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Romanian Transgaz submits bid to buy Moldovan operator of future Iași-Ungheni-Chișinău gas pipeline



Romania’s gas transport company, Transgaz, reportedly submitted a bid for the purchase of the Moldovan Vestmoldtransgaz, reports AGERPRES citing its sources.

The initial price for Vestmoldtransgaz was 180 million lei (approx. 10,5 million USD) and implied an initial investment of 93 million euros during the first two years after purchase. The Romanian Transgaz will operate in Moldova through its recently founded local branch, EuroTransgaz. Thus, Transgaz would be able to participate in the gas interconnection of Moldova and Romania, including via the future extension of the Iași-Ungheni pipeline until Chișinău. The respective segment is supposed to be finished until the end of 2018.

Transgaz had a net profit of 433,5 million Romanian lei in the first nine months of 2017, 21% more than in the same period of 2016.

The approximate calculations estimate that the total cost of building the Ungheni-Chișinău gas pipeline would be 113 million euros. The European Union would contribute to the project with a grant of 40 million euros for the two phases of the project, while the European Bank for Reconstruction and Development will offer a 41 million euros loan. European Investment Bank would give a loan of 41 million euros.
Romania offered 550 thousand euros as a grant for the construction of the pipeline and other 350 thousand euros for the building of gas distribution center in Ungheni.

The previously built pipeline of 43 km from the Romanian city of Iași to the Moldovan city of Ungheni was able to transport up to 1,5 billion cubic meters of natural gas but it was finally agreed to deliver only 50 million cubic meters per year, due to the low price of the Russian gas provided by Gazprom. The 120 kilometers long and 600 millimeters wide pipeline would allow Moldova to import more natural gas from Romania, thus enhancing the security of energy supply.

Currently studying International Relations at the University of Pécs, Hungary. Study focus: Transnistrian conflict settlement, Moldovan statehood, Moldovan democracy.

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Air Moldova gets 75 million lei as financial assistance to stay in air



The state-owned Air Moldova will benefit from a financial aid of 75 million lei (approx. 4,38 million USD) from the state enterprise of the Chișinău International Airport, reports Mold-Street.

The assistance was recently approved by the Competition Council of Moldova with the aim to save the national airlines from failing to operate its flights. Air Moldova reportedly faces the problem of lack of financial resources, which causes the “slowdown of the company because of the impossibility of timely payment of the maintenance costs for the airplanes” and thus, delay of flights.

Three big Moldovan banks- Victoriabank, Moldova-Agroindbank and Mobiabanca,- informed Air Moldova about it not meeting the capital sufficiency criteria set by the National Bank for loan beneficiaries.

Only in the first 8 months of 2017, Air Moldova has a record of net losses worth 111,5 million lei, having its capital worth -2,9 million lei (minus 2,9 mil). The Competition Council found out that the losses have increased since 2013- from 604,6 million lei to 1,12 billion lei in August 2017. The management of the Moldovan airlines did not give an explanation for the company’s losses.

The respective Council motivated that closing down Air Moldova would seriously damage the air traffic to EU and CIS destinations, adding that the next competitor, Wizz Air, is not able to fill in the gap.

After 6 months, the Economy and Infrastructure Ministry (who proposed the given assistance), together with the Agency for Public Property, Aeronautic Civil Authority, and the Chișinău International Airport, will have to present either a restructuring plan or one of dissolving Air Moldova. Previously, Economy Minister Octavian Calmîc declared that Air Moldova is not be privatized until 2019.

Air Moldova operates flights to 29 destinations: Athens, Barcelona, Bologna, Brussels, Bucharest, Dubai, Dublin, Florence, Frankfurt, Istanbul, Krasnodar, Larnaca, Lisbon, London, Madrid, Milano, Moscow, Paris, Rome, Venice, Verona, Vienna, Sankt-Petersburg and Torino, plus the 5 season flights – Antalya, Heraklion, Tivat, Corfu and Zakynthos.

