05BUCHAREST1123 / 2005-05-12 13:46:00
Embassy Bucharest
                C O N F I D E N T I A L SECTION 01 OF 04 BUCHAREST 001123 
E.O. 12958: DECL: 05/06/2015 
     B. B) BUCHAREST 0835 
     C. C) BUCHAREST 0658 
     D. D) 04 BUCHAREST 3293 
1. (SBU) Summary: Four months into its tenure, Romania's 
center-right government has taken cautious but concrete steps 
towards combating Romania's widespread corruption, its key 
campaign pledge.  This includes passing anticorruption 
legislation and indicting several businessmen allegedly 
involved in notorious corruption cases, who experts claim 
were previously shielded from prosecution by the former PSD 
government.  Despite these initial steps, critics point out 
that a major anticorruption case has yet to be prosecuted 
under the new leadership.  President Traian Basescu and his 
team will be challenged to reform Romanian institutions and 
fundamentally change a political and economic culture in 
which corruption is an integral and even expected component. 
Their job is all the more difficult given that the EU may be 
obstructing some needed reforms.  End Summary. 
Fighting the Corruption Battle:  Matching Words..... 
--------------------------------------------- ------- 
2. (SBU) Throughout Romania's 2004 electoral campaign, then 
presidential candidate Traian Basescu and the leading members 
of his Liberal-Democratic (PNL-PD) alliance made corruption 
the central plank in their platform.  Recognizing the strong 
concern corruption remained to voters and the vulnerability 
of the then governing Social Democratic Party (PSD) on the 
issue, PNL-PD insiders told post that Basescu made a point of 
raising corruption in "every stump speech and at every press 
appearance he could."  When he met cheering crowds on 
December 13 to announce his impending electoral victory, he 
stated that "corruption is a threat to national security," 
and promised to make anticorruption the top priority of his 
government. In his inauguration speech on December 20, he 
stated: "We cannot talk about joining, with dignity, the EU, 
without solving the major problems of Romania: corruption and 
poverty.... Today, high-level corruption is one of the 
greatest dangers to national security." Basescu made this 
anticorruption commitment repeatedly to the international 
community.  He pledged to the foreign diplomatic corps 
January 18 to "solve Romania's persistent corruption," 
finally translating "words into deeds."  Prime Minister Calin 
Popescu-Tariceanu and others in the new cabinet have 
similarly used strong language to underscore the importance 
of the anti-corruption fight. 
3. (SBU) Among Basescu's early stops as president were the 
key institutions charged with combating corruption -- the 
Intelligence Services, the Ministry of Interior, the National 
Anticorruption Prosecutor's Office (PNA), and the Supreme 
Magistrate Council (CSM).  At each stop, Basescu reiterated 
that anticorruption was his top priority and instructed the 
institutions to improve their efficiency and interagency 
cooperation.  He told the Romanian Intelligence Service that 
it must provide substantial information about corruption 
sources and share such information with anticorruption 
agencies if it is to be effective in  eliminating corruption 
from the Romanian government.  In addition, Basescu has 
expressed his desire to establish an "intelligence community" 
in Romania, so as to enhance interagency information sharing 
on corruption and other domestic national security concerns. 
He told the PNA it must concentrate efforts on tackling 
large-scale cases, lamenting that the majority of those 
pursued were insignificant when compared to the magnitude of 
Romania's corruption problem. 
.... With Deeds 
4.  (C) By declaring corruption a national security concern, 
Basescu thereby brought the issue under the purview of the 
presidency and the Supreme Council of Defense (CSAT) -- the 
interagency council comprised of the President, the Senior 
Advisors, the Ministers of Defense, Economics, Foreign 
Affairs, Interior, and the Chairs of the intelligence 
services.  The parliament's adoption of a National 
Anticorruption Strategy ) which Basescu has stated he will 
put before the legislature by the end of June ) will serve 
to firmly anchor corruption legally as a national security 
concern.  Furthermore, as an issue within the CSAT, Romanian 
intelligence services can now be tasked to collect 
information domestically on potentially corrupt individuals 
(Ref A).  (Note: This is a controversial issue within 
Romanian society, and as such, Basescu appears to be moving 
cautiously.  Transparency International Romania (TIR) has 
argued against using intelligence services to combat 
corruption, arguing that the services themselves are likely 
afflicted by corruption.  TIR opines that using intelligence 
services will actually complicate the prosecution of 
corruption cases by introducing additional procedures to an 
already lengthy prosecution process.  End Note.) 
