Romania’s restitution saga: A group of 70 people received cash and Fondul Proprietatea shares worth over EUR 1 bln

finance ministry

A group of about 70 people received compensations worth more than EUR 1 billion from the Romanian state, via the National Authority for Property Restitution (ANRP), for assets that were confiscated by the communist regime some 60 years ago.

Many of these people weren’t the original owners of the confiscated properties, nor their rightful heirs, but middlemen who bought the litigious rights from the rightful heirs, at high discounts, and then got paid in full for the full value of the assets.

The ANRP released, on Friday, December 12, the list of the largest 30 compensations paid by the state since the authority has started handling the restitutions, in 2005. Some 70 people benefited from the compensations granted by the state in these 30 cases, and got a total of EUR 1.05 billion in cash and shares in Romanian investment fund Fondul Proprietatea (FP), which is more than a third of the total compensations paid by the state, via ANRP, which were about EUR 3 billion.

The largest compensations were paid to the heirs of former Romanian industrialist Nicolae Malaxa, one of Romania’s tycoons in the interwar period. Malaxa, who owned some of Romania’s largest factories, fled to the U.S. after World War II and his fortune was confiscated by the communists. His heirs, Loreen Ellen Malaxa, Georgeta Palade Van Dusen, and Philip Theodore Palade, received three compensations worth more than EUR 240 million, which were paid in Fondul Proprietatea shares. Malaxa’s heirs were initially Fondul Proprietatea’s largest private shareholders, holding more than 6% of the fund’s shares.

The second largest compensation, worth some EUR 105 million, was received by Romanian businessman Horia Simu. He was not an original owner, but bought the litigious rights for some properties, for USD 1.5 million, according to data presented in January 2014 in a report of the Romanian Court of Accounts. This basically means that he made a profit of over EUR 100 million. Horia Simu is also known in the Romanian media as the “copper banker” because he started as a banker for Citibank and then founded the largest copper producer in Romania, Cuprom, which went into insolvency in late 2008.

A group of Romanian businessmen have received several compensations. Just like Simu, they also bought the litigious rights from the rightful owners of the properties which were confiscated by the communist regime (or from their heirs), at insignificant prices, and managed to get tens of millions of euros from the state. Among these there’s Stelian Gheorghe, who got compensated some EUR 89.4 million. He had bought the litigious rights for some EUR 1.4 million. Stelian Gheorghe is currently investigated for this compensation, as it seems that the compensation was a few times higher than the real value of the asset he was compensated for, which is a plot of land near Bucharest.

Several former officials of the National Authority for Property Restitution (ANRP), including Alina Bica, the chief prosecutor of the Directorate for Investigating Organized Crime and Terrorism (DIICOT), have been arrested in the last month for granting this compensation. According to prosecutors of the National Anticorruption Directorate (DNA), who are investigating this case, Bica and her colleagues at the ANRP approved the EUR 89.4 million compensation for Stelian Gheorghe, although the land he was compensated had a real value of some EUR 27 million.

Stelian Gheorghe also appears to have received a compensation of some EUR 51 million, in another case. One of his associates was businessman Valentin Visoiu, who owns several construction and real estate companies. Visoiu was recently held and placed under house arrest in a case in which the mayor of Pitesti, Tudor Pendiuc, is investigated for bribery.

Another known businessmen who made fortunes from compensations received from ANRP is Vasile Geambazi. He received some EUR 67 million. Geambazi is Gigi Becali’s nephew and he has been one of the largest traders of litigious rights.

Gigi Becali, who’s known mostly as owner of the Steaua Bucuresti football club, used to be one of the richest people in Romania, in 2006-2008, as he owned large plots of land in Pipera, one of the developing parts of Bucharest. He is now serving a jail conviction, as the court ruled that the deal Becali made with Romania’s Ministry of Defence, in the early ‘90s, in which the two sides exchanged large plots of land, was illegal. The court found that Becali bribed the minister of defence Victor Babiuc to approve this land swap which favoured Becali.

The full list with the top 30 largest compensations granted by ANRP can be found here.

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