MONEY FRAUD AND THE POLITICIAN CASE STUDY A

MONEY, FRAUD AND THE POLITICIAN - CASE STUDY -

A. PROJECT – infrastructure objective B. ACTORS – persons or entities involved C. FRAUD –abusive behavours D. MONEY – funds affected by fraud

A. PROJECT Rehabilitation works to 2 road bridges affected by the floods from the period April – August 2005 Project financed by the Programme PHARE 2005 CES, sub-component „Measures against the disasters caused by the floods”

B. ACTORS 1. POLITICIAN – president of the party county organisation, member in the party central management; 2. AUTHORITY – county council led by the politician; 3. CONSTRUCTOR – politician’s friend; 4. SUBCONTRACTOR 1 – politician’s son-in-law; 5. SUBCONTRACTOR 2 – politician’s relative.

1. POLITICIAN - President of the county council - Contractor’s friend - Subcontractor A’s father- inlaw - Subcontractor B’s relative 2. CONTRACTING AUTHORITY County Council Offers’ evaluation commission Project implementation team 4. SUBCONTRACTOR A 3. CONSTRUCTOR 5. SUBCONTRACTOR B

C. FRAUD STAGES OF PROJECT IMPLEMENTATION STAGE I – OBTAINMENT OF THE FINANCING APPROVAL Stage 1 – Submitting the projects Stage 2 – Evaluation of the projects and concluding the contract /financing agreement STAGE II – IMPLEMENTATION OF THE PROJECT Stage 1 – Award of the works, supply or services contracts Stage 2 – Accomplishment of the project’s objectives Stage 3 – Finalisation of the project – quantifying the indicators STAGE III – POST-IMPLEMENTATION ASSESSMENT

FRAUD STAGE I – OBTAINMENT OF THE FINANCING APPROVAL Eligibility condition: The objectives of road infrastructure affected by the floods produced between April – August 2005 Report of direct causality between the floods and the need for financing The financing request: false statements regarding affecting one of the bridges by the floods between April – August 2005

DLAF INVESTIGATIONS 1. There were no documents regarding the damage to the bridge following the floods produced starting with April 2005 2. There were identified documents regarding the damage to the resistance structure of the bridge, drawn up in the year 2004 3. Starting with August 2004 the road traffic was restricted 4. On 07 March 2005 the road and pedestrian traffic were completely forbidden

STAGE II – IMPLEMENTATION OF THE PROJECT Stage 1 Organisation and carrying out of the award procedure of the works contract - Submitting the offers by 9 tenderers and requesting clarifications - Evaluation of the offers and drawing up the evaluation report by which there was established the successful offer of the tender (other than the offer of the CONTRACTOR)

- The illegal and unjustified refusal of the manager of the contracting authority (POLITICIAN) of approving the evaluation report (2 nd April) - The illegal order of establishing a commission for the purpose of verifying the successful tenderer (3 rd April) - Verifications made by infringing the material and territorial competence

- Drawing up a second evaluation report containing false statements regarding imposing a minimum term of accomplishment of works of 3 months and maximum 6 months - Rejecting the offer declared successful on the grounds that the term tendered of 2 and 28 days cannot be assimilated to the minimum term of 3 months - Accepting the offer of the CONTRACTOR, with a value bigger with approximately 1. 000 EUR

- Cancellation of the second evaluation report by the National Council for Solving Appeals (CNSC) - CNSC cancelled the reasons for rejecting the offers by invoking a minimum term for the execution of works of 3 months as this was not mentioned in the award documentation - Repeating the process of evaluation of the offers, without taking into account the decision of CNSC

- Drawing up a third evaluation report by infringing the decision of CNSC – grounds for absolute nullity of the works contract - In the third report the successful offer was rejected again on the grounds that it tendered an execution term of 2 months and 28 days, but there was admitted for evaluation an offer in which the execution term was only 2 months The works contract was concluded with the CONTRACTOR which had an offer with a value approximately 1. 000 EUR bigger than the one illegally rejected

- The execution term was entirely neglected after the CONTRACTOR (POLITICIAN’s friend) obtained the contract (the works took longer than 12 months) - The initial value of the contract was increased by approximately 1. 100. 000 EUR, by falsifying the documents regarding the negotiation procedure and those regarding the execution of the „supplementary” works

D. MONEY 1. Illegal obtainment of PHARE funds = around 900. 000 EUR (falsely stating that the bridges were affected by floods) 2. Prejudicing the budget of the county = around 1. 000 EUR (illegal rejection of a conformable offer) 3. Prejudicing the budget of the county = around 1. 100. 000 EUR (unjustified increase of the contract value)

DLAF notified the prosecutors, who continued the investigations and proved the following: THE CONTRACTOR gave up part of the works and then made payments to the two subcontractors close to the POLITICIAN – son-in-law and a relative THE CONTRACTOR transferred to the POLITICIAN a commercial space of 300 sm in the amount of around 100. 000 EUR The prosecutors disposed sending to trial 11 persons THE POLITICIAN was sentenced to 8 years of prison

Constantin LICA Counsellor Control Directorate constantin. lica@antifrauda. gov. ro Fight against Fraud Department - DLAF