the links between public procurement and political...
TRANSCRIPT
MONEY AND POLITICS
the links between public procurement
and political parties
WHAT MONEY ARE WE TALKING ABOUT?35 bln EUR
EU funds 2007-2013
1.5 bln EUR
National Program for Local Development 1 – 2012-2016
6.5 bln EUR
National Program for Local Development 2 – 2017 -2020
CONCLUSIONS – PARTY FINANCING
•Politicians keep the money for their personal use; or give a fraction to the party
•Party related companies prefer national funds; still, EU funds are also vulnerable
CONCLUSIONS – PARTY FINANCING
•Some companies donate to all the parties: local networks
•Some companies or individuals donate to parties that are theoretical political enemies; money is more important than the party adversities
CONCLUSIONS - PROCUREMENT
•National funds are more vulnerable to less scrutiny and less institutional capacity
•Big companies get money due to capacity and resources; they had political support to get here (“the first million”)
•A significant number of companies in top 20-30 (works, consultancy etc) are politically connected or have criminal record
CONCLUSIONS - PROCUREMENT
•Conflicts of interests
•Systematic contracting for feasibility studies (copy paste studies) + additional costs
•Consultancy – one of the main vulnerabilities
•Lack of capacity in contracting authorities; documentation of low quality
CONCLUSIONS - PROCUREMENT
•Big difference between the estimated value and the final value of the contract; over evaluated contracts
•Subcontracting and supporters
•Lack of interdisciplinary institutional analysis; institutions do not communicate
PATTERNS Rapidly increasing companies or party/government connected wins
WHO ARE THE OWNERS?A. Real owners - ANI – 2008 -2012, ½ out of 2856 councillors were shareholders or administrators; 190 signed 802 contracts = 25 mln EUR; 50% in conflict of interests
•PSD 393 (93 mln RON) + PDL 221 (11 mlnRON)
B. Camouflaged owners – indirect control, so that they go around the law
FRAUDMECHANISMS
•Legal donations by companies are a small portion of the way parties ensure their survival;
•paying a commission (typically 10-20%) of the contract value by a company to the contracting authority in order to win a public procurement; requesting bribes by decision-makers (eg mayor, county councilor) to approve payments for works already executed by companies
•the use of false or overrated consultancy contracts to mask the illegal campaign funding
•obtaining funds in situations of conflict of interest– the decision-maker is the shareholder, administrator or is controlling the firm in any other form and uses the public office to directly or indirectly get contracts for the company– the existence of firms whose owners are decision-makers who work or worked at public institutions such as CNADNR or MDRAP –institutions that manage funds and procurement procedures
•soliciting from companies various products or services for electoral campaigns (campaign materials electoral, consulting or advertising services, food, etc.)
•determining the local decision-makers by a political leader to cast votes in exchange for approving funds (for example, from the National Program for Local Development).
•obtaining funds illegally under the pretext of organizing events, by paying participation fees
•overestimating contracts illegally, although there is no justification for works or services (consultancy, feasibility studies, etc.)
•appointing people close to political parties in key positions (for example at the head of state-owned companies) to facilitate the procurement of public procurement contracts; part of the money to get to the party
WHAT DOES THE DATA SHOW?
CONCLUSIONS - DATA
•Poor quality data
•Databases do not communicate
• Issues with input from CA and exports – may cause significant errors
GENEROUS COMPANIES WITH THE PARTIES
•Total donations of 263 mln. RON / almost 80% came from individuals
•1724 companies that donated 2006-2015
• more than 600 companies had contracts with the state / 303 from EU funds
•Main beneficiary is PD / PDL (36%), followed by PSD (22%)
2012a 2014 20162012b
2004 2007 2008 2009 2010 201120062005
Map of governments2004 - 2016
Partidul
Democrat
Liberal, 36%
Partidul Social
Democrat, 22%Partidul
Național
Liberal, 9%
Uniunea Social
Liberală, 7%
Partidul Noua
Generație-Creștin
Democrat, 5%
Alianța Politică Partidul
Social Democrat +
Partidul Conservator,
5%
Uniunea Democrată
Maghiară Din România,
4%
Sorin Mircea Oprescu,
3%
Partidul Conservator,
2%
PNTCD
1%
Partidul Mișcarea
Populară, 1%
UNPR
1%
Total donations to parties,
companies and individuals, 2006 -2015
0
5
10
15
20
25
30
35
40
45
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Millio
ns
All donations / years
* PNL does not contain info for some years
PD + PDL + DA PNL PSD + USL + PSD/PC
1.57
2.31
22.66 - top year
for donations
17.08
1.86 1.40
6.35
0.24
2.75
0.540
5
10
15
20
25
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Millio
ns
Donations per year, companies
BROKEN RULES OF DONATION
Art. 25/33, Law 334/2006(1) It is forbidden to finance in any way the electoral campaign of a party, of their alliance or of an independent candidate by a public authority, public institution, autonomous administration, national company, company or banking company, to which the state or administrative-territorial units are majority shareholders, or by companies that carry out activities financed by public funds. The ban applies to commercial companies that have carried out activities funded by public funds 12 months before the beginning of the election campaign.
