Leeching off European funds, Constantin Nicolescu-style
How do the Romanian corrupt pick their next targets? Picture it like an app’s radar screen. When there are no relevant targets in the vicinity, they expand the range of searches. This is how they’ve come across an unexpected cash cow: European funds.
Reasons to worry
According to an annual analysis of the National Anticorruption Directorate’s (DNA) activity, out of the almost 4,000 final corruption convictions between 2010 and 2016 related to public fund embezzlement, 1 in 10 involve European funds. This kind of abuse is most widespread at the local level. Nepotism and cronyism typical of “local barons” that concentrate a lot of power, together with a lack of transparency in public governance, and the fact that European fund-sponsored projects are only checked once they are finalised, not in real time, contributes to their steady drain. In turn, this has ranked Romania last in terms of the absorption of EU funds since 2013. (For instance, out of the €400 million available for the healthcare system, €250 million have gone unused due to a lack of projects targeting the modernisation of hospitals, in a country where 57,000 hospital-acquired infections have been registered only in the last five years.)
Top performing fraudster
One of the havens of European funding fraud in Romania is the Arges county. Situated in the south-central Romania, Arges is the ninth biggest administrative region of the country, with close to 600,000 inhabitants. The county capital is Pitesti. Arges is also the fourth most productive county in terms of GDP in 2017, overwhelmingly due to investments in their local factories made by car manufacturers such as Dacia Renault. However, the county’s reliance on a single industrial branch as well as its lack of infrastructure projects has consistently reduced its aggregate wealth, which is down almost 15% since 2014, when its GDP per capita was €7,450, 9% higher than the national average. Arges’ decline is also a consequence of poor public management, as illustrated by the case of former President of the Arges County Council, Constantin Nicolescu and his group of cronies convicted of misusing EU funds.
A longtime member of the Social Democratic Party (PSD), Nicolescu has represented the party since 1995 as deputy president of PSD’s local offices, prefect, senator, President of the commission for parliamentary control over the Foreign Intelligence Service (SIE) between 2001–2004 and, finally, President of the Arges County Council, since 2004 until his resignation in 2014. Nicolescu has been investigated and sentenced in several cases related to EU funds, which he first accessed illegally and then used to finance companies that belonged either to his relatives or to individuals who rewarded him with generous bribes. In one of these cases, Nicolescu obtained undue rewards of approximately €1 million. During one of his mandates at the head of the county council, he accessed €900,000 in EU funds to rebuild two bridges damaged by floods in the spring and summer of 2005. In fact, according to DNA prosecutors, the constructions not only had not been affected by floods, but had in fact been repaired a few months earlier by the same company that was commissioned to this effect for a second time: the aptly named Zeus Ltd, a household name in PSD infrastructure contracts.
Nicolescu also received a €100,000 bribe from the owner of Zeus Ltd, who wanted to make sure his company landed the project. This seems to have been the default modus operandi. Companies that wanted to win contracts from the county council had to pay a bribe equivalent to 10% of the project’s worth. Another case has Nicolescu pocketing €900,000 to renovate four schools in the county, which the county council falsely claimed had been affected by floods. Maybe this is how someone who before the 1989 Revolution was a mold technician who later worked as a professor and a politician has managed to make a fortune estimated at between $6–10 million.
The shock of justice
In January 2011, after finding out that he would be remanded for the Zeus 2 case concerning European money for bridges, Constantin Nicolescu fainted and was transferred to the Floreasca emergency hospital in Bucharest, where he underwent open-heart surgery. While there, Nicolescu’s diagnosis was changed several times from heart attack to fainting and then to stroke. After being released, he carried out his 30-day protective custody arrest and on 5 February 2015 he was definitively sentenced to 7 years and 8 months in jail. The former President of the Arges County Council was released on parole at the end of May 2017, after having executed only a third of his sentence. (This is common procedure for defendants who are over 60.) He is under investigation in another case at the High Court of Cassation and Justice, together with 39 other defendants who were mayors and deputy mayors in various localities of Arges county.
When Nicolescu, who was one of PSD’s oldest members and controlled a resource-rich region, was arrested, influential PSD figures such as Adrian Nastase closed ranks around him. They declared that Nicolescu was the victim of a fake, politically-motivated case instrumented by the current regime “to discredit, locally, nationally and internationally, the politician Constantin Nicolescu”. Even Arges Archbishop Calinic, whose archdiocese had been sponsored by Nicolescu, came to his defence, and accused a liberal senator of being behind the investigation. Ultimately, such reactions to this non-singular EU funding fraud case can only tell us one thing: if the corrupt can easily ignore Romanian taxpayers whom they swindle time and time again, they find it even easier to do this with European taxpayers, who have fewer methods to hold them accountable for misusing their money.
