized as "self suspension." These same contacts
predict this will mean little more than Nastase's voluntary
absence from a few official party functions. Moreover,
Nastase has not even hinted that he would resign from his
more important position as Chamber of Deputies president.
Nonetheless, ruling Liberal-Democratic (PNL-PD) Alliance
politicians have vowed to press for his removal, although
legal provisions would only allow for such a move in the
event of a criminal conviction.


Mudslinging in the PSD: The Politics of "Dossiers"
-------------- --------------

6. (C) The scandal has re-ignited smoldering tensions within
the PSD, leading some members to speculate that President
Traian Basescu was behind the revelations, with the goal of
dividing the opposition. Indeed, Nastase claimed publicly to
be a "victim of a campaign" orchestrated by "Basescu's
entourage," which used "information collected from the
intelligence services." Without providing details, Nastase
also pointed to "enemies within his own party." PSD contacts
say he likely meant PSD President Mircea Geoana, and several
party power brokers who now support Geoana, including former
Transport Minister Miron Mitrea, former Interior Minister Ion
Rus, and PSD Chamber of Deputies faction leader Viorel
Hrebenciuc. Embassy contacts also tell us that despite
Geoana's tepid public support for Nastase, he received the
news of his party rival's travails with glee. Indeed, one
Geoana aide told PolChief that Geoana viewed the scandal as
an opportunity to purge the PSD of some of its most corrupt
elements, including his number one challenger for power
within the party. In the weekend immediately after the "Aunt
Tamara" revelations, the PSD leadership convened to discuss
Nastase's possible removal from his senior party position.
His agreement to "self suspend" was viewed within the party
as an acceptable compromise.


7. (C) Meanwhile, the Romanian High Court issued a verdict
against PSD leader for Bucharest Dan Ion-Popescu, ruling that
the latter could not account for personal assets of over USD
1.5 million claimed on his legally required wealth
declaration statement. The Court ordered the freezing of
many of the assets, until Popescu could account for their
acquisition. Long-standing cases against Mitrea, Hrebenciuc,
and others have also resurfaced in the media. One PSD aide
asserted that this heightened coverage is a result of the
party's infighting -- "rival party strongmen are slinging mud
against each other." He continued that each senior party
official had "a collection of sensitive files" on fellow
party members, including potential rivals.


8. (C) While the scandal intensified, former president and
PSD founder Ion Iliescu stepped forward to assert that the
"time was ripe" for the PSD to seize the offensive in the
anti-corruption battle. He publicly called on the PSD to
initiate effective anti-corruption legislation and strive to
create transparent public institutions, noting that the
Romanian public deserves to know about the wealth of public
figures. Although Iliescu did not directly defend Nastase
(the two men feuded when Nastase was PM and Iliescu was
President),he observed that allegations of suspicious
accumulations of wealth were not unique to the PSD.
Exercising his position as the PSD's pater familias, Iliescu
insisted that the party should take a "break" from
mudslinging, assess the impact of the recent revelations
about Nastase and other leaders, and discuss the PSD's
future. He vowed to remain silent about the corruption
revelations until early next week, concluding that as a
committed social democrat and party founder he would support
any internal reforms that would strengthen the PSD and
increase the party's diminished public credibility.


9. (C) Many PSD party activists welcomed Iliescu's efforts
to still the PSD's troubled waters - fearing that continued
public bickering could release a tsunami of allegations that
would further damage the party. Longtime Iliescu ally and

BUCHAREST 00000111 003 OF 004


former Culture and Religion Minister Razvan Theodorescu
publicly echoed the sentiments of many within the PSD's
national and local leadership, as well as rank and file party
members, when he publicly called for Iliescu to "return to
the forefront" as the party's "spiritual leader," asserting
that "no other leader (in the PSD) has the competence,
influence and charisma of Ion Iliescu."