5. (SBU) The new PNL-PD led coalition under the direction of 
Prime Minister Tariceanu made passage of key anticorruption 
legislation a centerpiece of its first 100 days in power. 
That effort included: 
-- A bill introduced on 3 March to revise the wealth 
disclosure procedure for more detailed picture of total 
income and income sources for all public officials.  The 
Senate, largely due to efforts of opposition PSD members, 
drastically weakened the proposal on 21 April.  The bill has 
now moved to the Chamber of Deputies, where additional 
changes are expected.  (Note: The Senate's act was symbolic, 
as full authority for this measure rests with the Chamber of 
Deputies. See septel. End note.) 
-- An emergency ordinance * passed by the Chamber of 
Deputies on 29 March * to eliminate penal immunities of 
former ministers.  It is now before the Senate for approval. 
-- A law passed by both chambers as of March 31 to eliminate 
penal immunities that public notaries had previously enjoyed. 
6. (C) While the former PSD government similarly passed 
extensive anti-corruption legislation, PNL-PD Minister for 
Parliamentary Relations Bogdan Olteanu asserted to PolChief 
that "the big difference now is that the current government 
actually plans to enforce the laws."  Critics reply that it 
is still too early to tell if PNL-PD will emerge with a 
better legislative record on corruption than the PSD.  Other 
proposed legislation currently under discussion include 
judicial reform, specifically the monitoring and verifying of 
public officials' wealth and interest declarations.  The 
government has expressed hope that this mechanism will be in 
place by July 2005 (See para 14). 
A New National Anticorruption Strategy 
7. (SBU) At the same time the new cabinet, to comply with an 
EU requirement, established on March 30 a government-wide 
National Anticorruption Strategy (NAS) for 2005-7. Defining 
corruption as bribery, influence peddling, and receiving 
undeserved money or goods, the NAS was designed to be the 
official roadmap of the government's anticorruption goals. 
The NAS establishes the standards by which the EU will 
measure Romania's anticorruption progress from now until 
November 2005, the month in which the European Commission 
will publish Romania's country report. If this report deems 
Romania's progress insufficient, the European Commission has 
stated that it will delay Romania's EU accession by one year 
under a clause especially included in Romania's accession 
treaty.  Understanding the importance of the NAS as the 
yardstick by which the EU will measure progress, Basescu has 
told government agencies that he wants specific individuals 
named responsible for the various aspects of implementation, 
so as to bolster accountability.  He has pledged to follow up 
with these appointees. 
8. (SBU) The NAS prioritizes a list of comprehensive 
anticorruption initiatives and establishes a list of 
responsible ministries and the date by which tasks are to be 
completed.  These task include increasing transparency and 
integrity in public administration, preventing corruption in 
business, organizing anticorruption campaigns and educational 
programs, strengthening and improving the efficiency of the 
judicial system and reducing the number of governmental 
agencies involved in anticorruption, so as to centralize 
A Few Big Arrests 
9. (SBU) The early months of the new government have also 
been characterized by arrests in several major corruption 
cases.  Although our law enforcement contacts point out that 
these cases had been under investigation for quite some time, 
the arrests nonetheless added credence to Basescu and 
Tariceanu's claims that they are serious in the 
anti-corruption fight.  Indeed, independent analysts point to 
a link between the new government taking power and a relative 
flurry of arrests of individuals who had long been under 
investigation, but left undisturbed due to apparent shielding 
from prosecution.  Although there has yet to be a prosecution 
in a large scale corruption case, one journalist opined to 
PolChief that the difference now, is that there finally 
appears to be some momentum. 
