George Soros’ Romanian Ghosts: Fighting Corruption With Corruption

Romania’s anti-corruption crusade meets Russian corporatism

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Image credit: Max Pixel. goo.gl/eEXJXfr a caption

Crossposted from Capital Research Center

In 2006, then-FBI Director Robert Mueller visited Romania, where he praised Minister of Justice Monica Macovei and her anti-corruption efforts. His comments marked a major public relations victory for Macovei because her tactics had recently fallen under intense parliamentary scrutiny. Mueller also advised 33-year-old Prosecutor General Laura Codruta Kovesi—recently appointed at Macovei’s behest—that “the capability to intercept phone calls and the legal ability to use them in court” represents “an essential tool” in fighting corruption.

The Bigger Picture

The financial support that the U.S. State Department accords to anti-corruption efforts in Romania and other Eastern European countries does not stem from philanthropic generosity. When the Christian Science Monitor dug under the story’s surface, it found that the policy fits tightly into the broader ongoing power struggle in the region between the U.S. and Russia. U.S. Ambassador to the Czech Republic Andrew Schapiro emphasized the geopolitical aspect of the aid:

There is a greater recognition that these issues of good governance, transparency, and rule of law are not just issues about fairness. They are not just issues of economics. They are also issues of security.

The Christian Science Monitor told how Czech programmer Jiri Skuhrovec developed software to track public tenders for Reconstruction of the State—an NGO-led anti-corruption drive—which early on “received significant support from the U.S. Embassy in Prague and Open Society Fund Prague.”

Skuhrovec noted that by tracking party financing, he helps reveal Russian influence because when Russians buy foreign companies, those companies often contribute to political campaigns.

Keeping Russia Out of Romanian Business

American direct aid to Romania wound down when the country entered the EU. Concerned though that Russia would use Romanian oligarchs to gain a foothold in the economy and turn back the country’s anti-corruption fight, U.S. Ambassador Nicholas Taubman stressed the need for the U.S. government to continue to support anti-corruption efforts. He suggested it do so by placing “small grants with USG cost-sharing into the hands of grassroots civil society builders,”—in other words, NGOs.

Taubman’s concerns were not misplaced. In the mid-2000s, growing Russian power monopolies built on bribery and extortion presented a genuine concern for Romania and the rest of Eastern Europe. But any hope that Macovei’s crackdown on corruption (meant to placate the European Union) might curb Russian oligarchs’ forays into the country failed spectacularly.

Gas Dominance Through Aluminum

Romania’s intelligence service, the SRI, found that Russian oligarch Oleg Deripaska planned to monopolize the country’s aluminum industry when three government-owned aluminum producers were set to privatize. Deripaska failed, but the suspicion led the SRI to wiretap Russian billionaire Vitaly Maschitskiy and his associate, Valery Krasner.

Krasner previously worked as a senior executive with Marc Rich Investment Ltd. In 1983, the U.S. had sentenced Rich on 65 criminal counts, which included buying oil from Iran while it held U.S. hostages. President Bill Clinton controversially pardoned Rich on his last day in office, sparing the billionaire a lifetime prison sentence. Krasner’s scruples, however, surpassed what Rich’s outfit would tolerate. After only working for the firm for two years, the Marc Rich Group sued Krasner for millions of dollars in damages for fraud.

Vitaly Maschitskiy had made his fortune largely in oil, gas, and timber, benefitting immensely from Russia’s post-communist privatization. Shortly after he and Krasner met, they set their sights on the Romanian aluminum industry. The Romanian government, anxious to qualify for World Bank funding under its Private Sector Adjustment Loan Agreement, was highly susceptible to underselling ALRO, the largest producer of aluminum primary products in Eastern Europe.

A London court case revealed that, in order to hide their Russian roots, the Russian businessmen allowed the U.S.-based Marco International Corp (MIC)—which Rich co-founded—to negotiate the deal with the Romanian government. They called it “Project Vostok,” or the “Eastern Project.” Through their network of consultants, they lobbied Romanian government officials, investment banks advising the Romanian government, and the World Bank, to both sweeten and speed up the deal. Their strategy paid handsome dividends.

MIC created a British shadow company, Marco Acquisitions Ltd., and acquired control of the energy supplier Conef, which already held part ownership of ALRO and Alprom SA, a producer of finished aluminum products. A short while later, Maschitskiy’s company acquired the majority of shares in both. ALRO then bought a majority stake in Alum Tulcea, Romania’s only aluminum refinery.

“So, I started investing there and gradually acquired control over Romania’s whole aluminum industry,” bragged Maschitskiy to Interfax in 2014.

Maschitskiy’s 99.97 percent ownership of Conef also provided the state-owned Russian oil and gas giant Gazprom prime access to Romania’s energy market.

The SRI suspected Maschitskiy of using ALRO as leverage to obtain long-term contracts at below-market energy prices to then sell the excess electricity on the open market.