Lotto Loser? Vice Premier's Number May Be Up
--------------

10. (C) As media coverage of the Nastase scandal and other
allegations concerning PSD leaders intensified, the National
Anti-Corruption Prosecutor's Department (DNA) announced
January 20 that it was also investigating possible criminal
offenses, including tax evasion, by Conservative Party (PC)
Vice Premier George Copos. He is also suspected of criminal
collusion with the national lottery president. Although the
PC is a member of the governing coalition, Embassy contacts
note that as one of the wealthiest individuals in Romania,
Copos maintains "friends of all political persuasions." The
timing of the prosecutor's public announcement also coincides
with an escalating war of words between PC leader Dan
Voiculescu and President Basescu. In their latest exchange,
Voiculescu accused Basescu of being "a hypocrite" and
Basescu, for his part, has made no secret of his desire to
drive the PC from the governing alliance.


Prosecutors Prepare their Case
--------------

11. (C) The General Prosecutors office announced January 12
that it had reopened an earlier file against Nastase over a
suspect property purchase, a prime piece of downtown
Bucharest real estate, and would broaden the scope of the
investigation to examine other "dubious transactions,"
including the "Aunt Tamara" dossier. Nastase accepted an
"invitation" to answer questions by prosecutors on January

17. Embassy contacts assert that Nastase can expect future
summons from the prosecutors.


12. (C) While many analysts noted that most of the currently
discussed allegations against Nastase had been widely known
for several years, it is not out of the question that Nastase
could actually wind up in the docket on at least some of the
charges under investigation, particularly given the wide
publicity of the current scandal. A key factor is the DNA's
new head, Daniel Morar, an aggressive and effective
prosecutor. Another element is the EU Accession report
currently due for May. Given that the EU has singled out
entrenched corruption as a major problem in Romania, a
successful prosecution of a prominent and powerful public
figure - like Nastase - could send a strong message to
Brussels that Romania is, finally, getting tough on
corruption. Nastase - essentially impregnable during his
2000 to 2004 tenure as PM - now faces bitter rivals within
his own party as well as a lack of political clout generally
that will make it difficult for him to derail a prosecution,
as his detractors assert he has done in the past. The court
of public opinion may also help determine whether Nastase
gets his day in court - whether he wants it or not. Media
coverage of the current spate of scandals has been intense
and shows no signs of abating, helping to focus widespread
public anger about corrupt public officials.


13. (C) Nevertheless, a successful prosecution is far from a
slam dunk. Missing key documents in one case (see paragraph
3) will increase the difficulty of a successful prosecution.
Additionally, a thorough and accurate investigation of the
myriad of complex and often interlocking allegations against
Nastase could last at least one year. A thoroughgoing
investigation will require detailed analyses by accountants,
tax experts, real estate evaluators and others - providing
ample time for other files to "vanish." As one wag recently
noted to PolOff, law offices have lately been flooded with
politicians and their family members attempting to jiggle and
reconfigure complex transactions. Furthermore, Nastase,
despite his somewhat faded luster, retains influence in some
circles and, according to PSD insiders, has a stack of
compromising "dossiers" in his possession that he could use
to help derail an investigation, or put his rivals under the
hot lights.


Comment: Will Nastase Fall?
--------------

BUCHAREST 00000111 004 OF 004



14. (C) As one top pollster told PolChief, Nastase's
popularity has taken a nose dive with the recent revelations.
He added that a poll expected to be released in coming days
also shows that the PSD had taken a hit, with its figures
similarly down as a result of the scandal. Indeed, this is
the most serious political blow delivered to Nastase since
his defeat in the December 4, 2004 presidential elections.
His wealth and influence may allow him to remain a power
within the party. However, many doubt that he will be able
to recover fully, as senior PSD leaders as well as
rank-and-file members increasingly view him as unelectable on
a national level. By now, much of the Romanian public has
heard of Aunt Tamara and her family jewels, much to the
discomfort of the former prime minister and her unfortunate
heir Adrian Nastase. End Comment.


15. (U) Amembassy Bucharest's reporting telegrams are
available on the Bucharest SIPRNet website:
www.state.sgov.gov/p/eur/bucharest
TAPLIN