Moldova Weekly #6: The government strikes back, ghosts from the 90s, the French connection
The government strikes back
The new government is keen to undo many of its predecessor’s deeds. Prime Minister Maia Sandu officially announced that the Public Property Agency will sue Avia Invest in order to terminate the latter’s lease on the Chișinău Airport. President Igor Dodon promised that the state will also try to rollback the privatization of Air Moldova. In both cases, the authorities claim major irregularities were committed during the selection of the private investor. Law enforcement bodies and a parliamentary commission are looking into the signing of both contracts. This week, the commission heard former Prime Minister Chiril Gaburici, who mostly claimed ignorance and laid all the responsibility on the Public Property Agency. His fellow ex-PM Pavel Filip was summoned for hearings as well, but chose to attend the opening of a school mess hall instead.
Head of said commission, MP Igor Munteanu (ACUM/PDA) also announced that Moldova’s main tobacco factory will return to state property. It had been privatized in January 2019, but the investor, Le Bridge, will give it back without litigation if they get their money back - about 170 million lei. Frack Arif Charles, owner of Le Bridge, also sold his 25% stake in the company that won the lease on all the bus stations in Moldova for 25 years. This is only the last in a long line of ownership changes for the company. The Munteanu commission is looking into this case as well, and heard former Minister of Economy Octavian Calmîc, who said he did not participate in the negotiation of the lease contract and admitted it was not a very transparent affair.
Ghosts from the 90s
News finally broke that the US District Court of Columbia ordered Moldova to pay over 50 million dollars to Komstroy, an Ukranian company. The Democrats promptly blamed the ACUM-PSRM alliance and called this a bill of their incompetence. We delved into the issue and found that Komstroy is the legal successor of Energoalians (or Energo Alliance in some documents), who, in turn, bought a debt owed by Moldova to Derimen, an offshore company. The debt originated in 1999-2000, when Moldova bought electricity from Ukraine via Derimen, a parasite intermediary. Energoalians, a company currently linked to jailed banker Veaceslav Platon and involved in the Russian Laundromat, acquired the debt and sued Moldova. The litigation led to ad hoc arbitration tribunal in Paris, in 2013, which ruled in favor of Energoalians. Curiously enough, the Moldovan arbiter agreed with the Ukrainian firm’s claims, while Dominic Pellew, the British chairman of the tribunal, signed a separate opinion. Long story short, the litigation is still ongoing so, for now, Moldova still doesn’t have to pay anything. Read our full take on the story here: The Energoalians Affair: What You Need to Know
Back from another visit in Moscow, President Dodon promised that gas prices for consumers would not rise this year and would start falling next year. He boasted that he had convinced Vladimir Putin and Gazprom chief Alexey Miller to continue applying the same formula for calculating gas prices for Moldova. However, energy expert Sergiu Tofilat explains that the formula is based on the average EU prices for the previous year. In effect, this means that if gas prices drop worldwide, Moldovans will feel it only months later. According to Tofilat, Moldova now pays double the price of gas in Europe.
The expert published a study this week, denouncing 20 years of fraud and neglect at Moldovagaz. Tofilat blasts the incompetent and corrupt authorities for letting the company fall into Gazprom’s hands for pennies, explains how a debt of over 6 billion $ was accrued for the gas consumed by Transnistria, and why the politically-minded regulators did not adjust the gas prices for consumers even when import prices changed significantly.
The EU published a report on the implementation of the Association Agreement between Moldova and EU. The previous government got passing grades for economic and financial reforms, but disappointed Brussels in many other areas: the justice reform, anticorruption efforts, the investigation into the banking fraud, media plurality, rule of law, etc. The EU however has high hopes for the new government, which promised to tackle precisely these issues. As a sign of trust, the EU resumed financing for Moldova and says three deals totaling over 55 million euros have already been signed.