Maschitskiy, Krasner, and Marian Năstase, president of Marco Group’s Romanian subsidiary, used code names to discuss their scheme. The SRI deciphered that “the Captain” referred to Romanian President Traian Băsescu, “Trump” referred to millionaire businessman Dorin Cocoş, “Little Trump” referred to Cocoş’s wife and Băsescu’s Chief of Staff Elena Udrea, and “the Pilot” referred to Minister of Economy and Commerce Codruţ Şereş.

Maschitskiy and Krasnov’s phone conversations suggested that they funneled a “bribe through “Trump” to convince “the Captain” to approve a cheap energy deal. Băsescu then sent an urgent message to “the Pilot,” or Şereş, to solve the problem, “not just in the interest of the Government, but in the interest of the people.” The deal allowed ALRO to purchase energy directly from Romania’s hydroelectric plant at half the normal price, providing it a major advantage over competitors.

In an interview in February 2007, Şereş wondered if anyone had informed the president of the €4 million ($5 million in 2005 dollars) given to one of the president’s advisers to secure the deal.

Băsescu, for his part, had no love for Gazprom. He once accused the Russian giant of “being more efficient than the Red Army in making Europe dependent on Russian resources.” But he defended his decision to instruct Şereş to approve ALRO’s request because ALRO officials told him that they only received around 75 percent of the energy needed for the year, and had to pay bribes to get the rest. By approving the request, he was simply acting in the nation’s interest—helping a large employer get its product to market.

Covering up Corruption With Anti-corruption

Based on the previous incriminating phone conversations, Ciprian Nastasiu—a prosecutor with Romania’s Directorate for Investigating Organized Crime and Terrorism (DIICOT)—opened a new case specific to ALRO. He received a one-month warrant on June 2, 2007, from Romania’s Supreme Court to intercept the Russians’ conversations and those of multiple actors close to Băsescu. When Nastasiu notified the SRI, the agency refused to carry out the order. When he informed the Supreme Court of the situation on July 2, the Justices promptly issued an extension. The following day, however, Nastasiu was informed that he had been taken off the case and demoted to a post on the other side of the country.

Angela Ciurea, the next prosecutor to take the case, also probed too close to the palace. After she placed top government officials under surveillance, General Prosecutor Kovesi called her into her office. Livid, she demanded to know why Ciurea hadn’t informed her before obtaining a warrant for those individuals, one of whom was a close friend of Kovesi’s.

Ciurea too soon found herself demoted, and bullied into resigning shortly thereafter. Three years later the Supreme Court granted her appeal and deemed her demotion without cause. She had already vowed, however, never again to work for the Romanian government

The DIICOT deputy director who took the case after Ciurea found the government slightly more cooperative. A few months later, however, he went into early retirement at age 56—an act that required the president’s signature.

Kovesi finally moved her personal assistant over to DIICOT to handle the matter. He closed the case in January 2010, less than two months after Băsescu narrowly won reelection.

In April 2007, Gazprom secured long-term access to Romanian gas shipping facilities by signing supply contracts with companies Romgaz, Transgaz, and Conef. The Conef contract alone provided for selling the country up to 42 billion cubic meters of gas through 2030 at a price classified as a “commercial secret.”

In 2011, the newspaper Cotidianul reported that ALRO had enjoyed a 230 percent profit increase over the previous year. It also paid over 200 percent less per megawatt-hour than the average citizen for electricity.

In 2014, after safely retiring, DIICOT prosecutor Eugen Iacobescu claimed the ALRO case contained a mistake. The Russian businessmen had paid those who lobbied the president €10 million in bribes, not €4 million.

In Part 10 of “George Soros’ Romanian Ghosts,” we investigate the “Balkan outpost” of the U.S. State Department in Romania.

 

George Soros’s Romanian Ghosts

How the Open Society Foundations’ NGO network tries to influence politics in Eastern Europe

Crossposted from Capital Research Center

Liberal billionaire George Soros has consistently funded left-wing movements and organizations in the United States, including Occupy Wall StreetBlack Lives Matter, and the communist-connected Color of Change. But the billionaire’s goals have always been bigger than one country. In fact, in 2017, the U.S. only received 15 percent of his Open Society Foundations’ (OSF) dedicated funding—the rest went to foreign countries and global projects.

Soros has given particular focus to exporting political unrest to the former communist countries of Eastern Europe, including his native Hungary. In fewer than 25 years, OSF has poured $1.6 billion into the region for “democratic development.”

But why would the organization spend such a sum on countries that are already democratic?

Soros’s motto, “If I spend enough, I will make it right,” provides an answer, as well as insight into his philanthropic activity, almost all of which entails political—not humanitarian—ends.

During the 2016 U.S. presidential election, Soros spent at least $25 million supporting Hilary Clinton and other Democratic candidates. But when all that spending didn’t “make it [the election] right,” Soros declared in an op-ed, “Democracy is now in crisis.”

Apparently, Soros’ definition of democracy means people electing only candidates of whom he approves.

