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The World Bank reports: The court infrastructure amendment is inefficient

The judicial reform by reducing the number of courts from 48 to 15 has proven to be inefficient and has led to a crowded infrastructure. So far, no donor has been committed to fund the infrastructure of the courts. Even if the EU has previously had plans to finance the construction of three judges (amounting to ± €15,000,000), the recent developments in Moldova have put the support on hold.

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At the same time, governments in recent years have considerably underestimated the time and costs required to design and build new buildings for judges. The findings are contained in a World Bank report on public spending in the justice sector, writes Anticoruptie.

Courts are crowded and there are no meeting rooms, which raises suspicions about efficiency, transparency, integrity, and accountability. The lack of clear signaling, lifts, canteens, and toilets, as well as access deficiencies, come together with users who are not well-informed and not well-behaved, according to the same document.

The authors of the study state that about $60,000,000 are needed to finance the reorganization of the courts, as originally foreseen.

Annual cost savings are estimated at 45,300,000 lei, and court consolidation is expected to be redeemed within 17 years. According to the report, the estimated amount is given only for new constructions, renovations, extensions, furniture, and equipment. However, it underestimates the real cost of this model of network consolidation by courts. For example, Moldova lacks the energy efficiency standard for its courts and other physical infrastructure in the justice sector, and none of the courts meets the national or international anti-fire standards.

“The estimated cost of 1,500,000,000 lei does not include the cost of ICT upgrading, the purchase of land (if necessary) or the demolition of existing buildings. However, funding is yet to be identified and donors have not yet allocated resources to finance the court infrastructure. Instead of relying on its own limited resources or donors, it would be necessary for the heads of the justice sector to initially reduce the total amount needed, including following the example of the homologous countries,” the report said.

Furthermore, the authors of the study have calculated the time needed to build new buildings for the courts, as well as the necessary costs. They estimated that the total average duration required to complete the design process – based on the experience of EU countries – is about 14-20 months, and design costs are estimated at about $20 dollars x m² or up to 5% of construction costs.

An inquiry by the Journalism Investigation Center in December 2016 shows that tens of millions of lei have been invested in the premises of some judges who will be closed in the coming years under the reform process initiated by the authorities. The data on the website of the Public Procurement Agency shows that the value of the contracts concluded for renovations amounts to more than 55,000,000 lei only in the last years.

In turn, the Ministry of Justice states that in reality, the amount would be lower because not all of the work has been completed.

Economy

Moldova likely to pay $58 million debt to Platon-associated energy company, case returns to Paris Appeal Court

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The government of the Republic of Moldova is likely to be obliged to pay a $58 million award to Komstroy, an Ukrainian energy company closely associated to now-imprisoned oligarch Veaceslav Platon.

As Law360 reports, the award was reconfirmed by the U.S. District Judge Christopher R.Cooper on 23 August, when Moldova was rejected the claim that it had “been denied due process” in an arbitration case within an ad-hoc arbitral tribunal in Paris. Back in 2013, the tribunal concluded that Moldova had violated an investment commitment under the Energy Charter Treaty (ECT) by not paying debts owned to Komstroy’s predecessor (LLC Energoalliance- based in Ukraine) on the deliverance of electric power in 1999-2000. Thus, the Moldovan government was allegedly owing around $46,5 million. The tribunal’s decision was disputed by the Moldovans at the Paris Court of Appeal, which subsequently ruled in 2016 that the ad-hoc tribunal “misinterpreted the subject debt as an “investment” under the ECT” (Case No. 14-cv-01921 (CRC)). In its attempts to find recognition of the tribunal’s decision, Komstroy asked the D.C. Court to examine the case, even though the French Cassation Court returned the case to the Appeals Court in 2018.

Notwithstanding the ongoing proceedings in Paris, the US Court ruled in late 2018 that the award can be enforceable and more importantly, its amount could be increased to nearly $58 million, considering the exchange rate from the award date.

