October 1, 2015 / 6:11 AM / 4 years ago

Romania's powerful mayors tumble in corruption crackdown

BUCHAREST (Reuters) - Former presidential candidate and two-term mayor of Bucharest Sorin Oprescu took to the airwaves in September to right a few wrongs about how local officials are perceived in Romania.

“Everyone believes that everybody in local administration are thieves, that they all take 10-15 percent,” he told a local television journalist. “We are not all thieves and hooligans.”

Hours later, Oprescu was arrested pending an investigation for allegedly taking bribes. Prosecutors said Oprescu, who denies wrongdoing, worked in a system where companies kept about a third of the profits won from state contracts, and the rest was given back to Bucharest city hall staff in kickbacks.

Oprescu was the latest bigwig caught in Romania’s accelerating crackdown on corruption, which could unlock economic growth and much-needed modernization in provincial towns.

Prosecutors have launched investigations against some of the most powerful and well-connected people in Romania, where corruption deters investors and tax evasion and bribery are a drain on public finances.

The indictment of Prime Minister Victor Ponta on charges of forgery and money-laundering in September has grabbed most of the recent headlines. But dozens of mayors of all political stripes have also been sent to court, from the Black Sea port of Constanta to Sighetu Marmatiei near the Ukrainian border.

Mayors are powerful: Romanians have elected two as president since 2004. Current President Klaus Iohannis launched his campaign on the back of sprucing up the scenic Transylvanian town of Sibiu.

Mayors’ influence also stems from the public funds they control — Bucharest city hall and its six district mayors have an annual budget of almost 2 billion euros — and from working in a highly politicized public administration.

For parties, mayors are key to getting the vote out on behalf of lawmakers by doling out small gifts like flowers, brandy or T-shirts to cajole constituents to the polling booths. Romania’s chief anti-corruption prosecutor said there was evidence of local officials giving bribe money to parties.

Romanians also tend to trust their mayors more than they do central government, and one survey by local pollster IRES showed more than half of Bucharest would vote for Oprescu again if he is found innocent.

“Corruption certainly impacts foreign investment, both at the national and the local levels, and contributes to underdevelopment,” said Miha Hribernik, senior Europe analyst at risk analysis company Verisk Maplecroft.

Many local administration heads “are able to deter investors by requesting bribes or favouring local businesses in public tenders. In this respect, local and national corruption are closely linked, and efforts to eradicate one will directly benefit efforts to eliminate the other.”

Cleaning up local administration has been a priority of the anti-corruption agency DNA and a requirement of the European Commission, which keeps Romania’s justice system under special supervision. Brussels does not comment on individual corruption cases but has urged Romania to tackle local administration graft in its annual monitoring reports.

“Until now we have not noticed a slowdown in corruption cases that involve big city mayors or county council presidents,” DNA chief Laura Codruta Kovesi told Reuters.

“It is pretty difficult to explain why, despite the investigations, the situation continues. One possible explanation could stem from the magnitude of the public funds managed by decision makers in local administrations.”

Since 2013, prosecutors have sent to trial 92 mayors, 24 deputy mayors, 22 county council presidents and dozens of other local officials. The investigations have pointed to mass corruption in some of Romania’s biggest cities.

The mayor of Iasi was accused of using police to spy on his mistress. A finance minister was arrested for taking bribes worth 1.5 million euros in his former post as mayor and using proceeds to buy paintings including by Picasso and Warhol. The mayor of Bucharest’s fifth district, the city’s poorest, is on trial for taking 30 million euros in bribes.

They all denied wrongdoing.

HAPPY BIRTHDAY, MR MAYOR

The bulk of investigations revealed contracts given to bribe-paying firms, which may help explain why Romania’s infrastructure is among Europe’s least developed. Too many villages have mainly gravel roads and about 40 percent of Romanians do not have indoor plumbing.

The EU set aside 20 billion euros in development money for Romania to build roads, water, sewage and heating systems in 2007-2013, much of it aimed at local authorities. Romania only tapped about 60 percent.

The EU has suspended payments several times due to irregularities. The Institute for Public Policies, a local think tank, estimated Romania lost roughly 1 billion euros of the funds over seven years.

Not all money was lost due to graft, but also to a lack of administrative capacity and fiddly public procurement laws that mean tender processes are opaque and inconsistent. At the EU’s request, the government is working on revising it.

“Public procurement legislation is ambiguous on purpose,” said Monica Macovei, a former justice minister turned European Parliament member, who is seen as the architect of Romania’s fight against corruption.

“There are a lot of requirements, a lot of ‘but’ and ‘and’, complicated procedures which leave a lot of open doors for fraud and corruption.”

Weeks after Oprescu’s arrest, prosecutors started investigating other city officials on suspicion of taking bribes to favour water and sewage utility Apa Nova, owned by France’s Veolia.

Prosecutors said they used their influence to get Bucharest’s city council to hike tariffs, boosting the firm’s net profit by 38 percent in 2012. Apa Nova said it had respected its contracts and that Bucharest tariffs were lower than in other Romanian cities.

One man fighting graft is Nicusor Dan, who will run for mayor in next year’s election. He founded the activist group Save Bucharest in 2008, which has won 28 lawsuits against mayors, thwarting illegal construction and the destruction of parks and historic buildings.

“Following DNA investigations we will certainly learn about other corrupt deeds and then we will perhaps understand why people in this city have been displeased with traffic, pollution, cleaning, public transport and more,” said Dan.

He will hope to attract voters who back Romania’s fight against corruption. On the day Oprescu was arrested, a flash mob of about 30 cyclists showed up outside the DNA headquarters to sing a modified version of “Happy birthday”, with lyrics saying “may he get many years in jail”.

Editing by Matthias Williams and Giles Elgood

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