In a system full of corruption and bribes, in the past two years, only one mayor was caught in the act and then given suspended sentence. He was charged of having frauded a public tender. Though, some tenders seem more than doubtful and the witnesses of some businessmen and mayors reveal a world where the shadow games and the bribes dictate the rules of the game, rules which are accepted by all sides, otherwise, they are excluded from the deal.

Continuation

No doubt, company Litarcom SRL can be called one of the champions of tenders in the last four years. It won more than 70 public tenders, worth about 270 million lei. Many experts in the field claimed that this SRL did not have either necessary equipment or specialized staff. Many of the tenders won by Litarcom are (were) for resources from projects financially supported by the National Ecological Fund (NEF) of the Ministry of Environment.

„If this company does not win, the project will not be approved”

Founder of the company Litarcom SRL is Liviu Jitari, aged 34. The SRL was founded by him in August 2002 together with another young man Grigore Marandici. Jitari was 22 when he has been the only founder since May 2015, after he had bought the shares of Marandici. The biggest agreement of this company worth 34, 9 million lei was won by the Mayoralty of village Costesti, district Ialoveni in October 2013, for “providing works of sewerage system and wastewater treatment". One year later, an additional agreement of increase was signed between the Mayoralty and the company. The price of the works increased by 2 million and the total sum of the project reached 37 million lei. The mayoralty of Costesti, represented by the former mayor Vasile Borta signed the additional agreement, though as in the case of the tender from Pelivan, it was not clear if additional money for works was necessary as works have just started.

Currently, works stopped both in Costesti and Pelivan, though under the agreement, they were supposed to finish this summer. A former employee of the Mayoralty in Costesti said that the local authorities won this tender after the former leadership of the Ministry of Environment, represented by Gheorghe Salaru assured us that the tender will be won by Litarcom SRL. He said to the former mayor Vasile Borta that „they can be the best initiators of projects, but if this company (Litarcom) does not win; the project will not be approved”. Such a scheme used at approving projects from the National Ecological Fund was reported by the mayor who accepted to talk about frauding a tender and this case was reported in the first part of this investigation.

Millions for inexistent works

Natalia Petrea, current mayor of Costesti, elected in June 2015 says for ZdG, that the documents for the tender organization in 2013 were examined by law bodies. „Under the agreement, works were supposed to continue throughout 2016, but I do not know their plans”. She claimed that she heard that the former mayor Vasile Borta, who represented the Liberal Party in the period 2011-2014, party that owned the Ministry of Environment, was said that namely this company must win the tender in 2013. „I heard about it. It is true. The law bodies are now investigating over this tender. I went to hearings. I said all I knew”, said the mayor. As for the equipment and staff of Litarcom SRL, Petrea confirms our information. „Poor equipment. There were about 2 people. They worked with local equipment and people” , she said.

Documents acquired by ZdG in „case Costesti” show that in 2013-2014 decision makers, including from the Ministry of Environment approved the transfer of 6,7 million lei that reached the accounts of the company Litarcom, without testing the works performed by this SRL. An internal auditing of the Ministry reveals that the documents were sent to law bodies. Vasile Borta, former mayor, who in 2015 was a candidate on the lists of the Democratic Party in local elections, denied of being ordered by the former leadership of the Ministry of Environment, the company that was supposed to win the tender in 2013, and said that  „something like that is not said”. Then, Borta hung up and did not answer to other questions.

Valeriu Munteanu, current minister of Environment confirms the schemes set with the help of the National Ecological Fund. Last week,  in a public meeting, Munteanu declared with reference to an economic unit who came to his office and hinted that they are “heads” (they decide) over projects from the National Ecological Fund. Though, the official did not give any name, perhaps he referred to Litarcom SRL. „When I came in office at the Ministry of Environment, I noticed serious violations of the legal framework in the field of projects’ financing of the National Ecological Fund. Obviously, we ordered an audit of conformity as a priority to large projects, which had clear evidence or suspicion of misappropriation of public funds. They found several irregularities of management, most of the information was sent for examination to law bodies, to punish the guilty persons and repay the amount stolen. If you refer to the case (Costesti) yet discovered in the first month of mandate, it shows the catastrophic situation previously registered at the Ministry of Environment ", said Valeriu Munteanu.

