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Economy

Over 20 million US dollars from Moldova’s electricity bills ended up in offshore firms’ accounts// RISE

Over 20 million dollars from electricity invoices paid by Moldovan consumers have reached the accounts of offshore companies. The money was removed from the Victoriabank accounts of a company in Tiraspol that has been interfering with the supply of energy for several years in Moldova.

RISE outlined the scheme by which the buffer company in the separatist region became the main electricity supplier overnight, earned millions of profits and hid them in tax havens.

Only around 20% of the country’s total electricity demand is produced on the territory of the Republic of Moldova on the right bank of the River Nistru. In recent years, the battle for Moldova’s electricity supply contract has usually been made between two regional players: a representative of the Ukrainian group DTEK, which is part of the business empire of Ukrainian billionaire Rinat Akhmetov, and the Cuciurgan plant, which is owned by the giant Inter RAO UES, controlled by the Russian state.

Source: MediaCenter (The Cuciurgan plant)

How EnergoKapital appeared in the scheme:

After the spring of 2014, when the Ministry of Economy announced that between April 1, 2014, and April 1, 2015, the Republic of Moldova bought electricity from DTEK Vostokenergo and from the Cuciurgan plant, due to the crisis in the Eastern Ukraine that degraded into an armed conflict, in autumn of 2014, DTEK has completely ceased delivery of energy to the Republic of Moldova. Consequently, DTEK’s contractual obligations were taken over by the Cuciurgan Power Plant.

At this point in the scheme, an intermediary appeared – the company EnergoKapital in Tiraspol, which was founded in October 2014, a few weeks before the DTEK ceased its deliveries. Founders of the company that emerged overnight were Bas-Market SA in Tiraspol, with offshore shareholders, and Ornamental Art Limited in Hong Kong.

In the following years, the EnergoKapital’s license was prolonged four times, with the left bank becoming the main electricity supplier in the Republic of Moldova. Thus, from the end of 2014 until the end of March 2017, EnergoKapital delivered energy worth about 400 million dollars to the consumers on the right bank of Nistru.

The offshore compromise

Victor Parlicov, the former director of the National Energy Reglementation Agency, claims that such schemes have happened in the past, but the emergence of EnergoKapital as an intermediary is also due to some misunderstandings between business partners in Chisinau, Tiraspol, and Moscow.

Former director of EnergoKapital in 2014-2016, Mihail Dobrov, now head of Dnestrenergo, an enterprise that manages Transnistrian energy transport networks, refused to speak on this subject.

Criminal law in Chișinău

The criminal scheme by which Moldova was supplied with electricity also came into view of the law enforcement bodies, the General Prosecutor’s Office, stating beforehand that the EnergoKapital intermediary figured in a criminal case. Vladimir Mosneaga, prosecutor at the Office for Combating Organized Crime and Special Causes, refused to rule on the file, suggesting that RISE should wait for the official response.

Currently studying Interactive/Media/Design at the Royal Academy of Art. Based in The Hague, The Netherlands.

Economy

Moldova Government increases guaranteed minimum wage to 2610 Lei ($157)

25 April 2018- The Government of Moldova adopted a decision to increase the guaranteed minimum wage in the real economy by 230 lei (approx. 14 USD) up to 2610 lei (approx. 157 USD). The change is expected to enter into force from 1 May 2018.

Thus, the workers in the real sectors of the economy will not receive less than 15,44 Moldovan lei (0,93 USD) for an hour of labor, compared to the current 14,09 lei- 2380 lei monthly.

In 2017, the prices increased by 6,6%, while the productivity growth rate was 3%- a 9,6% salary increase is put up.

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Economy

Moldova buys 69 Russian GAZ ambulances

24 April 2018- The Moldovan Center for Urgent Medical Assistance announced about the delivery of 10 ambulances bought last year from the Russian GAZ. Other 50 GAZ ambulances are expected to be delivered until the end of May.

The 69 ambulances will be distributed in 32 urgent medical centers, where the ambulances are 90% overused. The Center claims that the GAZ Sobol ambulances, costing 740 thousand lei each, comply with the international standards and the technical equipment allows a high level of medical assistance.

The seller of the ambulances was a Moldovan firm residing in Coșnița, Dubăsari district. According to Mold-Street, the ambulances were produced at the GAZ factory, which belongs to Basel group (Basic Element), controlled by the Russian oligarch Oleg Deripaska. The latter is subject to the US sanctions due to his alleged involvement in the President Trump campaign manager Paul Manafort’s collusion with Russian officials during the 2016 elections. There are also “allegations that Deripaska bribed a government official, ordered the murder of a businessman and had links to a Russian organized crime group” (NPR).

Some claim that this would mean that the Moldovan Government is a collaborator of Deripaska.

Facing criticisms about GAZ’s quality, State Secretary Boris Gîlcă declared that he was too skeptical about the quality, but then was later convinced that “things changed”:

“Things changed, there are quality cars, well equipped, at an extremely good price, the best price, which probably was the criteria for the listing”, says Gîlcă, quoted by Unimedia. Gîlcă says that only 60 ambulances were bought from the public listing, but then 9 were delivered as part of “very tough negotiations”.

For 2018, the Government of Moldova allocated 273 million lei for buying other 168 ambulances: 35 intensive therapy units and 133 regular ambulances.

In 2017, urgent medical assistance was offered to approximately 868 thousand people.

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Economy

Study: Corruption in Moldova’s public procurement yearly costs up to 3 billion Lei

Source: Iurie Morcotilo, Expert-Grup

11 April 2018- An analytical commentary by Iurie Morcotilo states that the corruption in public procurement costs Moldova up to 3 billion Lei (183,24 million USD).

The study is based on the official data on the estimated full cost of public procurement from 2008 till 2015. The main factors cited as causes stimulating corruption in public procurement are lack of transparency, the complexity of the procurement process, but also the misinterpretation of the public budget as something abstract, not as money from the taxpayers. The corruption in public procurements are believed to happen at different stages: planning, procurement launching, evaluation and contract awarding, contract implementation stage.

Though Morcotilo recognizes that quantifying corruption is hard in this field, the study views some indicators from Moldova’s ranking in the Global Competitiveness Report: embezzlement of public funds, favoritism in governmental decisions, informal bribes and payments, and inefficiency of public spending.

The costs of corruption in public procurement was also calculated based on the estimated international average of 20-25% of the total amount of public procurement. In Moldova’s case, the 25% quota was reasonably applied, even if the statistical data on public procurement are lacking (only big contracts are counted for stats). The study found that between 1,3% and 2,5% of Moldova’s GDP are lost to corruption in public procurement:

“Based on the available data and applying the 25% average percentage of the corruption cost in public procurement, it can be estimated that in 2015 this cost varied from MDL 1.6 billion to MDL 3 billion, which represents between 1.3% and 2.5% of GDP”, reads the study.

Of course, those are only monetary costs. Other consequences are:

  • long-term financial losses for the public budget;
  • negative impact on health and safety of population;
  • negative effects on competition.

The author opinionates that the corruption in public procurement can be reduced only by joint efforts of the authorities fighting corruption and those responsible for procurement management, but also by enhanced monitoring by citizens.

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