Hana Lešenarová, Associate Director, Compliance Intelligence Investigations and Technology, Control Risks
Romania used to have one of the worst anti-corruption records among European Union member states, but the country has been making strides in recent times with a concerted judicial campaign. The presidential election victory of Klaus Johannis in November 2014 was another boost to the anti-corruption drive. One of Johannis’ campaign planks was a promise to ensure the independence of the judicial system and back the anti-corruption efforts of Romania’s National Anticorruption Directorate anti-corruption authority, the DNA and the judiciary. A clean-up will improve the business environment in the long-run even if the current time is marked by turbulence and uncertainty resulting from multiple investigations.
In 2013 alone, Romanian courts sentenced 1,051 individuals for corruption, a 41% increase compared with 2012, while an additional 1,000 individuals were charged that year, according to the 2013 annual report of the DNA. In addition, 49 legal persons were indicted last year, an increase from 25 such cases in 2012. This change of pace coincided with the appointment in May 2013 of Laura Codru?a Kövesi as the head of the DNA. The agency’s success rate has reached a remarkable 90% in this period. In addition, DNA currently has 4,800 cases open, meaning more sentences are likely to follow.
A number of high profile international companies have found themselves in the spotlight, with investigations currently involving names such as Microsoft, Fujitsu Siemens and EADS Deutschland GmbH. Since the mid-2000s, the Romanian subsidiary of Fujitsu Siemens sold Microsoft licences to the Romanian government in an allegedly corrupt manner, involving eight former ministers and high ranking politicians being investigated for influence peddling, bribery or money laundering (or all three) and dozens of companies from Romania, Liechtenstein and offshore jurisdictions. To date Microsoft has not been linked to any alleged wrongdoing and is not facing investigation. The defence equipment provider EADS Deutschland GmbH (of Airbus Group) is being investigated for alleged bribery related to a border security contract acquired by the Romanian interior ministry in 2004. Germany is also investigating the case, with prosecutors in Munich raiding Airbus’ premises in October 2014. Neither EADS Deutschland GmbH nor Fujitsu Siemens have issued any comment on the cases.
The scope of investigations will continue to grow as President Johannis has a clear mandate to fight any attempts by governing political parties to weaken the independence of the judiciary or sweep under the carpet critical investigations of fellow party members. For foreign companies operating in Romania there are risks associated with the anti-corruption drive and they fall into two main categories:
Operating in Romania’s changing business environment poses new challenges for investors already in the country and for those considering entry. The risk that they too – or their employees and suppliers – may be implicated in such investigations has now increased significantly. It is vital for investors to be able to obtain an independent assessment of the situation, which would enable them to prevent reputational and financial damage to their company and staff.