Relations of the champion company at tenders

Liviu Jitari, founder and manager of Litarcom SRL, together with his wife own 2 apartments in Chisinau, both of them are put in pledge for credits worth some millions of lei, is founder of another 2 SRLs with experience in winning public tenders: Avi-Bors, where Jitari’s partner is Igor Munteanu, who participated in some tenders as representative of Litarcom and Capillati, founded by Jitari and Adrian Covas and he is executive director of SRL Litarcom. Though this SRL has its main declared activity in „poultry trade”, over the last 2 years, it won many public tenders, including one estimated at 10 million lei, organized by the District Council Orhei for road reparation in village Ghetlova. Attending the tender was one SRL, the winner. Otherwise, Capillati SRL, founded by Jitari and Covasi has the address in an apartment on str. Mitropolit Gurie Grosu, registered on the name of couple Nina and  Nicolae Covas. The latter is the president of the Poultry Association in Moldova, former candidate on the lists of Alliance Our Moldova (AMN) in the parliamentary elections in 2009. Later on, he joined the Liberal Democratic Party. In 2013, Covas was arrested by CNA officers for bribing, as he demanded 90 thousands lei from a man to help him to get a plot that was owned by an enterprise. Shortly, he was set free.

When they talked about Litarcom SRL, many mayors spoke about this economic unit and the former minister of Environment, Gheorghe Salaru. Namely in the period when he was minister, the company got the biggest agreements. Requested by ZdG, Salaru said that he has not and had not any connection with this SRL. He remembers that before the tender in Costesti, he discussed with the mayor of this village and he claims that he has never told him what company must win the tender. „There was a conflict between 2 companies that considered that they won. How could I get involved, if there was a conflict?”, wonders the former minister. He said that he had never influenced any mayor and that he had not decided on the allocation of the money from the National Ecological Fund (FEN), but a commission that had representatives both at the Ministry of Finances, institution that issued the money. „If you want to find something, go and meet those from the Tender Committee and from the AAP that approved the correctness of the tenders, though many of them were contested. This is a subjective opinion. It seemed to me that Litarcom won too many tenders, I could not do anything, though I realized that there will be problems as they assumed too many commitments and they had not capacities to complete them to the end”, said Gheorghe Salaru.

„I do not understand why you need it”

We discussed with the executive director of Litarcom Adrian Covas. Together with Liviu Jitari, they founded  the SRL „Capillati”.  We asked him some questions and he did not answer, he wanted the questions in written form. We insisted to find from Covas the connection of the company with the works in Pelivan and Costesti: „Wherefrom did you take this information? It is not true. If you want correct information, send us a letter and we will reply”. We sent the questions to him and we waited for an answer, but we did not receive anything. We asked about his father Nicolae Covas, his connection with the political world. „What is the question? (smiles). I do not understand why you need it. The information is partly not right. You want to provide information about what is done in the country, for the population to have right sources of existence, water and sewerage, you can ask and you will get answers”, recommended Adrian Covas. Though, we have repeatedly called him, we did not get an answer on behalf of the company.

In the message sent to the address Litarcom SRL, we asked about the tenders worth 270 million lei, won over the last 4 years, about problems in many villages where the company won these tenders, about the relations with political world and different functionaries of this SRL. Also, we requested the physical address of the company, where the equipment is stored and the employees activate. We did not get any answer.

Winners on 8th place

Law on public procurement says that the "most economically advantageous" winning bid will be considered when the winner of the tender is appointed. In the case of agreements of public procurement on works, criteria of establishing the most advantageous criteria are quality, cost of a unit of the product of the bidder, total price and the bidder's experience. The law also establishes that the share price in the total bid evaluation shall not be less than 80%. In other words, the main criterion for selection should be the lowest price, provided that the value of the offer is not less than 85% of the estimated value of work, calculated by the contracting authority.

Under this investigation, we found several public tenders that designated winning the companies that did not propose the most advantageous prices.  Their analysis and reaction of people involved are suspicious. An example is the tender for construction of water supply system in the village Pleseni, Cantemir. The winner was Foremcons SRL, the company ranked eighth (9.6 million), by 2.6 million more than the lowest offer price (7 million). Lacatus SRL and Valdcongrup SRL, participants in the tender contested outcomes, but their claims were rejected and the contract was registered on November 25, 2015 at AAP.

