After seven months in custody, former Moldovan Prime Minister Vlad Filat was sentenced to nine years in prison on corruption charges in a billion-dollar case that shook the nation’s economy. The theft from three banks amounted to about 13 percent of the country’s annual gross domestic product.
The case, however, is far from over; both Filat’s lawyer and the case prosecutor vowed to appeal the court’s decision. Last year the Moldova Parliament lifted Filat’s immunity, so that he could be investigated in a case involving the disappearance of more than US$ 1 billion from three Moldovan banks. A total of 79 lawmakers out of 101 voted to lift the immunity and Filat was duly arrested by the National Anti-Corruption Center.
Moldovan Former Prime Minister Vlad Filat
Recently, a court in the capital city Chisinau, found Filat guilty of abuse of office and corruption, and sentenced him to nine years in prison. He denied any wrongdoing, and claimed the case was politically motivated.
The court – somewhat academically – banned Filat from holding public office for five years, and ruled to withdraw his Order of the Republic state distinction, and to confiscate his assets. The judges also determined that he has to pay a fine of $3,027 USD
Filat’s lawyer, Igor Popa, said that the case sought to remove Filat from the political stage. “No true fight against corruption has been made in this case. The cause has nothing in common with bank fraud, and the decision will be appealed at the Court of Appeal and also the European Court of Human Rights. We are sure that we will win the case at ECHR.”
Prosecutor Adriana Betisor, on the other hand, maintained that the punishment was too mild, and that none of the evidence presented by the prosecutor in court had been contested. “No counterargument to the unveiled evidence has been brought,” Betisor said. “We demanded 19 years imprisonment. Nine years is too little for the damage caused by Mr. Vlad Filat to the state.”
A leaked report compiled by the corporate investigation and risk consulting firm Kroll, found that the banks involved in the case loaned the money to unidentified parties, and The National Bank of Moldova was forced to issue the three banks in question some $ 870 million USD in emergency loans, to keep the economy from collapsing. Filat was Moldova’s Prime Minister between 2009 and 2013.
Filat was just a pawn in a complicated Russian game of financial chess, much of this cash ending up in established western high street banks, ultimately finding its way back to Russian businessmen who own groups of companies involved in construction, engineering, information technology, and banking.
Famous for their UK spending sprees, on fancy autos, public school education, furs, electronics; but particularly London property, law enforcement in Moldova, Latvia, the United Kingdom, and Russia, continues to investigate this massive Russian Laundromat. Although attempts to bring those responsible to justice and to recover the money have been hampered in part by the reluctance of Russian officials to cooperate, this, and well established human trafficking, is the legacy over which Moldova has to redeem itself, should they ever be invited to join the European Union. But, what is Moldova?
According to the World Bank, Moldova is a small lower-middle-income European economy. Moldova, the poorest country in Europe, has made superb progress in reducing poverty and promoting inclusive growth since the early 2000s. The economy has expanded by an average of 5 percent a year and was driven by consumption, and supported by remittances from abroad. Remittances account for a quarter of GDP, among the highest shares in the world.
European integration has anchored the government’s policy reform agenda. Negotiations between Moldova and the European Union (EU) on an Association Agreement and a Deep and Comprehensive Free Trade Agreement (DCFTA) began in 2010 and were concluded on June 27, 2014, with the signing of both documents.
Against a background of political instability, a polarized society, and an adverse external environment, Moldova faces big economic challenges. After the loss of an eighth of GDP – to a massive fraud in the banking sector – transparency, accountability, and corruption have emerged as crucial concerns. With higher public debt and damaged business confidence, the macroeconomic framework was severely damaged, while external budget support were halted till an IMF agreement is achieved. On the back of a prolonged recession in Russia, and uncertainty in Europe, macroeconomic and fiscal stabilization is an important short-term challenge.
While corruption and governance issues are set at the centre stage, Moldova has other important challenges to face. Large-scale emigration, combined with decreasing fertility rates, has hastened the pace of aging in Moldova, making the pension system fiscally and socially unsustainable. Additional challenges stem from an inefficient and large public sector and the unresolved status of Transnistria, a frozen conflict.
Moldova is a small country surrounded by Romania and Ukraine. This former Soviet republic was known for its agricultural production, as part of the breadbasket of the USSR. Today, Moldova is regarded as the poorest country in Europe. Moldova is primarily a source country for victims of human trafficking, who are frequently forced to become sex workers in the Middle East.
The region that is currently the Republic of Moldova has had a tumultuous history. For centuries, Moldova has experienced constant invasion and occupation by the Romans, Huns, Tatars, Ottomans, Mongols, Turks and Hungarians to name a few. Throughout hundreds of years of changing rule, human trafficking was a regular practice. Captives from this region were carted to far off lands in Europe and the Middle East, bought and sold as sex and labour slaves.
Girls from Eastern Europe have been coveted for their beauty and sold to Turkey in large-scale sex trades since the early 1800s. Moldova spent its more recent history controlled by neighbouring Russia, and later, the Union of Soviet Socialist Republics (USSR). Until it declared independence in 1991, shifting identity and oppression, have characterised Moldovan history, and culture.
During the era of the USSR, human trafficking by crime groups was low. However, human trafficking occurred on a massive scale at the hands of the state. In the 1940s and 1950s, more than 250,000 Moldovans were deported to labour camps in Siberia. The state simultaneously denied the existence of prostitution in the USSR and supported it.
Prostitutes were granted special “yellow cards,” essentially a license to practice. Prostitution and sex slavery proliferated behind the Iron Curtain. Towards the end years of the USSR, prostitution and other deviant activities moved into the hands of large organized crime groups. As the USSR neared social and economic collapse in its final years, human trafficking became an increasingly profitable enterprise. Widespread corruption did little to curb the rise in sexual exploitation of women from the Eastern Bloc.
Igor Dodan President of Moldova
Back to the EU drawing board, it would take a great leap of faith to discount in any meaningful way Moldova, both past and present. Regrettable as it may be that this little country was so abused in the past – due to its size and position in Eastern Europe – that the possibilities for change might not be so dramatic as the citizens of Moldova may think, for the very same reasons. Despite the current Russia leaning President Igor Dodan, once the Ukraine has settled its differences with the Russian Federation, its little next door neighbour could easily be earmarked as a permanent tax haven, and not just one for Russians oligarchs either!
BY CHARLIE LOFTUS