A Credit Suisse Group manager and three government officials will be jailed for 20 days while Romanian prosecutors pursue a criminal investigation into the sale of state-owned assets.
Vadim Benyatov, Credit Suisse's managing director for central and eastern Europe, was arrested by prosecutors yesterday. He'll be jailed along with the three officials pursuant to an appellate court order issued in Bucharest late yesterday, state prosecution spokesman Robert Cazanciuc said. “The court admitted the request by prosecutors to put them under preventive arrest for 20 days,'' Cazanciuc said in a telephone interview late yesterday. Prosecutors said last week they were investigating Benyatov and seven other men for economic espionage related to the sale of government assets. Credit Suisse, Switzerland's second-biggest bank, advised on the sale of Romanian oil and gas companies in 2004 and this year worked on the sale of the country's remaining stake in a phone company. The criminal investigation, the first involving international investment bankers in Romania in the past decade, comes as the country prepares to join the European Union on January 1. The EU has repeatedly told Romania to crack down on corruption to make sure competition rules are respected.
Credit Suisse spokeswoman Gavin Sullivan said in a telephone interview before the court order was issued that Benyatov is one of two current employees and one former worker who are under investigation in the probe. Mircea Calin Flore, a Credit Suisse vice president, and former employee Michael Susak were named in a November 22 statement by prosecutors. Sullivan confirmed their identities. Flore and Susak were neither detained nor arrested. “We have no reason to believe that any Credit Suisse employee has acted inappropriately,” Credit Suisse said yesterday in a statement e-mailed from London before judges in Bucharest approved the men's arrest. “We take these accusations very seriously and are prepared to cooperate fully with the investigation.” The other three men also placed under arrest yesterday are Dorinel Mucea, the deputy head of the Romanian government's agency in charge of energy industry asset-sales, Stamen Stancev, a Bulgarian investment consultant, and Mihai Donciu, a Romanian Communications Ministry adviser, Cazanciuc said.
Mucea, who was the head of the agency when Romania sold its oil company Petrom SA to Austria's OMV AG in 2004, didn't return calls to his mobile phone yesterday. His phone was switched off at the time the judges approved his arrest. The eight men are being investigated in connection with “an organized crime group” involving a Bulgarian citizen, Stamen Stancev, an adviser of “an international investment bank,” according to the November 22 statement. Stancev denied any wrongdoings in a statement broadcast by Realitatea TV news channel after he met with prosecutors November 28. The same day, newswire Mediafax cited Mihai Donciu, the Romanian adviser, as saying he is "completely innocent.” When asked whether Stancev works or has worked as an employee or adviser for Credit Suisse, Sullivan said the bank “declines to comment on Stancev.” Credit Suisse in 2004 was hired by Romania's government as an adviser on the sale of Petrom, Romania's biggest oil and gas company, to OMV for €1.5 billion ($1.97 billion) and the sale of its natural gas distributors.
Romania in January also selected the lender's investment banking arm to advise on the sale of the state's remaining 46% stake in former phone monopoly Romtelecom SA, which Communications Minister Zsolt Nagy estimated is worth as much as €1 billion. The sale is slated for next year. The start of the probe coincided with a special meeting November 22 of Romania's Supreme Defense Council, headed by President Traian Basescu, to debate energy security and sales of state- owned assets, including Petrom to OMV. “The council decided that sale contracts be made public immediately regardless of whether we're discussing about Petrom or power, or gas distribution companies,” Basescu said November 22 “The Petrom contract must be analyzed by the state's institutions, including the General Prosecutor's office, and that's already happening as you found out.”
The Economy Ministry, which is in charge of selling energy assets, said in a statement today that international companies that bought energy-industry companies in Romania agreed to have the contracts made public. The ministry said asset-sales contracts signed in previous years with OMV, Gaz de France, E.ON Ruhrgas AG, E.ON Energie AG, CEZ AS and Enel SpA will published on its Web site by noon in Bucharest today.
Credit Suisse's Sullivan declined to give a contact number for Benyatov or his aides. Gheorghe Dragomir, Benyatov's Romanian lawyer, said in an interview broadcast by Realitatea TV that prosecutors refused to show his client the entire file containing the evidence against him. Calls to Flore's office and mobile phones at Credit Suisse in London late yesterday weren't immediately returned. Susak, who is now CEO at PPF Investments in London, said in a telephone interview yesterday that “this action is totally groundless.” “I haven't been subpoenaed, no one contacted me or tried to contact me so I really am trying to understand what the driver behind this action is,'' said Susak, who worked as managing director for Credit Suisse in central and eastern Europe until May. (Bloomberg)