After the ruling on 23 August, Gene M.Burd, attorney for Komstroy, told Law360 that it’s “pleased” with the US Court’s decision to determine the Paris ad-hoc tribunal’s right and scope to act upon the role demanded by Moldova and the Ukrainian energy company.

Moldova’s Justice Minister, Olesea Stamate, rushed (on 11 September, when the US court decision got out into the wild) to explain that the payment of the award can be enforceable only after the Paris Appeals Court issues a final ruling at the end of the month. As quoted by Ziarul de Garda, Stamati dismissed Komstroy’s claim as a a “scheme that was applied by some persons to milk the public budget”, describing the debts as “bogus”, “sold at double price”. In addition, the Minister announced that Moldova contested the US court decision.

As Sic.md explains in a fact checker, Moldova’s problems began back in Paris, where lawyer Victor Volcinschi was reportedly defending the position of the Ukrainian company instead of the Moldovan side. Additionally, the new law firm, Bukh Law Firm, subcontracted in December 2018, was not paid between February and April 2019 by the previous Democrat government, putting the whole defence at risk.

According to sic.md, LLC Energoalliance is associated with the more-than-controversial oligarch Veaceslav Platon and his involvement in the even more famous Russian Laundromat.

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Important

Dumitru Alaiba: Vlad Plahotniuc has a Czech nationality as well?

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Deputy of the ‘ACUM’ bloc Dumitru Alaiba wonders whether the former DPM leader and oligarch Vlad Plahotniuc is Czech citizen. He recently posted an extract from what appears to be a document saying this:

According to the deputy, on June 4, Plahotniuc tried to open a new company in the UK.

“It seems that Vladimir Plahotniuc, before being taken down from the government, was busy with business development. On June 4, 2019, he was trying to open a new company in the UK – with a Czech passport. There’s nothing illegal, of course. It’s just that I didn’t know about it” wrote Alaiba on his personal blog.

The deputy urged Moldovan diaspora in London to visit the address from the document, in case they are in the area.

Read more: Vlad Plahotniuc made good use of his passport long before he became a political man

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Important

The Kroll 2 Report: 77 of Ilan Shor’s companies received $2,900,000,000 in loans

Kroll was contracted by the National Bank of Moldova on January 28, 2015, in order to investigate money laundering frauds in three banks: Banca de Economii, Banca Sociala and Unibank. The amount of the contract was not made public. The Kroll 2 report, published by the parliamentary investigation commission on bank fraud, spans 154 pages. However more details, such as company or person names, have been deleted.

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At the same time, the report does not contain the list of beneficiaries of bank fraud. Kroll 2 presents the schemes where bad loans were offered, but also how these funds have later circulated. The report contains the list of the 77 companies within the URB group, as well as the loans they have taken from the Moldovan banks.

In interviews, they were experts at Kroll with employees at Banca de Economii, and it was found that many relevant materials related to loans offered to Ilan Shor’s group were destroyed in suspicious circumstances of a fire in late November 2014.

The report states that between 1 January 2012 and 26 November 2014, the Banca de Economii, Banca Sociala and Unibank offered $2.9 billion in loans to companies in the Shor Group.

Money earned on loans was redirected to foreign accounts in the Latvian banks ABVL and Privatbank, through which they were laundered. These accounts appear to be open only for this purpose because they did not record any other transactions.

Another part of the loans was transferred to the bank accounts of the Republic of Moldova, Russia, but also other jurisdictions.

The loans went through a coordinated money-laundering process and then disappeared into several bank accounts.

Part of the loans offered to the companies in the Shor group remained in Moldova. The tracking of the initial destination of the funds showed that the amounts remained in the accounts held at the three banks or were transferred to other banks in Moldova to pay for other loans. At the same time, more money was mixed with other funds, so it was impossible to track them later.

Out of the 2.9 billion US dollars, Kroll points out that about 220 million US dollars remained in the Republic of Moldova and were used to repay loans from the Banca Sociala, Banca de Economii and Unibank, and other banks.

The full Kroll 2 report can be read here:

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