This is a translated and slightly adapted version of an article originally published in Romanian on September 11.

Democrats slammed the alert button earlier this week over (relatively old) news that Moldova would have to cough up one billion lei to a company connected to the convicted financier Veaceslav Platon. The blame is placed on the ACUM-Socialist coalition, obviously, which is accused of plotting to free the financial wheeler-dealer from prison. Minister of Justice Olesea Stamate said Moldova didn’t have to pay anything yet. Who is right?

What do Democrats say?

The Democratic Party’s official FB page shared an OMG.md news story[1] with the following comment:

“Already better, huh? The PSRM-ACUM government is presenting a bill of its incompetence to the citizens of Moldova. We’re talking about nearly 1.000.000.000 (one billion) lei which Moldovans will have to pay to a firm secretly owned by Veaceslav Platon. The PDM government fought and won that suit of millions of dollars, but what happens now as the PSRM-ACUM alliance is in power? Is it just utter incompetence? Or are there other interests involved, as well, including financial ones?”

The post[2] went on to be shared by MP Sergiu Sîrbu and other Democrats.

What really happened?

The affair dates to the late 1990s, when the state-owned Moldtranselectro imported electricity from Ukraine through a British Virgin Islands-registered company and allegedly accrued a debt of around 200 million lei in the process. The offshore company then sold the alleged debt to an Ukrainian firm called Energoalians.

In 2002, the Moldovan Court of Audits found that not only was the debt bogus, it was Energoalians that owed Moldtranselectro $10.8 million.[3] The Ukrainian firm lost all the subsequent judicial proceedings in the Moldovan courts, but then won the lawsuit in Ukraine.

The Ukrainian ruling gets rejected in Moldova, so Energoalians resorts to ad hoc arbitration in France. In 2013, the arbitrators decided by a vote of two to one in the claimant’s favor. Victor Volcinschi, the arbitrator appointed by the Moldovan government, ruled in favor of Energoalians, as the presiding arbitrator, Dominic Pellew, delivered a dissenting opinion (the third arbitrator was appointed by the claimant).[4] Volcinschi was delegated to the ad hoc tribunal in 2010, when the Ministry of Justice was headed by Alexandru Tănase. Years later, the public learned from a leaked phone conversation that Tănase and Platon used to chummily call each other Sasha and Slava.[5]

Meanwhile, Energoalians merged with a firm called Komstroy. Using the 2013 arbitration ruling, Komstroy in 2015 managed to freeze the accounts of MoldATSA in Bruxelles (the civil aviation authority had nothing to do with the litigation, it’s just that the claimant was after any Moldovan governmental account it could get in foreign jurisdictions). In 2016, the Paris Court of Appeal rules that the arbitration tribunal didn’t have the authority to adjudicate the claim and reverses the decision, unfreezing MoldATSA’s accounts as a result. On this occasion, the then Transport Minister Iurie Chirinciuc called for a probe into how Victor Volcinschi arrived at the decision which helped Energoalians win in the earlier stage.[6]

In 2018, France’s Court of Cassation reverses the appellate ruling and sends the 2013 case back to the Court of Appeal.[7]

Following the 2013 win, Komstroy/Energoalians began seeking the recognition and enforcement of the arbitral award in various foreign jurisdictions. The Moldovan government was successful in blocking this effort pretty much everywhere, except in the United States. The hearing there was put on hold after the decision of the Paris Court of Appeal and resumed after the decision of the Court of Cassation. In August 2019, the US District Court for the District of Columbia confirms that Moldova has to pay $46.5 million plus costs to the Ukrainian company.

What happens next?

Contrary to what Democrats say, Moldova doesn’t have to pay anything yet. The proceedings in France are not completed yet. As mentioned above, the case is still pending before the Paris Court of Appeal. Justice Minister Olesea Stamate has announced that the Court is expected to deliver a verdict by the end of the month. Moreover, the Government appealed the D.C. court decision,[8] meaning Moldova could avoid paying the ~50 million dollars.

Who’s to blame?

The original sin can be traced to an offshore firm called Derimen, the one that acted as an intermediary for electricity imports in 1999-2000. Identifying its beneficiary would be next to impossible today. But in 2011 a report by an NGO named “Pro Europa” (now inactive) attributed Derimen to Dumitru Diacov, speaker during 1998-2001.[9] He reportedly owned two other dummy companies, Energomontaj and Ferren-M, also involved in importing electricity from Ukraine.

This has never been demonstrated. But what the Court of Audits did confirm in 2002 was the nature of these companies as dummy corporations. Through Ferren-M and with the help of the notorious judge Ion Muruianu, Energoalians was close to pushing RED-Nord into bankruptcy before the electric utility underwent reorganization.