Explanations of the mayor and of the winning company

Asked why the company that ranked 8th was nominated the winner, the mayor of Pleseni, Alexandru Ovcinicov, elected on the list of the Democratic Party, previously represented the Communist Party in the Republic of Moldova said that all participating companies had a license for installation of water supply but only four were licensed for installation of water tower. "I thought that Polimer Gaz Complet will win based on price, but it had no license for another type of work. Other companies that we thought  would win, made mistakes in the estimate ... The law says that one hour in construction work costs about 40 lei, but they showed 23 lei, for a lower price. Two companies had much lower costs than the 15% limit permitted by law. Though, the documents were right, I could not contract them, because later they could request another additional agreement, increasing the price. This could not be accepted at the Public Procurement Agency.  The Anticorruption Center performed a search, as a company wrote to CNA… we chose the most advantageous offer, not the lowest price", says the mayor. He denied that the tender had been faked.

On the other hand, representatives of the two companies participating in the tender say that the lower price is explained by the fact that they are direct importers of materials (pipes, pumps). For this reason, they can carry out the works at a lower price compared to companies who purchase these materials in the Republic of Moldova. One of the economic units, disqualified for lack of license to mount water towers says that his company had metal construction license which would allow them to build water towers. Dumitru Axentii, director and founder of Foremcons says that his company was the winner owing to the experience and works performed previously and mistakes admitted by other participants, excluding any external influence. "In any competition, experience and price are taken into account ... Some of them do not include all materials in the offer, the necessary number of wells. It is obvious, that it is cheaper", says Axentii.

Mayor who avoided the answers

Another tender which was not advantageous for the state from financial viewpoint, was held in December 2015 in Mincenii de Jos, Rezina. The winner of the tender was Avi-Bors SRL, that has the same owners as Litarcom SRL, participated in this tender and proposed an offer by 90 thousands lei higher than the winner. The offer of Avi-Bors for the construction of the water supply system of the village was estimated at 3, 9 million lei and ranked 7th based on the price criterion. The offer with 1,7 million smaller was that of Expocostas SRL (2, 2 million lei), followed by Lacatus SRL (2, 8 million lei) and Talimax Grup SRL (3, 3 million lei). The results of the tender were contested by 3 participants: Expocostas, Lacatus and Valdcongrup. Both the agreement and the contestations are being examined at AAP.

Ion Stog, mayor of Mincenii de Jos said that Avi-Bors was designated winner as other participants did not present „appropriate documents”. Asked if he was interested in the experience of this company and the works performed previously, the mayor said that he was driving and he will call us some minutes later. He did not call, we called him several times but Stog did not answer. We talked to him some days later, when he said again that he was busy and to call him in 10 minutes. He did not answer. Neither Liviu Jitari, from the winning company explained how the company founded by him participated in the tenders and whether he had an understanding with the mayor before the tender was held.

They won the tender twice, at different prices

Another doubtful tender, as a result of which an economic unit proposed a higher price than that of other participants and was appointed winner, has been recently held in Durlesti for sewerage and piping works on str. Rezistentei and on Calea Unirii. The first tender for this project was held on October 10 2015 and the winner was Vedacon SRL that proposed the lowest price. The results of the tender were contested by other participants on the ground that the winning company admitted an error when it presented the banking guarantee and showed a smaller sum than the official one. That is why, AAP rejected the registration of the agreement and the tender was repeatedly organized on December 24 2015. The winner was Vedacon SRL that proposed an offer by 1, 3 million lei higher than the first tender and ranked 5 out of 6 participants based on the value of the offer.

Representatives of the Mayoralty in Durlesti say that currently the agreement is at AAP for registration but the results are contested and the Agency will take a decision after the contestations are examined. We called Andrei Clapaniuc, director and founder of Vedacon SRL, to find out the „secret” of the repeated victory and how he explains the difference of 1.3 million lei for the offer proposed 2 months later. Clapaniuc refused to discuss with us: „Leave me alone, I do not want to comment these for unknown people, by phone”. I insisted, but the director of Vedacon refused to continue the dialogue with us.