TYPOLOGY OF COMPANIES
VICTOR CONSTRUCT – universal donor
> 475,000 RON to PSD, PDL, PNL, USL from 2007, almost half to PDL and half to PSD
CONREC – family relations
> Mihai Vrăjitoriu, administrator –godfather of the PNL mayor of BotosaniCătălin Flutur (2004-2012)
ASESOFT INTERNATIONAL / TEAMNET–donors to political opponents
> Companies controlled by Sebastian Ghiță, former PSD MP (2012-2016). Both donated to PDL in 2009. Until 2012, PDL was in power
INSTITUTUL DE STUDII SI PROIECTARI ENERGETICE SA / ROMELECTRO – power relations
> ISPE donated 15.000 to PDL in 2008.
Dan Ioan Gheorghiu - former advisor on energy of PSD
PM Victor Ponta, personal advisor to PDL minister
Adriean Videanu and PSD Minister of Industry, Dan Ioan
Popescu.
Romelectro (shareholder at ISPE) was part of the foreign trade network in the communist regime. ISPE isshareholder to other companies with
CONSIZO SERV - S.R.L. - power relationsConstantin AVRAM was county councilor, sub-prefect,PC/ALDE parliamentary in the 2012-2016 mandate
> more than 30 contracts with Bacau Municipality, between 2007-2009, when Avram was county councilor and shareholder. 45 % of the company revenue comes from Bacău Municipality.
SC CCCF DRUMURI ȘI PODURI, FILIALA ROMÂNIA (bankrupt) – former employees
Virgil Icleanu is a former director in the National Roads Company (CNADNR)
CCCF was a shareholder of Societatea de Constructii In Transporturi Bucuresti SA –the company had 16 contracts between 2007 and 2015 with the Roads Company.
Icleanu is also administrator at SC ConstructiiFeroviare Iasi that has 30 contracts with CNADNR. The company donated 20,000 RON in 2008 to PDL.
CONBAC S.A. – conflicts of interests
Mihai Șlic, local councilor (PDL) and vicemayor of Bacau (PNL) was shareholder until 2015. He lost his mandate due to conflicts of interests: CONBAC and Profinstal got contracts from the Municipality. The company donated 15,000 RON to PDL in 2012.
18 out of 42 contracts are signed with the National Investments Company, mostly in 2008-2010, when PDL was running the Ministry of Regional Development.
CONSMIN (insolvency) – the briber
Donated to PNL in 2012
Marius Botoroagă (administrator), involved in the “Gala Bute” case
Admitted to have bribed former PDL minister of Development, Elena Udrea and the head of the National Investments Company (CNI), Ana Maria Topoliceanu to make sure he would receive money for the works (10%).
Almost 45% of the revenues of the company came from CNI. Almost 50% of the contracts were signed with ApaServ Valea Jiului S.A (105 contracts).
TOP WINNERS AND POTENTIAL POLITICAL CONNECTIONS
- VEGA 93 – Corneliu Istrate- PSD
- CONFORT S.A. – Cornu Georgica - PDL (denied connections)
- DELTA ACM 93’ – PDL (Ionel Pirpiliu, brother of former PDL deputy, Stefan Pirpiliu)
- ELSACO ELECTRONIC SRL – PNL
- TANCRAD SRL* – PSD - Traian Stăncic (founder), former work colleague of Nicolae Dumitru, former PSD mayor of Galați
* In 2014, Tancrad SRL was indicted by DNA in
a case where the PSD president of CJ Brăila, Gheorghe Bunea Stancu, was convicted for abuse in office, conflict of interest and obtaining undue advantage for himself or for another.
Prosecutors said that four contracts concluded between Tancrad SRL and Braila County Council were attributed fraudulently, with an estimate value of 2,450,752.88 lei.