10. (SBU) The most dramatic arrest occurred in January soon 
after the new government took office.  Bucharest papers 
carried front-page headlines when police handcuffed and 
escorted RAFO refinery boss and PSD moneyman Corneliu Iacubov 
to the Bucharest central jail, where Iacubov shouted, "This 
is from Basescu!  What he gives is what he will get!"  The 
Prosecutor General's Office accuses Iacubov of large-scale 
money laundering and financial fraud. Similarly, the PNA 
indicted in April petroleum king and PNL Senator (and 
financier) Dinu Patriciu on charges of money laundering, tax 
evasion and fraud.  This indictment is particularly notable 
in that it defies allegations that the government would use 
the anti-corruption battle only against the opposition. 
11. (SBU) Other recent high profile cases include the April 
13 indictment of former National Securities Commission 
President Gabriela Anghelache for "abuse of position" in her 
role in the privatization of the bustling downtown Bucharest 
Bucur Obor market complex.  PNA alleges that Anghelache 
temporarily lifted a trading ban on the company's shares to 
allow one of its main shareholders, Laurentiu Postavaru, to 
purchase additional shares.  Postavaru is also under 
investigation by the PNA. 
12. (SBU) Corruption again made the front pages in connection 
with the March 29 kidnapping in Iraq of three Romanian 
journalists and their American-Iraqi guide.  On April 5, 
Romania's General Prosecutor's office arrested Syrian-born 
businessman Omar Hayssam, whom the press (and some in 
government) believed orchestrated the kidnapping (ref B). 
Hayssam, one of Romania's wealthiest individuals, was 
formally charged with fraud resulting in a combined loss of 
1.8 million euros to four different companies.  In following 
days the media linked him to a wide swath of Romania's most 
senior opposition politicians.  This included former 
President Ion Iliescu, former PSD Vice President Viorel 
Hrebenciuc, and former PSD deputy and member of communist 
securitate Ristea Priboi. Iliescu reportedly included Hayssam 
on a number of official delegations, including to the United 
Arab Emirates, Vietnam, the Philippines, Japan, Singapore, 
Uzbekistan, China, Russia and Kazakhstan.  In addition to the 
charges already filed, Hayssam is also being investigated for 
numerous other acts of fraud, tax evasion, money laundering 
and organized crime, not to mention acts related to his 
alleged involvement in the kidnapping.  One PSD political 
advisor told PolChief that many in the PSD are "seriously 
worried" about how far these investigations will go.  The 
scandal involving Hayssam is also attributed to influencing 
the results of the April 21 PSD internal elections, in which 
Iliescu, Hrebenciuc, and other stalwarts were ousted from the 
party leadership. (Ref B). 
Changing the Institutions 
13. (C) Basescu and his team have repeatedly acknowledged 
that essential in the fight against corruption is a 
fundamental change in government institutions, both in terms 
of personnel and of how the institutions carry out their 
functions.  Basescu vowed that no individual who had been 
tainted by credible corruption allegations would be appointed 
to the cabinet, a promise he and Tariceanu largely kept.  The 
most notable appointment was new Justice Minister Monica 
Macovei, a largely apolitical figure from an important local 
human rights NGO.  Early on Macovei confessed to visitors 
that she had "no idea of where to start" in cleaning up a 
Justice Ministry she described as riddled with "old communist 
bureaucrats" and "PSD political plants."  She was 
simultaneously challenged with implementing EU-mandated 
reforms, more sweeping in Justice than in any other sector. 
Nonetheless, by mid-March many government interlocutors and 
NGO contacts reported that Macovei appeared to be "hitting 
her stride." 
14. (SBU) On 7 April Macovei appointed Prosecutor Doru 
Dobocan as head of the General Department for Protection and 
Anti-Corruption within the Ministry of Justice.  The press 
has dubbed Dobocan as a "pit bull" in the fight against 
corruption.  Macovei is also developing in the Ministry a new 
investigative body * the Agency for Integrity and Statements 
of Wealth * which would investigate the veracity of public 
officials' asset declarations. 
