Romania’s Directorate for Investigating Organized Crime and Terrorism (DIICOT) has closed the criminal investigation against Romanian company Rompetrol Rafinare, which operates the country’s biggest refinery – Petromidia, and its parent-group KazMunayGas International (KMGI).
The case was related to a historic debt of EUR 571 million (USD 603 million) that the Petromidia refinery had to repay to the Romanian state, dating back from the refinery’s privatization, in 2000.
In May 2016, The DIICOT put under distraint KMGI’s stake in Rompetrol Rafinare and other assets worth around EUR 600 million. On December 5, 2019, DIICOT decided to drop the charges and lift the majority of precautionary measures against Rompetrol Rafinare and KMGI.
“Through this decision, the Romanian authorities confirm that the numerous controversies and debates raised over time do not imply criminal law issues, or their place is not before the criminal judicial authorities of the Romanian State,” KMG International said in a press statement.
“This decision consolidates the local holdings of the KazMunayGas group and opens way for further investments required for the development of the group’s local activities, with positive impact over economic growth, maintaining and developing the workforce, the group’s constant contribution to public budgets, as well as, in general, to the development of the local business environment,” the group also said.
The group’s legal defense team was coordinated by Romanian attorney Gabriel Albu, on behalf of Budusan, Albu & Asociatii. Musat & Asociatii, one of the biggest local law firms, also assisted KMGI in this case.
Context: When Romanian businessman Dinu Patriciu took over the refinery from the state in 2000, he promised to repay the historic debts. In 2003, the Adrian Nastase Government accepted to turn the debt into convertible bonds with a maturity of seven years. The idea was that, if Patriciu didn’t buy back the bonds, the state would become a majority shareholder of the refinery by converting the bonds.
In 2007, Patriciu sold the Rompetrol Group, which included the Petromidia refinery, to the state oil company of Kazakhstan – KazMunayGas in a deal that valued the group at about USD 2 billion, making Patriciu the richest man in Romania.
When the bonds reached maturity, in September 2010, the new owner of the refinery bought back only a fraction of the bonds (EUR 54 mln) and converted the rest (EUR 517 mln) into shares. Thus, the Romanian state became a shareholder in Rompetrol Rafinare (Petromidia) but with a minority stake. The Finance Ministry filed a lawsuit against Rompetrol claiming that the group didn’t have the right to buy back only part of the bonds and convert the rest.
In 2013, the Government led by Victor Ponta signed a memorandum with KazMunayGas to close the debt issue. Through the memorandum, the Kazakh group agreed to buy little over 25% of Rompetrol Rafinare’s shares, from the state’s stake of 44.69%, for USD 200 million, and launch an investment fund that would invest USD 1 billion in Romania, in which the state would hold a 20% stake (paid for by KMG).
Dinu Patriciu died in 2014. In 2016, DIICOT started investigating the so-called "Rompetrol II" case, which the prosecutors spun off from an older case against Patriciu, started in 2006. The case against Patriciu from 2006 was also partly related to money that the Romanian state had to recover from Petromidia. The DIICOT prosecutors also decided to seize Rompetrol Rafinare’s shares and other assets worth about RON 3 billion (EUR 600 mln).
(Photo source: Rompetrol)