- SC DIMAR SRL – Iulian Dragunoiu - donated 50,000 RON to PDL in 2009
- IRIDEX GROUP CONSTRUCTII - Corneliu Pascu, former PC Senator from Buzau between 2004 and 2008, close to the Voiculescu family
- UTI GRUP SA - Tiberiu Urdăreanu, former MAPN major, UNPR member
Urdăreanu declared in 2016 that he bribed the former PSD minister of Energy, Constantin Nita to intervene for a contract related to the traffic management at the former PSD mayor of Iasi, Gheorghe Nichita
FINANCIAL CORRECTIONS – POR
Non-eligible
payment
20%
Restrictive
criteria
60%
Reducere
de termen
7%
Others
13%
Type of irregularity, top 150 projects
T DANCOR and ROMCONSTRUCT – Cornel Ciocan, convicted for tax evasion. Brother Dan Ciocan was county councillor and deputy (since 2012) – PSD; donated to PSD in 2008, 2009, 2013 and 2014.
CAST SRL – Gimi Palada said under investigation that he gave 10% of the contract to Vlad Cosma (PSD) through a fictive contract. Cosma intervened with his father (Mircea Cosma) to ensure that the bills are paid on time. According to Palada, the money also went to PSD Prahova. The company was involved in a bribery network in Prahova for roads and snow contracts
EUROVIA-CONSTRUCT INTERNATIONAL SACRISTESCU ILIE DAN (godfather of Mircea Drăghici, leading figure in PSD) and CAZACU C. DANUT MIRCEA, former general councilor (PD) in Bucharest; his wife, Cornelia Cazacu was PD senator between 2004 and 2008.
TEHNOLOGICA RADION
BERNA GH. THEODOR, former advisor of mayor Traian Băsescu (PD), denounced that the former PSD deputy Sebastian Ghiță asked bribe from him (RTV case)
TEL DRUM
Connection to PSD President, Liviu Dragnea, according to press
50% of all contracts are signed with CJ Teleorman
NATIONALINFRASTRACTURE FUNDS
NATIONAL INVESTMENTS COMPANY (CNI)
306
124 111 82124
33
156
101230
65
0
100
200
300
400
500
USL PSD PNL PDL UDMR Altele
Comparison, no of contracts
-reported to the political colour of the mayor-
2004-2008 2009-2012
39.91%
15.80% 16.55% 11.32% 16.43%5.81%
24.70%
13.17%
43.85%
12.47%
0
0.2
0.4
0.6
0.8
USL PSD PNL PDL UDMR Altele
Comparison % of sum-reported to the political colour of the mayor-
2004-2008 2009-2012
Proportions change as the government changes
TERMOGAZ COMPANY
In 2010, Minister Udrea Elena Gabriela received indirectly, for hemself and for another, through Lungu Ştefan, material benefits from Gardean Adrian and Gardean Miron, to ensure the timely financing of works contracts concluded by SC Termogaz Company S.A. with several territorial administrative units under the "Skiing for Romania" program. […]
In 2011, Udrea Elena Gabriela requested and received from the defendant Gărdean Adrian, for hemself and for another, material benefits worth 10% of the payments made by the Ministry for the works contracts concluded by S.C. TermogazCompany S.A. and S.C. Kranz Eurocenter S.R.L., in exchange for the guarantee that the funding will be approved in time
“
“
MBS Group
Former PDL municipal councilor in Turda SILAGYI GABRIEL
Natalia Silagyi, his wife, held the position of councilor on evaluation in the Project Monitoring Department, MDRT, while MBS was implementing projects signed with CNI
NATIONAL PROGRAM FOR LOCAL DEVELOPMENT (PNDL)
www.expertforum.ro/clientelism-2016
In each county between 30-50% of the winners are not published in SEAP
In each of the counties surveyed, almost 50% of the contracts are won by 5-6 companies, out of 40-50 competitors. A significant number of them have been subject to criminal investigation or have political or family ties at the local or central level
Ties are in many cases party-based, but tend to be built around local power relations. Some owners of companies donate to several parties simultaneously, act as political go-betweens or have family ties with people from other parties.
Some companies are nominally administered by façade administrators; in reality they are ran by politicians or other powerful individuals. In some cases identified, real owners (public officials) do not even make much effort to hide and engage in direct transactions with their firms.
The rule of county/regional monopoly seems to apply
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