15. (SBU) Also fundamental in the anticorruption fight is the 
National Anticorruption Prosecutor's Office (PNA), which was 
established in 2002 as an independent entity to prosecute 
major corruption cases.  Although the PNA budget is ample by 
Romanian standards and its prosecutors are among the best 
trained, it has yet to prosecute a major corruption case to 
conclusion.  Embassy Resident Legal Advisor notes that the 
delay in concluding such trials is at least partially due to 
Romanian jurisprudence practices, which do not facilitate 
swift justice.  Some Embassy contacts have confided that 
Basescu and Tariceanu may seek to replace PNA Director Ion 
Amarie, despite the fact that the latter's tenure is not due 
to expire until 2008.  Minister Macovei has stated that 
Amarie should take responsibility and resign for what she 
views as the PNA's poor anticorruption record.  (Note. Post 
will report more on the current debate over the PNA septel. 
End note.) 
16. (SBU) The Ministry of Interior has also taken a series of 
positive steps in efforts to root out internal corruption. 
It has established its own anticorruption office, which is 
charged with investigating and preventing corruption within 
the Ministry of Interior.  In recent months, the Ministry has 
replaced police directors, border police and customs 
officers, citing corruption as the reason for their removal. 
The Ministry of Interior has announced that their 
replacements will be selected via a process of open and fair 
Comment: A Good Start, But the Task is Big 
17. (C) Basescu, Tariceanu, and their team have amply 
demonstrated their commitment to fighting corruption, in word 
and (at least early on) in deed.  Their National 
Anti-Corruption Strategy earns high marks from the EU and the 
Embassy team.  A real test of anticorruption efforts will be 
whether the PNA and courts are able to prosecute major cases 
to conclusion without political interference.  Preserving the 
judiciary's independence while fostering a get-tough on 
corruption environment will likely prove a difficult 
balancing act for the new government.  An even bigger 
challenge will be fundamentally altering a culture of 
corruption that has strong historical roots and permeates 
virtually all levels of Romanian political and economic life. 
 According to Transparency International, Romania ranks as 
one of the most corrupt countries in Europe (only Albania 
ranks worse).  On the latest worldwide index of 145 
countries, Romania is tied for position 87 with the Dominican 
Republic and Iran. 
18. (C) Perhaps even more frustrating to the current 
government are the seemingly mixed signals from the EU 
concerning domestic anti-corruption efforts.  Several State 
Secretaries, as well as Minister of Finance Ionut Popescu, 
have expressed deep frustration with the corruption in the 
middle levels of the government bureaucracy.  Currently, it 
is nearly impossible to remove a civil servant from his/her 
job without a judicial finding of malfeasance, or even to 
move them permanently to another, equal position elsewhere. 
This hampers the current reformist government's ability to 
root out corrupt bureaucrats and replace them with hopefully 
more honest employees.  In response to Econ Chief's direct 
query about a civil service overhaul that could rid the 
government of the corrupt and incompetent in one fell swoop, 
Minister Popescu replied that the EU has signaled that the 
GOR should not do this, ostensibly out of fear that it would 
"demoralize" the bureaucrats or appear to be a political 
purge.  He also expressed frustration that on some occasions 
in the past, the EU has intervened to prevent individual 
personnel changes in the ministries. 
19. (C) In sum, by electing Basescu and his PNL-PD led 
government, Romanians made clear that they want a serious 
effort to diminish the country's endemic corruption.  Four 
months is little time for any government to make a 
significant dent in such a large problem, but it appears that 
the center-right government is serious about the problem and 
its initial steps, while limited, have been in the right 
20. (U) AmEmbassy Bucharest's Reporting telegrams, as well as 
daily press summaries, are available on the Bucharest SIPRNet 
website: www.state.sgov/p/eur/bucharest 

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