Romania’s parliament dismisses head of financial markets regulator

Romania’s parliament dismisses head of financial markets regulator
By Iulian Ernst in Bucharest May 12, 2017

Romania’s parliament unanimously dismissed the head of the financial markets regulator (ASF), Misu Negritoiu, on May 11. 

The vote was held after the National Liberal Party (PNL), which is now in opposition, called for him to be dismissed following a crisis in the car insurance market that sparked hauliers' protests. The PNL’s request was made last year, and since then Negritoiu, who is seen as closer to the ruling Social Democratic Party (PSD), has fallen out with the party’s leader Liviu Dragnea on a separate issue. 

The vote — on the recommendation of the parliament’s expert committees on budget and finance — came one week before the deadline for the enactment of the new third-party car insurance law. This should put an end to a six-month freeze of motor insurance fees imposed amid tensions between insurers and hauliers. 

Once the moratorium ends, insurers might raise their fees, although Negritoiu said recently that there is no reason for this. Depending on the magnitude of the hikes, hauliers might resume the protests that blocked main roads last autumn. The ASF was supposed to use the six months to resolve the situation by making the procedures used by insurers more transparent, but has failed to do this so far.

Under a decree issued by the government last autumn, the ASF should calculate non-binding benchmark fees for each category of vehicles and owners on a quarterly basis starting May 19. Fearing rising prices despite the benchmark fees, hauliers are asking for an extension of the moratorium — an extension that would, however, breach EU regulations. The European Commission has already warned Romania on possible infringements related to the freezing of fees.

The car insurance law is currently being revised in parliament and there is little information available on its content. However, Prime Minister Sorin Grindeanu said earlier this week that the government has discussed the issue with both the ASF and the expert committee in parliament, and confirmed that the law would be endorsed by May 19.

Negritoiu’s dismissal became imminent last autumn, amid the crisis on the car insurance market. However, his replacement was reportedly due to tensions within various factions of the ruling PSD on separate issues. 

Negritoiu took a critical stance against City Insurance, an insurer controlled by a relative of former Prime Minister Adrian Nastase, who remained influential within the party despite being indicted several times for corruption. 

In a later incident involving Negritoiu, Dragnea blamed the ASF head and officials from pension fund manager NN (part of ING group) for rumours circulated about the possible nationalisation of the second pillar of the pension system. 

“ASF leadership will be dismissed,” Dragnea said in an interview with Antena 3 TV station on April 12, during the NN scandal. He added that NN representatives would be summoned by a parliamentary commission to explain the incident, unless a criminal investigation was started by prosecutors.

Negritoiu immediately fined NN with a record RON750,000 (€165,000) but instead of securing his position, this prompted criticism from the opposition. The PNL claimed the fine was imposed on Dragnea’s orders and accused Negritoiu of political bias.

While his political bias remains debatable, and NN indeed overreacted to the rumours, Negritoiu’s political support had clearly vanished ahead of the vote.

At a press conference in the parliament on May 10, Negritoiu argued that he would rather be replaced on political grounds than because of the ASF’s performance or after an indictment by anticorruption prosecutors - an allusion to former ASF president and PNL member Dan Rusanu, who was removed from the post after being indicted for corruption. 

Indeed his professional record might not be hurt by his politically-grounded dismissal, but his performance as ASF head particularly in regard to the car insurance market (which is the core of the insurance market in Romania) is at best neutral, if not a failure.

Negritoiu replaced Rusanu as head of the ASF in 2014, after a career within ING group. He started his career in government institutions immediately after the fall of the communism, as a member of what is now the PSD.