Giurgiulesti port – absorber of public money

by Dumitru Lazur and Vitalie Calugareanu

MOTTO:

“The PCRM will not die unless its financing sources are liquidated.”

(Nicolae Andronic, the leader of the Republican People's Party–December 11, 2009)

# In 2004, the Government transferred the GiurgiulestiPort to a company registered in Negresti village, not an Azeri investor as they declared.

# The Government invested over US$100 million in the port, while the port’s owner Danube Logistics – only US$30 million.

# The general investor of the port has its roots in the Antilles islands in the Caribbean Sea.

# During two years, the general investor has imported gasoline and diesel oil through the Oil Terminal without paying VAT. The selling price is yet the same.

In 2004, not long before the parliamentary elections, the Moldovan Communist Government decided to renew the construction works on the Oil Terminal in Giurgiulesti. The works were stopped in 1999 as the state did not honor its commitments to the foreign partners – the European Bank for Reconstruction and Development (EBRD) and a group of Greek companies.

What did the Government do?

The Government looked for a foreign investor that would agree to pay the state’s debts of about US$25 million to the EBRD and the Greek businessmen, to finalize the construction of the Oil Terminal, to build a passenger and fright port and a refinery.The talks with the foreigners took place behind the scenes. The Government did not hold an international tender contest as required. At least two investors, from Russia and Malta, were interested in the Giurgiulesti project, but on December 29, 2004, the Government signed an investment agreement on the GiurgiulestiFreeInternationalPort with Azpetrol, Azertrans and Azpetrol Refinery –daughtercompanies of an Azeri oil giant that would have accepted the conditions imposed by the executive.

The pro-governmental press had reported on the GiurgiulestiFreeInternationalPort during many months, but nothing was said about the state’s obligations to the foreign investor. We asked the Ministry of Economy and Trade to provide the copy of the investment contract, but we were told that the document contains ‘confidential clauses’ and cannot be disclosed.

Bargain with Azpetrol...

The Government pledged to exempt the investor from paying VAT and other duties on the import of oil products through the Giurgiulesti port during eight years, on condition that the oil products will be sold at the filling stations that it will build (50 in number). For example, if Azpetrol imported diesel oil worth 500 million lei during a year, the state budget would lose 100 million lei as the agreement reached with the Government allowed it. Marian Lupu, who was then Minister of Economy, said such a concession was granted in order to compensate for the losses sustained by Azpetrol when settling Moldova’s debt to the EBRD:“We examined every detail so as to sign a balanced contract that would be advantageous to both of the parties,” Lupu said.

The Government also undertook to build a 49.8 kilometer railway between Cahul and Giurgiulesti, to construct natural gas pipes and electric power lines up to the port and to repair the roads and telecommunication lines going to the port. This commitment cost the state at least 900 million lei. In addition, the investor leased from the state the plot on which the port was to be built for 99 years. A shocking fact is that after the Government spent the 900 million lei to create the infrastructure, Azertrans became the de jure owner of the port.

Why Azerpetrol?

Azpetrol started to express interest in the port in the summer of 2004.Representatives of the company had meetings with Moldovan officials in Chisinau. Two months later, in October, the former head of state Vladimir Voronin visited Azpetrol’s terminal in Baku and met with high-ranking Azeri officials, including Minister of Economic Development Farhad Aliyev, who is the brother of the founder of Azpetrol, Rafiq Aliyev. The latter started his business career in Moldova in 1992, with the help of persons who later contributed considerably to the creation of the financial empire of the family of the Communist leader Vladimir Voronin.

Another trump card of the Azeri company was Thomas Moser, the first deputy director of Azpetrol, who negotiated the details of the agreement and signed it in the names of his bosses. Moser made a career at the EBRD after employed there in 1995. During 2000-2003, he had been the head of the EBRD representative office in Azerbaijan, while in November 2003 he joined Azpetrol. Moser negotiated not only with the Government of Moldova, but also with his former colleagues from the EBRD that wanted to get back the millions of dollars invested in the Giurgiulesti terminal during 1996-1999.

Thomas Moser told us that the post he held at the EBRD did not count during the negotiations. “While I had worked with the EBRD, I had no connection with the Giurgiulesti project,” Moser said, giving practically the same answer as the one that we received from the EBRD’s press service in London. In the answer sent to us, the EBRD says there was no conflict of interests in that matter.

Interesting registration

The port’s owner Azertrans was officially registered at the State Registration Chamber on December 27, 2004, only two days before the signing of the investment agreement with the Government. The company’s head office was in Negresti village of Straseni district, while its founder and the only associate – Moldovan citizen Ghenadie Apostol. There was no track of Azeri companies!Two months later, Apostoldisappeared from the list of associates. His place was taken by a foreign investor...not Azeri, but Dutch - Azpetrol Oil Services Group BV.

Who is Ghenadie Apostol?

The man worked in the security service of Azpetrol in Azerbaijan. At the end of 2004, he was encouraged to found in Moldova a limited liability company, which soon became the owner of the GiurgiulestiFreeInternationalAirport. In Moldova, Apostol worked at Azpetrol as head of the security and control service, but on November 2, 2006 he was fired as he “repeatedly defied the job duties during a year.” Apostol appealed the dismissal order to court, but lost the case.

