Bribed in Bucharest

By bne IntelliNews April 3, 2012

Bogdan Preda in Bucharest -

Raluca stuffs two RON10 banknotes (about €4.50) and five identity cards into the pocket of a bodyguard at a local tax office in Bucharest, the Romanian capital. Ten minutes later, the guard walks past the queue of about 70 people with the identity cards and five local tax forms that had been meanwhile printed, stamped and signed by the tax clerk inside.

Raluca had made it. In less than 15 minutes, she paid the local taxes for herself, her family members and those of some neighbours for this year and took advantage of a 10% discount for having paid the entire amount before March 31. The last people in the queue will have to wait for at least another two hours before paying theirs.

"With a job to be kept, two kids at home and a busy husband, I had no choice but to bribe my way in to pay taxes on land, apartments and cars owned by our family and those of our neighbours," says Raluca, who didn't want to be identified by her family name for obvious reasons, when asked why she had resorted to such a practice. "The system didn't give me an alternative."

The math is simple, according to Raluca. She paid a RON20 bribe, but saved another RON400 by paying her local taxes before March 31. She's happy to have saved time, the bodyguard is probably happy, as no doubt are the clerks inside - and she's clearly bothered to see the surprise on my face. "It's a fact of life in Romania whether we like it or not," she argues. "On one hand, I feel I'm too old to leave this country, but on the other I have to adapt to this sick system over here, which many of us now perceive as normality."

Higher up

Corruption in Romania goes right to the top. On March 30, Adrian Nastase, a former prime minister, foreign minister, opposition Social Democratic Party boss and parliamentary speaker, was placed on three years of probation in a corruption case that had been under investigation for more than six years. Romania's Supreme Court found Nastase guilty of blackmail while PM between 2000 and 2004. He also had been accused of bribery, but the court found him innocent on that charge.

Nastase's wife Dana also was placed on three years of probation for using false documents.

They both claim they're innocent and that the charges against them have been fabricated in order to keep Nastase out of politics for the past three years. However, it's just a matter of months since Nastase was convicted in another corruption case and handed a two-year prison sentence. In that case, the court ruled that Nastase had used a publicly funded conference of construction companies as a front to raise cash for his unsuccessful presidential campaign in 2004.

Nastase's case is just the most prominent in Romania, where other politicians have been either imprisoned or tried for various wrongdoings, especially over the last five years since the country joined the EU, which still criticises it for not doing enough to put its justice system in order.

Authorities say that Mihail Boldea, a lawmaker and former ruling Democratic Party member, who made more than €1m from real estate deals by forging court papers and other legal documents, has fled Romania for an unknown African country via Turkey. Prosecutors, who claimed they couldn't immediately arrest him due to his parliamentary immunity, summoned him for questioning on March 21 even though they knew he left the country on March 17, the daily Gandul reported.

Yet this charging of politicians, top government officials and businesspeople in recent years doesn't seem to be solving the general corruption that the average taxpayer must pay "under the table" for all sorts of services, ranging from ordinary health care for which they already paid taxes, to paying a bribe in scores of other situations of their everyday lives.

Such a situation is illustrated in Transparency International's statistics, which in its latest report on corruption in December put Romania among the top three most-corrupt EU-member states, with only Bulgaria and Greece considered to be more corrupt. "Romanians are disappointed by the authorities' lack of efficiency in protecting them from corruption, either in the form of abuse of public resources, bribery or secret decision-making, but also because of their lack of efficiency in discovering and punishing existing corruption acts,'' Transparency International's Romanian office wrote in the report.

The embezzlement of public funds has led to some notorious examples in today's Romania, with the worst linked to public services or utilities.

For example, €10bn has been spent over the past five years by the state-owned National Highway and Road Company on just 150 kilometres of completed highway. Then there was the preferential power sales awarded by state-owned Hidroelectrica to certain power trading companies, which resulted in €1.5bn of profits over the last 10 years disappearing. And the state railway company, which has been constantly managed by political appointees, has posted losses totalling €1.3bn over the past four years. One of its former general managers is being tried only now for allegedly having diverted from the company €70m in 2002 and 2003.

The corruption in the country is also increasingly being highlighted by the international press; on April 2, the UK's Independent newspaper ran a front-page story with the headline, "Romania's hospital scandal: Babies left to die as doctors refuse to work without bribes". The story centres on a Romanian doctor called Catalin Cirstoveanu who runs a cardio unit with state-of-the-art equipment at a Bucharest children's hospital. "But not a single child has been treated in the year and a half since it opened," the newspaper reports. "The reason? Medical staff he needs to bring in to run the machinery would have expected bribes."

Grim consequences

This widespread mentality of making "a buck on the side" at all levels of government structures has dramatically reduced Romania's capacity to absorb EU non-reimbursable funds, which would have gone a long way toward the country's development. Since it's almost impossible to divert EU aid funds into other businesses due to strict monitoring, officials are not attracted by the hard work needed to put together the projects, so the country has absorbed no more than about 6% of the €19.6bn it was entitled to had it put the correct procedures in place.

Romania's failure to attract EU funding between 2007 and 2013 could impact on the bloc's decision to award it an equal amount of money for the 2014-2020 period, EU Commissioner for Regional Development Johannes Hahn has warned. "Only for this year, it would be necessary to receive payments of €30m a week in order to meet all the requirements," Hahn said during a visit to Bucharest on March 19. That's virtually impossible, so Romania is pinning its hopes on the level of aid for the next 2014-2020 funding cycle not being tied to the amount received during the current six-year post-accession period.

This rampant corruption and a lack of reform in the justice systems are among the main issues that has prevented Romania and Bulgaria from becoming members of the EU's passport-free Schengen zone. Some EU states like the Netherlands fear that the two nations would "export" their criminals and dodgy practices to other nations due to a lack of proper monitoring by their authorities.

Romania convicted 54 officials last year for corruption-related crimes in the allotment of EU funds, up from 20 in 2010, Reuters reported on March 19, citing Romania's top prosecutor Daniel Morar. The number of final convictions and jail terms handed out to officials both nearly doubled. Even so, the "black" or "underground" economy accounts for about 25% of the country's GDP, according to the latest estimates presented by George Maior, head of the Romanian intelligence service. That's equal to about €30bn that's not being taxed, nor reported in an economy where corruption has become "a fact of life."

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