Something rotten in the City Hall
Ten people, including present and former City Hall servants, are suspected of organizing a scheme through which building companies illegally appropriated municipal land. Law enforcement officers searched their offices and homes. The prosecutors are also investigating the City Hall’s purchase of 31 Isuzu buses from an offshore company in Northern Cyprus in February 2019. The municipal authorities chose this offer despite the Romanians from BMC Truck & Bus making a cheaper offer. Acting mayor at the time, Ruslan Codreanu, is running as an independent in the mayoral elections this fall and labelled the investigation as political pressure.
Meanwhile, there’s definitely something rotten at the wastewater treatment plant. As alcohol factory Zernoff embarked on mass media campaign to deny any guilt, the wastewater plant had to bear the brunt of the public outcry over the stink that’s bothered Chișinău for weeks. The director says the stench comes from 7 deep lakes full of liquid mud from previous years and thinks it’s the City Hall’s responsibility to deal with it. He also admitted that 98% of the microorganisms from ‘active mud’ used to treat wastewater died this summer, but failed to explain why he allowed this to happen. This angered the prime minister during a public hearing and she will probably push for his resignation.
Urban activist and mayoral candidate Victor Chironda presented his team, which includes some well-known figures from local civil society. Chironda revealed that they will run on the lists of the New Force Movement, a mostly unknown party registered by former Defense Minister Valeriu Pleșca, which offered its platform unconditionally. Another activist to join the race is Vitalie Voznoi, on behalf of the European Left Party. Both candidates promise a campaign ”without politics”.
Meanwhile, the country’s best karaoke politician Renato Usatîi announced his candidate for the Chișinău City Hall: former municipal chief prosecutor Ivan Diacov. He is the brother of Dumitru Diacov, founder and honorary president of the Democratic Party. Another controversial nomination comes from fugitive oligarch Ilan Șor, who put forward Valerii Klimenko, a former municipal councillor. Klimenko has a long history of hateful declarations against Romania, love declarations towards Russia - in 2010, he suggested that Moldova should join the Russian Federation, and clashes with other politicians and activists.
The prosecutors’ race
Despite the government’s stated intention to change the law, the High Council of Prosecutors (CSP) went ahead with the selection contest for a new chief prosecutor. For a while, nobody seemed to want the job, but eight candidates registered on the very last day. On its part, the government finally approved a bill that will change the appointment procedure of the Prosecutor General. In short, CSP will appoint the PG from a shortlist of at least two candidates, pre-selected by a commission from the MInistry of Justice, consisting of the minister, a former judge or prosecutor with at least 10 years of experience, a seasoned international anticorruption or prosecution expert, a civil society representative and a reputed national expert. President Dodon felt excluded from the procedure so the chief of state also got the right to appoint an expert in the commission. The bill needs to be passed in the Parliament in order to come into effect and it is not clear what will happen if CSP goes on and appoints a PG before that.
Things are just as interesting with the rest of the judiciary. While the government is waiting for the opinion of the Venice Commission on the proposed justice reform, 87 judges signed a letter calling for an extraordinary Assembly of Judges on September 20. They also demanded the resignation of the current High Council of Magistrates.
The French connection
France is willing to finance the rehabilitation and renovation of the Chișinău-Ungheni railroad, which leads right to the border with Romania. The two governments signed a letter of intent, so the exact details will be worked out later. Minister of Economy Vadim Brînzan met French Secretary of State for European Affairs Amélie de Montchalin and expressed hope that this project will help connect Moldova’s railway network to Romania and the rest of Europe. For now, most of the railroads are in a sorry state and the few trains that still run, do it at a very low speed. Foreign Minister also spoke about building a bridge in Ungheni in order to connect the town to Romania’s Unification Highway, a long-gestating project meant to connect Transylvania to the Moldova region of Romania. Given Romania’s world-renowned difficulties in building a highway, Popescu asked the authorities in Bucharest to give priority to the Iași-Ungheni segment, so that it will be among the first to open.
Popescu also met with Amélie de Montchalin and announced more initiatives for cooperation in the fields of taxation, policing, counter-terrorism. This fall, the French will send experts to help Moldova with justice and healthcare reforms.