The Romanian High Court of Cassation and Justice ruled on June 17 in support of the seizure of the assets of Rompetrol Rafinare, the company that operates the country’s largest refinery Petromidia, KMG International (KMGI) and Oilfield Explorations Business Solutions (formerly Rompetrol).

KMGI is now in the process of selling the majority stake in the refinery to China Energy Company Limited (CEFC) in a $680mn deal. The company has already initiated procedures to sue Romania through the international courts to protect its ownership rights at its refinery, KMGI vice-president Ahmat Zhangulov told Adevarul daily earlier this month.

Romanian prosecutors announced in May that they had seized some €680mn worth of assets owned by four people involved in the privatisation of Petromidia in 2000, as well as assets of the three companies. The companies challenged the decision in court asking that the seizure should be lifted.

The Directorate for Investigating Organised Crime and Terrorism (DIICOT) said at that time it was taking action to recover alleged losses incurred by the state budget. The losses were estimated at RON1.74bn, $290mn and €35mn - some €680mn altogether.

Following the announcement of the high court, KMG International reacted saying it finds the decision “unfair and unjust” and it will use “all legal avenues to protect its investments, activities and the current operations and also its more than 5,000 employees in Romania.”

“This decision could affect the medium and long term of KMG International development plans and future investment strategy in Romania, also the ability of the Group to attract additional financing.  We underline the fact that the investment plan of the group shows benefits for the Romanian economy – ensuring working places, contributions to the state budget, also benefits for partners and suppliers,” the company said in a statement.

KMGI will continue to make the preparations to sue Romania through the international courts - Stockholm arbitration tribunals based on the Energy Charter Treaty and ICSID, the arbitral tribunal of the World Bank in Washington DC, it added.

KMGI also noted that the allegations relate to a period before KazMunaiGaz took over the majority stake in Rompetrol Group.

“Thus, invoking  in 2016 the illegality of privatizations carried out in 1999 and 2000, raises from the very beginning obvious problems on the conventional, constitutional and legal nature, even only in relation to the principles of ownership and of ensuring the security of civil circuit,” the company said.

DIICOT has started investigations into a group made up of 14 individuals suspected of tax evasion, money laundering, market manipulation and other illegal activities. The group was allegedly formed in 1998 and is suspected of involvement in the privatisation of the Petromidia refinery as well as the conversion of the refinery’s historic debt.

In addition, in May, DIICOT asked approval to start an investigation former Finance Ministers Mihai Tanasescu, Sebastian Vladescu and Gheorghe Pogea and former Economy Minister Dan Ioan Popescu on suspicion of setting up an organised criminal group. President Klaus Iohannis endorsed the investigations on May 31.

Mihai Tanasescu was officially indicted on June 17, according to local media.

DIICOT claims that between September-October 2003, Tanasecu and Popescu exercised their duties in bad faith following an agreement with Patriciu and several others, by initiating and promoting an emergency ordinance on the conversion of Rompetrol Rafinare’s debt, amounting at the end of September 2003 to around $603mn, into bonds subscribed by the finance ministry.