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Romania: Alleged Misuse Of EU Funds Highlights Country's Corruption Problems

The past several months have seen frequent media reports of candidate country Romania's alleged misuse of EU funds. The latest scandal -- involving a cabinet minister's alleged use of EU funds for private business -- has triggered an investigation by the EU's antifraud office. Widespread corruption in the Balkan country has prompted various Western officials, including the U.S. ambassador to Bucharest, to repeatedly urge the government to tackle the problem more seriously.

Prague, 11 September 2003 (RFE/RL) -- A corruption scandal is rocking the Romanian government, with one of its top ministers under suspicion that she has illegally diverted European Union funds to companies belonging to her family.

Romanian media has reported that European Integration Minister Hildegard Carola Puwak allegedly diverted some 150,000 euros in nonreimbursable European Union education credits to companies run by her husband and son to train Romanians in Germany.

The reports prompted the European Commission's top official in Romania, Jonathan Scheele, to issue a statement on 2 September stressing the EU's "zero tolerance" policy on corruption and saying that the European Anti-Fraud Office (OLAF) had been informed of the apparent irregularities.

OLAF Spokesman Alessandro Buttice today told RFE/RL that based on information gathered in Bucharest by EU auditors, OLAF is opening a case meant to assist Romanian authorities in investigating the allegations against Puwak.

"After the information we received [and] the examination of this information, the European antifraud office is opening a case of assistance to the national authorities -- the prime minister's control department and the national anticorruption prosecutor in Romania -- about the allegations, the information we received on this case [of Integration Minister Puwak]. I want to stress that the cooperation with these two authorities is very good and we work very closely and we will give all the assistance to the national authority to do this investigation."

Puwak has repeatedly denied any wrongdoing and said her son and husband received the money in 2000 while she was an opposition legislator. She even ventured to welcome the EU audit into the affair. However, it later emerged that most of the funding was received while she was in the government. The money was disbursed under the EU's Leonardo da Vinci program, established to provide vocational training in accession countries.

Romanian investigative journalist Liviu Avram, of the leading daily "Adevarul," was one of those who broke the story. Avram told RFE/RL, "Four firms belonging to the Puwak family have used these programs in 2000 and in 2001, and one [firm] in 2002, so we are speaking about five financial programs, and we raised this problem. Mrs. Puwak has said that all these funding programs were approved before she became a minister. Subsequently we discovered that three of them have taken place integrally during her mandate. So this is a first inaccuracy which Mrs. Puwak does not want to clarify and says only that the time frame is irrelevant."

Puwak also denied that the Integration Ministry has been involved in the approval of these projects.

But journalist Avram said Puwak's statement was inaccurate, since one of the vice presidents of the national commission which approves the Leonardo projects is from the Integration Ministry.

Romanian anticorruption prosecutors have opened an investigation into the claims, while the country's two main opposition parties have called for the minister's resignation.

But the Romanian government, including Prime Minister Adrian Nastase, has expressed staunch solidarity with Puwak. The cabinet on 2 September said it had "absolute trust" in Puwak, and added it was "convinced" the EU investigations will clear her of any wrongdoing.

Nastase yesterday suggested that the media exercise "patience" and find "other stories."

But Avram says Nastase's statements amount to interference with the course of justice and the ongoing investigations.

"I am quite surprised that Mr. Nastase says he is convinced that the European Union audit commission will find out that there is no conflict of interest. I wonder how the prime minister knows this?"

EU candidates Romania and Bulgaria have been singled out by EU and other Western officials for their endemic corruption. The two Balkan countries were left out of next year's 10-country EU enlargement, and were repeatedly admonished about their corruption problems by Enlargement Commissioner Guenter Verheugen.

In a message to Romanian officials last week (on 2 Sept), Verheugen again mentioned the fight against corruption as well as the reform of the judiciary and the administration as main areas of concern regarding Romania's efforts to join the EU in 2007.

Furthermore, U.S. Ambassador to Romania Michael Guest issued a statement on 6 September saying that "corruption is one of the most important problems which blocks Romania's normal evolution."

Romania's ex-Communist Social Democrat government has been repeatedly accused by the independent media and the liberal opposition of turning a blind eye to corruption among its top members as well as its powerful local representatives, known as barons.

The media recently reported that some $700,000 in EU funds were spent to lay water pipelines in a vacation village where many government members, including Nastase himself, are said to have villas.

Newspapers also presented documents said to prove that Justice Minister Rodica Stanoiu sold a $10,000 house to a state company for $100,000 and pocketed the difference.

In a separate scandal, newly appointed Health Minister Mircea Beuran was accused of plagiarizing several scientific books.

Nastase himself last week admitted that he had used government money to publish a personal book, titled "Quo Vadis, Europa?" He later said his sponsor would return the money to the government, but declined to name the sponsor.

Analyst Cornel Nistorescu, director of the "Evenimentul Zilei" daily, says that by siding with his allegedly corrupt colleagues, Nastase is eroding his public and international support before the election next year.

"By defending his people, the prime minister is trying to defend himself, without realizing that by adopting this attitude he becomes weaker and weaker, that he loses credibility," Nistorescu said. "That by defending Hildegard Puwak, even for the simple fact that she lied to the public, or by defending [Health Minister] Mircea Beuran for obviously plagiarizing [studies], he is only eroding the credibility of his government."

Both Romania and Bulgaria have been urged by the EU to adopt more efficient anticorruption measures in order to be able to conclude accession talks by 2004 and join by 2007.

Bulgaria has recently amended its criminal code, and at the same time is in the process of amending its constitution in line with EU requirements.

The Bulgarian parliament last week approved changes to the country's constitution to limit the judges' immunity for acts committed in the line of duty and to stipulate that they need to serve on the bench for five years before they are granted life tenure.

Romania has also amended its constitution and adopted an anticorruption strategy, establishing a national anticorruption prosecutor's office.

But critics say the anticorruption policies have yet to be efficiently implemented. Nistorescu says the interference of political power in the course of justice has prevented any real breakthrough in the fight against corruption.

"What is happening is within the judiciary, where the mechanism is totally controlled -- I am referring to the relation between the judiciary and the grand corruption cases, that's where it is controlled. And as long as the judiciary is completely blocked by strict political control, I don't see how we can gain trust and points in this campaign to eradicate corruption -- [this campaign] which has so often been invoked by Romanian politicians, and which was accepted and believed by the foreign politicians, who have eventually realized that we cannot go beyond words."

Analysts agree that Puwak's case will represent a crucial test for the newly established national anticorruption prosecutor's office.

But they also say for both the domestic and EU investigations to proceed unhampered, Puwak should resign from her position.