Apostol refused categorically to speak to us about his experience as company founder. Thomas Moser told us that Apostol was used only in order to avoid a bureaucratic procedure: “At that time, it was much easier to register a company in the name of a private individual than to legalize a subdivision of a foreign company. Immediately after the procedure was finalized, the right of ownership over the company was transferred to Azpetrol Oil Services Group,” Thomas Moser said.

Azpetrol Refineryand Azpetrol had been registered as foreign capital companies directly, without resorting to ‘arrangements’. Azpetrol Group BVfrom the Netherlands was the only associate. The first company received the registration certificate on December 28, 2004, one day before the signing of the investment agreement, while the second a little earlier, on October 18, 2004.

The Caribbean investor

On October 19, 2005, Farhad Aliyev was arrested by the Azeri authorities and accused of involvement in a coup plot. His brother Rafiq was detained at the airport in Baku, while he was waiting for the flight to Chisinau, being accused of “attempt to use force to take over power, plotting of violent confrontations, etc.”Consequently,Azpetrol Group BVand Azpetrol Oil Services Group BV were expropriated, while the Giurgiulesti project reached an impasse.

Help came from the Caribbean Sea. On June 26, 2009, the Dutch Easeur Holding BV purchased Azpetrol, Azertrans and Azpetrol Refinery, renaming them Bemol Retail, Danube Logistics and Bemol Refinery. The new investor was a novice in business. Easeur Holding BV was founded in 2005 by Eastern Capital NV, which is registered in Curacao (the Antilles islands in the Caribbean Sea). It is not clear who is behind Eastern Capital NV.Thomas Moser told us that Eastern CapitalNVwas registered in Curacao“in order to optimize the fiscal costs”. “The Dutch holding companies benefit from a number of advantages under the agreements on the avoidance of double taxation that the Netherlands signed with most of the countries, including Moldova. Therefore, a large number of international companies direct there investments to Moldova through the Netherlands. Furthermore, the Antilles islands have a good reputation and cooperate with international organizations in combating fiscal frauds,”Thomas Moser said.

Lazar wants to calm usdown

Minister of Economy Valeriu Lazar said that at the legal level, the change of the owner of the GiurgiulestiFreeInternationalPort did not mean modification of the investment conditions and obligations. The Ministry of Economy told us that the transaction between Azpetrol and Easeur Holding BV was a commercial transaction between two foreign private companies and was performed without the Government’s involvement. “The general investor was not changed. Only the owner of the port was changed and the investment commitments of the parties suffered no modifications,” the Ministry explained.

Former MP Vitalia Pavlichenko has another opinion yet. She said that the investment agreement between the Government and the three subdivisions of Azpetrol in Moldovawas approved by law and when the owner of the port was changed, the Parliament was to modify the law so that it contained at least the names of the new investors.

Electoral terms

The investment agreement signed by the Government with Azpetrol, Azertrans and Azpetrol Refinery clearly says that the Oil Terminal must start work at the end of 2007. The official ceremony to inaugurate the terminal, which was attended by Vladimir Voronin as well, took place in September 2006, though a large part of the works have not been finished (many pipes had not been connected, while the roads had been covered with asphalt only till the middle). Then, Thomas Moser promised that the first ships with oil products will dock at Giurgiulest by the end of 2006. But is did not happen so. Bemol Trading received a license to import and sell wholesale gasoline and diesel oil only on August 23, 2007. The first oil tanker docked at Giurgiulesti in two weeks.

Under the investment agreement, the 50 filling stations of Bemol Trading and the passenger and freight port are to be put in commission in 2010, while the oil refinery – in 2012. In February 2008, the Government decided to ease the burden of the investor and build the passenger port from public money through the agency of IS Portul Fluvial Ungheni. The port was inaugurated with a lot of pomp by Vladimir Voronin on March 17, 2009, two weeks before the election day. The Communists’ electoral trick cost the budget over 93 million lei.

The works on the freight port go on, but the fate of the oil refinery is not known. In 2008, the Government proposed the Dutch group to build a bio-ethanol refinery instead of the oil refinery. No final decision has been yet made.

Oil traders dissatisfied

InMoldova, the filling stations can be built only under the scheme for placing filling stations and oil and gas storerooms. The 50 filling stations that Azpetrol (now Bemol Retail) was to build in Moldova were included in the scheme in September 2005. Victor Ghitu, the executive director of the Oil Importers Union “Importcompetrol”, told us that the Dutch company was allotted plots of land for the stations in the most favorable places. “In the municipality of Chisinau alone, Bemol Retail built or will build 15 of the 50 filling stations. The plots of land distributed to this company are situated near working filling stations. Moreover, it has service stations located at the entrance or exit of such important towns as Ungheni, Cahul and Balti or on highways and national roads where there are sufficient filling stations,” Victor Ghitu said.

According to a report by the Ministryof Economy, “the oil products imported through the port are intended mainly for the filling stations of Bemol Retail”. More than two years after the opening of the Oil Terminal, only the general investor imports gasoline and diesel oil through the port, being exempted from VAT. Thomas Moser said the Oil Terminal is open to all the companies, adding that Danube Logistics recently signed the second contract for the transshipment of oil products with an importer.

How much has been invested?

The Ministry of Economy informed us that Danube Logistics SRL invested US$30.5 million in the port by April 1, 2009. On the other hand, the Government spent more than US$100 million only on building the railway line, the passenger port and the electric power lines.

To be continued

The journalistic investigation was financed as part of the SCOOP project (through the Danish Association of Investigative Journalism – FUJ).