Tender from Seliste and the (un) known price by participants

To understand how a tender takes place in a village in Moldova, I participated in a tender organized by the Mayoralty Seliste, Orhei, for water supply and sewerage system in the village, held on 30 December 2015. At 10.00, representatives of eight SRLs came in the office of the mayor Vasile Scripnic. Also, he was president of the Tender Committee. As 10.00, a representative of the company Expocostas SRL has submitted an offer and following some discussions between the mayor and the people who were in the office, he has been accepted into the competition. During the tender, the mayor, helped by a subordinate, opened envelopes with documents, and checked the sum proposed by each SRL and the documents. We heard discussions between participants that some knew the estimated price of the work, others - no. Some argued that the price was published, others that not, though according to the law, the price should not be known to participants. After the tender, we discussed with representatives of 2 economic units about the company that has the best chance of winning. One of them referred to the Capital FCI SRL because they were among those that claimed an estimated price of the work that was published. We selected Expocostas SRL. This company proposed the lowest price and submitted the documents to tender at the last moment.

On January 19, 2016, all participant companies were announced that Capital FCI SRL was the winner. The representative of the company, contacted by ZdG said that he had not signed the agreement as winner of the tender, because it is not approved by AAP. The representative of the company, who asked us not to make public his name, said that the tender was won correctly, and the fact that he knew the price of the works is not a problem. He said that the price can be found based on some calculi on information from the announcement of the tender. SRL Capital FCI was founded in 1994 in district Orhei at some km distance from village Seliste. Igor and Emilia Galciuc are founders. Physical address of the company is in city Chisinau.

The plot that came into the possession of the mayor’s son

The simplest tenders have predictable winners in most of cases. As a rule, the tenders for food products brought to schools or nurseries in the village or for plots are won by relatives of the functionaries in the Mayoralty, those who actually organize the tender. In May 2014, in the village Cotova, district Drochia, a young man aged 23 Ivan Vortolomei won a tender for a plot of 1 hectare, organized by the Mayoralty managed by his father Fiodor Vortolomei. He was president of the Tender Committee. There were 2 participants in the tender, mayor’s son and an inhabitant of this village Ruslan Sugailo. The National Integrity Commission (CNI) notified by the Territorial Office Soroca of the State Chancellor’s Office  investigated the case and reached the conclusion that „a non-transparent character and a formal attitude to  the public tender process carried out by the Mayoralty of village Cotova, was registered”.

The rival of the mayor’s son did not have pretensions about the tender. Ivan Vortolomei purchased the plot at the sum of 13 thousands lei. Under the investigation, CNI found the  „fictional character of Mr. Sugailo Ruslan’s participation in the tender”. The conflict of interests admitted by the mayor of the village Cotova was confirmed by CNI and shortly the National Anticorruption Center (CNA) fined the mayor with a sum of 2 thousands lei. As a result, the local Council cancelled the tender and the plot came into possession of the Mayoralty. Shortly, the Mayoralty organized another tender and it was won by Iurie Nastas in Drochia.  Two months later, the plot again came into possession of the mayor’s son based on a sale / purchase agreement which he signed with the winner of the tender. He said that he needed that plot. „I bought it because I want to build a farm there. This is the right place. I paid 20 thousands lei for this plot. I do not know wherefrom I bought it”, said the son of the mayor from Cotova, who was elected this summer for a new mandate.  We asked Iurie Nastas if his participation in the tender was not formal, as he sold the plot to the mayor’s son. He did not reply, he just said that he found about the organization of this tender from someone in the village and he had not money to invest. „ Someone was supposed to send money from Moscow, I did not get the money and I decided to sell it. I do not remember whom I sold and the sum of money. It was long ago. Do you remember what you ate yesterday?”,  asked Nastas.

CNI and CNA fine the tenders’ rigging

There are many cases; many of them are confirmed by relevant structures, but without consequences either for mayors or winners of tenders. For example, in village Iargara in Leova, the company of the family of the former mayor Claudia Ivanov won over 20 tenders estimated at one million lei for „ purchasing food products for kindergartens in the village”. „I knew it is banned. I was sure that the products will be quality, there will be no problems, poisoning, the products will come on time and so on”, this is the strange explanation of the mayor for ZdG.

