Romanian PM: Property restitution became lucrative real estate business for 1,000 intermediaries

The restitution of properties confiscated by the Communist regime became a very lucrative real estate business for some and turned into millionaires plenty of people who had bought the litigious rights over restitution files, according to Romanian Prime Minister Victor Ponta ( in picture). The Government recently published data about the money spent on property restitution or on compensating former owners of properties confiscated by the Communists, and showed that some EUR 1.5 billion in damages went to some 1,000 people who had bought the litigious rights. Meanwhile, tens of thousands actual owners are still awaiting to be compensated.

The PM gave the example of a person who had bought the litigious rights for some EUR 500,000 from the Campia Turzii city hall, and who went on to receive EUR 20 million in compensation, just two months after buying the rights. Another highlighted example is of a 50-hectare agricultural land, for which a EUR 20 million compensation was paid, or some EUR 400,000 per hectare, much higher than the market price. In another example, for a total of EUR 1.5 million evaluated property rights, the compensations paid were 70 times bigger, in just a year after. In all these cases, the litigious rights had been bought by intermediaries, and the original owners received very little compensation, compared to how much the state actually paid. So far, Romania managed to solve 27,000 restitution files, and around 200,000 are still awaiting to be solved, according to the Prime Minister. Of the files which were already solved, only 13,000 actually were paid either in kind, cash or shares in Fondul Proprietatea, and 14,000 will be compensated on the new law, promoted by the current Government. The institution which handled the restitution was the National Authority for Property Restitution (ANRP), which started the restitution process in 2005. The PM suggested many of the intermediaries received favorable decisions fast and higher amounts as they had good connections with the ANRP. The ANRP vice-president Remus Baciu received a three – year jail conviction for taking a EUR 200,000 bribe. In 2011, the Government allowed the ANRP director Crinuta Dumitrean to decide which of the pending restitution cases should be solved first, by giving the remaining shares in Fondul Proprietatea, in case of 'medical emergencies, social cases, etc”, as the Government ordinance read. The PM highlighted how the Romanian state spent some EUR 1.7 billion which went to compensate only 415 people, “which is a type of getting rich that belongs to another era and to other places on this planet.” So in effect, according to the Government's data, around 1,000 people who bought the litigious rights received more money than the other 26,000 rightful owners, according to Victor Ponta. Three quarters of those who were compensated came from outside Romania, so the country in a way exported capital, and only a quarter of what was paid stayed home. The Romanian Parliament recently passed a new property restitution law, which uses a new system, based on points, and for which a new fund will be created, mostly including agricultural land and forests. Under the new law, the state will not offer in kind compensations to intermediaries, but only to original owners or their heirs. Under the bill prepared by the government, former owners of nationalized properties that cannot be compensated in kind will receive points with a nominal RON 1 value each. These points can then be used to buy property or exchanged for money. The total amount will be paid within seven years of 2017. Former owners of nationalized property whose cases have already been resolved will receive cash compensation within five years, not three years as planned in an earlier draft. Payments will start in January 2014 and be paid in equal annual installments, with a RON 5,000 minimum annual sum (EUR 1,133 ). The new restitution bill contains provisions for taxation. In effect, former owners or their relatives will not be taxed. However, third parties buying either the points or properties will pay a tax. The European Court of Human Right (ECHR) recently granted the Romanian government’s request to extend the deadline to take measures capable of providing adequate redress for those whose assets or properties were confiscated by Communist regime pre-1989. The one month extension is the second the ECHR has given Romania, after a nine-month extension the Court requested in April last year and approved in June.