Romanian bankers and officials detained in fraud probe

By bne IntelliNews November 5, 2012

bne -

Thirty three people, including economy ministry officials and high ranking officers at the Romanian Development Bank, were detained on November 2 as part of a wide-reaching fraud investigation.

Those arrested include three government officials and the deputy chairman of the bank, as well as the chairman of The Fund for Guaranteeing Loans for SMEs - a state fund set up to facilitate business lending by guaranteeing loans from commercial banks, Reuters reports.

All but one of the detainees are expected to be held for one month on the request of prosecutors. In addition to the arrests, prosecutors also raided 50 homes and offices in Bucharest, Giurgiu and Calarasi. Around 100 people have been questioned in connection to the investigation, which centres on an alleged criminal group set up to obtain bank loans under false pretences.

According to the prosecutors, between 2010 - 2012 the group obtained 40 loans for fictional businesses from the Romanian Development Bank, as well as the state-owned CEC savings bank, all of which were underwritten by the fund, over a two-year period. The Romanian divisions of several international banks including Raiffeisen, Piraeus, OTP, Millennium, and two Turkish banks - Eximbank and Garanti - were also targeted, although it remains unclear whether they actually handed out any cash, reports AP.

Despite the media furore, Raiffeisen analysts suggest they expect limited impact on the Romanian banks. "We see an immaterial impact on BRD-GSG from the ongoing scandal," they write, noting that the total value of the scheme came to around €22m, and that "the losses for the banks were mainly covered by the [state SME] fund."

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