In the op-ed, Soros lamented that the U.S. under President Donald Trump will become so embroiled in internal fighting and trying to protect its own minorities from violent attacks that “it will be unable to… promote democracy in the rest of the world.”

For Soros, however, democracy abroad—as in the U.S.—isn’t free if it doesn’t follow his ideology.

Uncle Sam joins Team Soros

The U.S. State Department often teamed up with Soros and OSF to “promote democracy” in Eastern European countries. This often consisted of targeting nationalist governments by infusing socially liberal propaganda through NGOs and Western-sponsored media—often going so far as to influence those countries’ elections.

One example is the U.S. Agency for International Development (USAID)’s reported meddling in Macedonia’s elections in 2016. According to USAID’s website, between February 27, 2012 and August 31, 2016, the agency gave $4,819,125 to Open Society Foundations – Macedonia. In April, the conservative watchdog group Judicial Watch filed a lawsuit against the State Department and USAID, for failing to respond to a Freedom of Information Act (FOIA) request for records and communications dealing with the funding and political activities of OSF’s Macedonian arm. Judicial Watch reported that with the help of then-President Barack Obama’s U.S. Ambassador to Macedonia, Jess L. Baily, the U.S. government spent “millions of taxpayer dollars to destabilize the democratically elected, center-right government in Macedonia by colluding” with Soros.

One NGO funded by the USAID-Soros alliance paid for the translation into Macedonian of far-left activist Saul Alinsky’s Rules for Radicals, which CRC Vice President Matthew Vadum calls “the seminal book for community organizers.” A Macedonian government official even referred to the American-funded activists as the “Soros infantry.”

In a 2006 Organization Trends detailing leftist NGOs’ influence in Romania, Neil Maghami observed that “in a sense NGOs are filling a power vacuum left by the collapse of the Soviet Union.” Many of these NGOs are funded by Western philanthropists like Soros, “whose dreams of leftist solidarity … die hard,” work to thwart investment from Western capitalists, while infusing their host countries with liberal social values.

The West has cause to celebrate the 28th anniversary of the end of communism in Eastern Europe. Western investors, business people, and consumers enjoy increased living standards in no small part because Eastern Europe embraced economic freedom. But while many Westerners took advantage of the economic opportunities that the economic opening brought, others, including Soros, saw an opportunity to wield enormous political influence in the region.

In Part II, we’ll look specifically at how Soros has infiltrated Romania since the fall of communism and how OSF’s progeny dominates much of the political discourse in that country.

Vladimir Putin Opposes U.S. Fracking Because It Threatens Russia’s Oil & Gas Exports

Image via Oil and Gas People, goo.gl/V2c1Yz

Image via Oil and Gas People, goo.gl/V2c1Yz

Russian connections to anti-fracking activism in the United States underscore Russian President Vladimir Putin’s dedication to keeping Eastern Europe dependent on the oil and natural gas which flows from its state-owned energy giant, Gazprom. Russia has successfully stopped fracking efforts in Eastern Europe through phony environmentalist and media campaigns, and is now attempting to disrupt the surge in American natural gas production that is quickly bringing the U.S. into energy independence, and creating threatening unwanted competition for the Russian energy in Europe.

 

Exports from the U.S. via the oil and natural gas extraction process known as hydraulic fracturing – or “fracking” – poses a clear danger not only to Gazprom, but to the Russian government. One quarter of the regime’s revenues come from taxes paid by the energy giant, in which the government is a majority stakeholder. It is not surprising, then, that Gazprom is the only major energy company in the world to oppose the development of shale gas. For years its executives have claimed that fracking poses severe environmental risks; Alexander Medvedev, Gazprom’s executive chairman and head of Gazprom Export, has vowed that the Russian state and Gazprom are ready “to wage [ ] war on shale.”

While many former Soviet bloc countries in Eastern Europe have joined NATO and the European Union in an attempt to distance themselves from their Moscow, their overwhelming dependence on Russian energy imports has prevented them from achieving complete independence. Gazprom supplies 30 percent of the European Union’s natural gas, and during a 2009 dispute with Ukraine showed the world that it can make Europe shiver if it turns the spigots off.

European Union nations have repeatedly attempted to find ways to diversify their energy resources, but the powerful environmentalist factions in many countries have lobbied against increased oil and gas imports from the United States and elsewhere. Innocently or no, these groups have played into the hands of Gazprom. After Germans protested in an emotional meltdown when a 2011 tsunami disabled the power supply of three Japanese nuclear reactors, German Chancellor Angela Merkel did an about-face on nuclear energy. With the support of 80 percent of the Bundestag, or German parliament, she decided to phase out nuclear power in that country by 2022. This prompted Russian President Vladimir Putin to jokingly tell the Germans:

I don’t understand how you will heat your houses. You don’t want the gas. You don’t develop nuclear energy. Are you going to heat with firewood? You also have to go to Siberia if you need firewood.

 

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