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Kroll 2 report: Summary and Reactions



On 21 December 2017, the National Bank of Moldova published the summary of the investigation report made by Kroll and Steptoe&Johnson. The report, otherwise called “2nd Kroll report”, completes the 1st Kroll report on the loan exposure of the Three Moldovan banks (BEM, BS, Unibank) that were defrauded in 2012-2014.

The 2nd Report comes with a more detailed scheme of how the leading “Shor group” defrauded Banca de Economii, Banca Socială, and Unibank by directly participating in the administrative councils of these banks and by falsifying reports on bank liquidities. Moreover, Kroll revealed several laundering mechanisms that were used to channel the funds from the three banks to the destination accounts. Even if it mentions the name of Ilan Shor as one of the facilitators and beneficiaries of the banking frauds, the summary does not provide any other names in order not to impede the ongoing investigation and prosecution in some cases.

What 2nd Kroll report says

  • Control over the Moldovan banks, and not only the Three failed ones, was constantly the aim of several interest groups. Several shareholders took advantage of the poor evaluation of banks’ shares and some could acquire small portions of shares through proxies. In the case of the Three Banks, the so-called “Shor group” could take control by buying shares on the behalf of off-shore companies, thus hiding the origin of the funds;
  • The administration councils at the Three Moldovan Banks were acting in coordination, involving conflicts of interests and integrity lack in the bank governance process. At Banca de Economii, where the Moldovan Government was the main shareholder, the Government delegates were periodically not invited to the meeting of the administration council;
  • What Kroll continues to say in its 2nd report is that Ilan Shor and around 77 companies in his entourage are known to be the beneficiaries of the fraudulent loans given between 2011 and 2012:


  • The liquidity level at the Three Banks was maintained at acceptable levels with the help of resources coming from pensions and social security funds operated by the respective banks, with the help of loans given by the National Bank guaranteed by the Moldovan Government, but also with the help of fake deposits in Russian banks;
  • The summary shows that most of the defrauded funds were channeled through Latvian banks (otherwise called “Core Laundering Mechanism”) for mostly British off-shore companies.

    Source: Kroll

    The Core Laundering Mechanism based in Latvia was either used for paying the loans back or to send the funds in different bank accounts in multiple jurisdictions such as Cyprus, China, Russia, Switzerland, USA or Hong Kong. Some banks in Moldova and Estonia were also used to launder money and disguise their origin.

    Source: Kroll;

  • Since some of the loans, worth approximately 2 billion USD, were channeled back to the origin banks to create a good credit score, the net loss of the Three Banks between 2012 and 26 November 2014 is estimated at 600 million USD;
    Source: Kroll
  • So far, the traces of only 50 million USD out of the total sum could be totally discovered;
  • Kroll and Steptoe&Johnson are planning to present a more detailed investigation in 2018 in Moldova;


  • According to Expert-Grup, the 2nd Kroll report did not fully explain the role of the state guarantees issued in November 2014, but also the actions conducted by the Moldovan Government regarding the reimbursement for the clients of the Three Moldovan Banks. Moreover, multiple NGOs called on the Moldovan Government to abandon the initiative to decriminalize several economic crimes, including banking frauds, an action would impede the prosecution of those involved in the “Moldovan Grand Theft” and encourage new frauds in the area;
  • Ilan Shor, the main figure in the “Grand Theft”, announced that his lawyers filed in court against Kroll for defamation, conspiracy to injure by unlawful means and wrongful interference with his economic interests. According to Shor, the reports issued by Kroll do not reveal the real beneficiaries of the frauds;
  • Pavel Filip, Prime-Minister of Moldova: “If we had to publish all the names that are found in this report, I assure that 90% of the names are absolutely honest people, but that were simply part of this circle. These names cannot be made public”, claimed Moldova’s PM, promising that all the responsible persons would be prosecuted;
  • Maia Sandu, PAS leader, ex-Minister of Education in 2014, did not seem surprised that Kroll pointed out to Shor’s primary role in the banking frauds, but rather asked his case is slowed down by the Prosecution’s Office. Her party organized a flashmob asking for the restart of Shor’s case. In addition, Sandu stated that current Parliament speaker, Andrian Candu, was the main promoter of the state guarantees for the loans of the National Bank to the failing banks;
  • Andrian Candu, speaker of the Parliament and Economy Minister in 2014, is waiting for the Kroll experts to come in January 2018 in Moldova to coordinate the investigation of the banking frauds;
  • Iurie Leancă, PM in 2014, now appointed Deputy PM, says that he is the most interested in the results of the Kroll investigation, but rejects claims his Government rushed into offering the huge guarantees for BNM loans.