Energoalians, a company unofficially linked to Veaceslav Platon, was also involved in the infamous Russian Laundromat, as confirmed by a note of the Supreme Court of Justice published by the investigative project RISE Moldova. The Ukrainian firm guaranteed the payment of a $30 million debt owed by one offshore company to another. The latter firm, Westburn Enterprises, apparently paid for the rent of a posh apartment in central London for the daughter of Ion Muruianu,[10] the same judge that shoved RED-Nord into insolvency over a debt towards Energoalians.

The PDM’s accusation that the current government is to blame for the D.C. court ruling is entirely off the mark. The new government, installed in June, only had time to approve a $60,000 invoice for the services provided by the New York-based Bukh Law Firm, which was selected by the previous government. On 5 December 2018, the Cabinet of Pavel Filip (who last Saturday was elected PDM president) adopted Government Resolution no. 1218,[11] whereby the Ministry of Justice was authorized to sign an agreement with the Bukh Law Firm, which was done on 11 December 2018. The Sandu Cabinet is just footing the bill for the services contracted by the PDM government. Moreover, the American lawyers asked for their money in April 2019 and the fee is for the period February 8 – April 10, 2019,[12] long before the ACUM-PSRM coalition was formed. If Sergiu Sîrbu is not satisfied with the job done by the American lawyers, it’s his new party boss he should rebuke.

About PDM’s legal victories, in brief

While the party affirms that “the PDM government fought and won that suit of millions”, the only victory so far, the one achieved in the Paris Court of Appeal, was won in April 2016, just months after the Filip Government was installed, by two law firms hired in 2014, under Prime Minister Iurie Leancă and Justice Minister Oleg Efrim, both PLDM members at the time. Then, in 2018, in the heyday of the PDM government, Komstroy/Energoalians obtained the annulment of the Court of Appeal decision in France, and the resumption of the litigation in the United States.

Conclusion

It’s not uncommon and almost natural to see an opposition party rejoice any time the government missteps, but in this particular case the current governing coalition only footed a bill inherited from the Democratic Party, and the fee is only for the legal counsel services. Perhaps Democrats would be disappointed, but Moldova doesn’t have to pay yet “almost 1.000.000.000 (one billion) lei”.

Although some have died of disease or old age in the meantime (for example, the arbitrator Victor Volcinschi died last year, aged 85), there are many people left who could shed light on the whole Energoalians affair. Veaceslav Platon is conveniently in prison and prosecutors could quiz him about the dummy corporations connected to Energoalians. The 2010 leadership of the Ministry of Justice, namely minister Alexandru Tănase and deputy minister Oleg Efrim, could explain their reasons for selecting Victor Volcinschi to sit on the arbitration tribunal in Paris. The government troika of 1999-2000 could also know something: the prime minister Ion Sturza, the president Petru Lucinschi, and the speaker Dumitru Diacov. Finally, there is this less known figure, the former RED-Nord president Gheorghe Pelin, who signed a contract with Energoalians through the dummy corporation Ferren-M back in 2000. Pelin stood trial for this and he maintained, curiously enough, that various governmental agencies were protecting Energoalians. [13]

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  1. Moldova has been ordered to pay about 50 million dollars to a Veaceslav Platon company (RU), point.md ↩︎

  2. Democratic Party of Moldova, official Facebook account (RO), facebook.com ↩︎

  3. Court of Audits Findings #66, of 4 July 2002, on the audit of imports of electricity from Ukraine during 1998-2001 (RO), lex.justice.md ↩︎

  4. Dissenting Opinion of Arbitrator Dominic Pellew, jusmundi.com ↩︎

  5. Phone conversation allegedly taking place between Veaceslav Platon and Alexandru Tanase, discussing the one-billion fraud (RO/RU), protv.md ↩︎

  6. Chirinciuc: The lawfulness of the actions of the arbitrator Victor Volcinschi, who decided in Energoalians’s favor, could be examined in Paris (RO), bani.md ↩︎

  7. The Paris Billion (RO), rise.md ↩︎

  8. Press conference held by the Ministry of Justice on the arbitral proceedings in the case of Moldova vs Energoalians (RO), privesc.eu ↩︎

  9. Press Dossier: Avoiding crime-connected presidential candidates (RO), ipn.md ↩︎

  10. Senior Moldovan Judge's Daughter Lived In Posh London Flat – With Tainted Money, rise.md ↩︎

  11. Government Resolution #1218 of 5 December 2018 (RO), lex.justice.md ↩︎

  12. Government Resolution #426, 30 August 2019 (RO), gov.md ↩︎

  13. Press conference by former RED-Nord director Gheorghe Pelin (RO), privesc.eu ↩︎