Former Romanian minister admits taking €4mn bribe in Microsoft case

By bne IntelliNews October 14, 2015

Iulian Ernst -

 

Romania’s former communications minister Gabriel Sandu admitted at a court hearing on October 12 that he received a €4mn bribe in the so-called Microsoft case. Eight other former ministers are under investigation in the case, but Sandu is the only one to be indicted so far.

The implications of the case remain unpredictable, as it involves ministers from three governments of various political orientations. It was instigated by Prime Minister Victor Ponta of the centre-left Party of Social Democrats (PSD) who wanted an investigation into contracts signed under his predecessor and political rival Emil Boc in 2009-2012. But he opened the door into a much broader political scandal that has dragged in politicians of both parties.

The National Anticorruption Directorate (DNA) started investigations into the sales of educational software licences for Romanian schools in September 2014. The nine former ministers are suspected of receiving bribes in exchange for signing and later extending contracts to license Microsoft software at above market prices.

Sandu was the first former minister to give testimony in court. He claimed to have contributed the entire €4mn bribe he received to the centre-right Liberal Democrat Party (PNL) electoral campaign and to that of Traian Basescu, the party’s successful candidate in the 2009 presidential election.

“I was the most stupid minister in Romania’s history,” Sandu admitted, according to hotnews.ro.

Sandu served as communications minister from 2008 to 2010, assuming office four years after the Romanian government acquired the right to use Microsoft licenses in the public sector.

The supplier was the local branch of Fujitsu Siemens Austria, a licensed distributor of Microsoft Ireland. There was no auction on the grounds that only one supplier submitted a bid. The initial value of the contract was around $74mn, with an additional $26mn paid during the next five years as more orders were placed.

The DNA claims that the software supplier offered a 47% discount for bulk sales and because the licenses would be used in the public sector. The discount was eventually shared by top politicians and businesspeople, the DNA says.

More details emerged as three of those involved in the scandal agreed to give full testimony. Former Fujitsu Siemens Romania manager Claudiu Florica and former tennis player Dinu Pescariu, who acted as a go-between, were allegedly the initiators of the fraud. Together with Dragos Stan, an investor specialised in the IT sector who helped transfer funds through offshore firms, they provided documents showing the flow of money. As a result they have not been indicted, but prosecutors say they can still be indicted for other actions related to the case.

In addition to Sandu, two others pleaded guilty on October 12. Nicolae Dumitru, the owner of property development group Niro, and Dorin Cocos, the husband of former minister and Basescu ally Elena Udrea. The pair admitted their involvement and have explained how the bribe was shared among politicians. A fourth indicted person, PNL vice president Gheorghe Stefan, has denied the accusations against him.

Dumitru admitted in court that he paid the bribe on behalf of Pescariu - one of the two initiators of the frauds - to Alexandru Bittner ($4.8mn) and Serban Mihailescu ($800,000) in 2004. The two are known as close collaborators of Romania’s then prime minister Adrian Nastase, who is suspected of facilitating the signing of the first Microsoft contract.

Dumitru also admitted to paying €1.9mn to Cocos in 2009. At the time, Cocos’ wife Udrea was a member of Boc’s centre-right cabinet. Later, Cocos has asked for €9mn for himself in return for convincing the government to sign another contract for Microsoft licenses. In total, he asked for €17.5mn to be shared among himself, Stefan and Sandu, prosecutors claim.

The investigation was originally requested in 2013 by Prime Minister Victor Ponta, who wanted a probe into the handling Microsoft contracts between 2009 and 2011, when Boc was in power. However, it was since expanded by the DNA to also cover the initial contract signed in 2004, when Ponta’s mentor Nastase had a firm grip on all public acquisitions in the country.

Nastase’s government also privatised oil company Petrom under conditions seen as detrimental to the state, and signed a contract with the US’s Bechtel to build the Transilvania highway, which was never completed.

By the time the initial contract expired, the PNL was in power and its candidate Basescu had defeated Nastase to take the Romanian presidency. A new €90mn contract was signed in 2009 and renewed two years later. The supplier under this contract was a firm set up by Florica, the former head of Fujitsu Siemens Romania.

Florica’s March 2015 testimony indicated that he and his associates successfully penetrated the public administration at the highest level during successive political regimes. Moreover, the same politicians have been implicated in an even larger corruption scandal that has not yet fully surfaced. The “EADS scandal” relates to the public acquisitions of equipment and services for the country’s border control system. International aerospace and defence company EADS, which was renamed Airbus Group in 2014, was the main contractor. The unfolding Microsoft case is expected to help prosecutors collect evidence for further investigations. 

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