The reaction of the Moldovan people to this 2nd Kroll report is that of confusion: nothing much new was revealed and the main figure of the “Grand Theft” is only under judiciary control in a delayed case.

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Moldovan foreign investors ask the government to pass the reform on the control bodies



Dear colleagues, representatives of the business community, civil society, state-owned institutions, citizens,

Foreign Investors Association, established in 2003 and which includes some of the largest foreign investment companies in the Republic of Moldova, actively promotes actions aimed at improving the investment climate. The Government and the Parliament have recently adopted a series of reforms of the regulatory framework, in particular in the field of state control over the business activity and permissive acts.

However, these reforms have less covered an important segment of state interference in business activity – the law enforcement bodies. Today, the law enforcement bodies, in particular the Economic Fraud Investigation Division, subordinated to the Ministry of Internal Affairs, and the National Anticorruption Center, enjoy a range of competences such as to seize goods, documents, information systems, to arrest, make proposals to preventively arrest and others, which may lead to a stop in the business activity and laying off of employees. Abusive enactment of such measures may cause major losses to the entrepreneurs and may ultimately determine the decrease in the potential to attract investments to Moldova, as a result of the deteriorated image of the investment climate.

Therefore, the Association welcomes, in principle, the initiative of the Ministry of Justice to promote the draft law amending and supplementing certain legislative acts (Criminal Code, Criminal Procedure Code, Contravention Code and other legislative acts) aimed at improving the investment climate by introducing less repressive criminal norms related to economic crimes and establishing additional procedural safeguards against abuses by the law enforcement and control bodies.

The draft was discussed in several meetings organized by both the Ministry of Justice as well as the Economic Council to the Prime Minister. The last meeting, with the participation of the Prime Minister, was held on 08.12.2017. Given the publicly launched suspicions referring to the recent high profile banking fraud cases, the participants to that meeting wanted to make sure that all the persons involved in these cases would not also benefit from the provisions of this initiative.

We understand and commend the fact that the Ministry of Justice has accepted to make changes, which would guarantee that this does not happen, and proposed to organize an additional technical meeting to discuss further proposals from the stakeholders with the subsequent completion of the draft.

To follow up on the above, we believe it is opportune to expressly provide for in the draft the manner in which the acts of the control bodies can be challenged, which would avoid putting the individual/legal entity in the situation of having to tacitly accept the accusations which are brought up to them and accept the starting of the criminal case.

We also draw your attention to a series of other provisions, which raise concerns among the business community, such as for instance:

  • Applying criminal liability for not obtaining any permissive act required for business operation, including regardless of the damages caused;
  • Applying criminal liability for concluding any anticompetitive agreement which causes extremely large scale damages or which generate extremely high profits (in international practice, such liability applies only in case of cartels, not vertical agreements);
  • If, during a control, a control body identifies that a crime had been committed, it has to mention in its control act the exact amount of damages caused by the crime and the actions which must be undertaken to remedy the violation. The act of control cannot be challenged in the court and serves as evidence for the criminal prosecution. There is the risk that common procedural safeguards, applicable to collecting evidence in the course of a criminal prosecution (including against self-incrimination) be disregarded by the control body;
  • Applying criminal liability for doing business in violation of the intellectual property rights and not indicating the fiscal code in the documents or indicating it with mistakes (it is not clear how these two issues can be combined).

In relation to the above, we express our readiness to continue the consultations with the authorities of the Republic of Moldova for finalizing the respective draft, taking into account the relevant comments, and we kindly call upon the Government, the Parliament and the President of the Republic of Moldova to support the respective legal initiative of the Ministry of Justice, that will substantially improve the business and investment climate in the Republic of Moldova.

The Foreign Investors Association also urges the representatives of other business associations and business community to join this call.

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