Romania’s PSD considers breaching integrity code to allow former PM Ponta to run for parliament

Romania’s PSD considers breaching integrity code to allow former PM Ponta to run for parliament
By Iulian Ernst in Bucharest September 8, 2016

The leader of the Romanian Social Democrats (PSD), Liviu Dragnea, has argued that former Prime Minister Victor Ponta is a “special case” and he should be on the party’s lists for the December election even though he a suspect in several criminal cases. 

Allowing Ponta to run in the election would break the PSD’s own code of ethics, which prohibits members of the party that are under any form of monitoring by prosecutors as part of investigations into any type of allegations from running on the party’s lists in national or local elections. However, voters currently seem more focussed on the economy than corruption, and the PSD leadership has sought to link Romania’s current strong growth to policies carried out under Ponta’s leadership. 

There are also rumours that Ponta could be planning a move to the fast-growing United Romania Party (PRU), in which case he would most likely take with him a small but still important part of the PSD's regional infrastructure at a critical time in the electoral cycle. It would therefore be in the PSD’s interests to ensure he is on its lists before campaigning gets underway. 

The party leadership will discuss the issue on September 15-16, meaning Ponta could be invited to join the PSD’s electoral lists just days after the National Anticorruption Directorate (DNA) announced the former prime minister was being monitored in connection to €220,000 allegedly paid by controversial businessman Sebastian Ghita ahead of the 2012 election in exchange for a seat in parliament. The money covered the visit of a foreign leader - reportedly former UK Prime Minister Tony Blair - to attend a conference in Bucharest. 

Ponta has already been formally indicted by the DNA for allegedly accepting €40,000 from another close ally, Dan Sova, in 2007-2008 as part of a broader arrangement involving a contract with state-owned power company CE Oltenia. Sova was later appointed to Ponta’s cabinet. 

In a separate scandal, Ponta’s PhD diploma was recently withdrawn after he was found to have plagiarised part of his thesis. This might result in his being expelled from the association of registered lawyers which would seriously limit his professional career. 

Finally, but perhaps most importantly, Ponta is also reportedly part of an investigation related to the settlement of a $600mn debt of KazMunaiGaz (KMG), the owner of Rompetrol Rafinare, which operates the country’s largest refinery Petromidia. 

Despite their long-standing political rivalry and the scandals surrounding Ponta, PSD leader Dragnea tends to argue in favour of reinstating Ponta to the party leadership. Dragnea himself is no stranger to controversy, having received a two-year suspended prison sentence for manipulating the vote in a referendum against former President Traian Basescu. In addition, the cases against Ponta are perceived by the electorate to be fairly insignificant. 

Dragnea has refused to elaborate on whether Ponta will be re-launched as one of the party’s leaders ahead of the parliamentary elections. However, on September 7 Adevarul daily quoted local party representatives as saying this would increase the party’s support among voters. 

In addition to cases against Dragnea and Ponta, many others have decimated what was once the party’s elite, contributing to the PSD’s rhetoric about abuses by prosecutors. This stance has long been held by the smaller Alliance of Liberals and Democrats for Europe (ALDE), an ally of the PSD led by senate speaker Calin Popescu Tariceanu, but it is increasingly part of the PSD’s rhetoric as well.

MP Codrin Stefanescu recently claimed that Ponta was “a victim” of prosecutors, as were other PSD leaders. He would not be the only exception to the party’s code of ethics, Stefanescu added, naming Craiova mayor Lia Olguta Vasilescu who ran in and won the June local elections despite her indictment for money laundering by the DNA.

Ponta’s hints that he might be available to join another party are another reason for Dragnea’s keenness to have him on the PSD lists. The almost overnight rise of the PRU has caused some consternation among the PSD leadership. A significant number of MPs, mainly from the PSD and mainly with integrity issues, have migrated to the PRU recently, and there is speculation Ponta could join them. Ponta commented in a recent interview with Antena3 that he might seek “better opportunities with other parties”.

Bringing back Ponta might also be consistent with a more aggressive electoral rhetoric about the benefits of the economic policies pursued by his cabinets. GDP increased by 6% y/y in Q2 and the growth has been presented as a delayed effect of past tax cuts – though the economic debate should go deeper into the sustainability and the sources of the growth. The PSD is now promoting more tax cuts in parliament, and while these are likely to be rejected by either lawmakers or President Klaus Iohannis, they contribute to the general idea that the Social Democrats, if elected, would continue fiscal loosening and public sector wage hikes. Further tax cuts are technically impossible, but the idea of tax cuts is politically profitable.  

Summing up, corruption does not seem too high on the list of topics for this year’s general elections. It’s economic issues that are making the headlines. 

More specifically, a sort of nationalist sentiment, partly justified, about the role of foreign investors in Romania seems to resonate with the electorate. For example, the conflict between debtors and banks, particularly in the context of the recently adopted debt discharge law, is generally viewed as pitting foreign financial groups against local debtors. Public debates about transfer pricing by multinational groups, the state aid predominantly being given to large multinational companies and the low wages paid by foreign investors in car parts plants have all contributed to this sentiment.

The debate is not formal or openly advocated by the main political parties, but it leaves little room for other topics such as corruption or the reforming of the public administration. As a result, Ponta, Dragnea and other politicians suspected or even convicted of criminal offences are likely to escape too much scrutiny as the election approaches. 

A lawyer by education, Ponta’s career has been predominantly influenced by his mentor, former Prime Minister Adrian Nastase who has served a prison sentence for corruption. Ponta worked as a prosecutor from 1995, when he graduated from the University of Bucharest law school, to 2001, when he joined the government as secretary of state and the head of the government's control department. In March 2004, he became minister-delegate for control of international grant programmes implementation and for monitoring the application of the EU acquis communautaire.