In a reply sent by CNI, we find that over the past 3 years, the institution registered 42 cases of conflicts of interest between local mayors or deputy mayors, who employed their relatives or helped them win tenders with the institution they manage. CNI sent the information to CNI that applied 5 fines, worth 2 thousands lei and other 3 fines worth 3 thousands lei. In other cases, the institution confirmed the expiry of the limitation period. Only 2 out of 5 cases that ended up in fines are related to the rigging of some tenders: case of the mayor from Cotova and that of the mayor of Cotiujenii Mari, Soldanesti, Petru Comendant, who appointed a company founded by him and managed by his wife, winner of a tender. As a result, the SRL got the rental of 2 facilities inside the school at a very low price. The mayor was fined 4 thousands lei for this violation.

Presidents of district, winners of tenders

Tenders „in family” are actually a rule, especially when one of the family members is a functionary. Over the past years, in many districts, the companies of the presidents of districts won many public tenders. For example, Asicon SA, society where the former president of district Calarasi Ilie Rau is shareholder, won about 48 tenders in the period 2011-2015; the majority of them were organized by the council he leads. Other 3 agreements were won by Asicon after local elections in June 2015, as a result of which Rau became district councilor on the lists of the Democratic Party. Ilie Rau said that everything was carried out in a transparent manner and his office of president of district could not facilitate the access of his company to public money. „How could they influence, if I did not participate in the tender committees? The company participated like other organizations … How could they not participate if they are from this district?”, says Ilie Rau. Asked about a conflict of interest the fact that his colleagues were part of these tender committees, Rau said that this is not a problem. I did not participate, I did not sign the agreements …”, said Rau.

The company of the liberal-democrat Grigore Cobzac benefited from agreements that stopped immediately after he quitted the office of president of district Hancesti. In 2011-2014, when Cobzac was president of the District Council Hancesti, Digricom SRL, founded by the current MP together with his son Victor, had over 40 agreements with state institutions. Most of these agreements were signed with mayoralties in Hincesti and with the District Council Hancesti that was managed by Cobzac. In 2015, since Grigore Cobzac has not been president of district, as he was elected MP, Digricom has not won any public tender, though, the MP said that the company managed by his son participated in 4 tenders, including in villages managed by liberal-democratic mayors. As for the tenders won by Digricom so far, the MP says that the law was respected and his company used to win tenders before he was elected president of district.

„I want to know where exactly the law was violated because I can say that in the same district Hancesti there were organized many tenders where Digricom participated but has not won. If you have any suspicion on corruption, pretensions over conflicts of interest, influence on public procurement, let us discuss about it before the article is published, as I can give you proofs. You can request the information about tenders which Digricom has won before I was elected president of district. There were many of them. I was responsible for constructions all my life”,  says Cobzac.

„I had an extremely responsible approach. You can meet the members of public procurement in the council who were not my sympathizers. They were communists and democrats. My worst rivals were in the group of public procurement. Meet them and discuss with them about my approaches”, said Cobzac. The 2 cases presented above are not exceptions as, the press wrote many cases about dozens of tenders won by the companies of presidents of districts, of mayors, MPs, ministers.

Director of the Public Procurement Agency: You must inform the National Anti-corruption Center

Viorel Mosneaga, director of the Public Procurement Agency was asked about the corruption from the field he manages and he said that we must notify the National Anti-corruption Center (CNA). „If you have such information, you should go to CNA. I would be curious to know if such actions happen”, he said and hung up. We called him again and we said that we wanted to discuss about this phenomenon. Viorel Mosneaga was worried by the fact that one month ago, we revealed how the company of his family, founded by his sister won tenders worth 35 million lei in the past 2 years.  „You do not have fair methods to ask for something. You ask me about public procurement and the press will write I do not know what”, reproached the functionary. As for the corruption in the system, Mosneaga said that „what you say is a serious issue, corruption. If you have such information, you must inform the CNA. If someone tells nonsense and says that he bribes, it is not a reason to put a bomb under somebody”.  We told the head from AAP that many persons spoke about cases of bribing the Agency: „If you know, why do you ask me. You asked me a weird question”, replied Mosneaga.

Valentin Lozovanu, expert at  IDIS Viitorul

"If the procurement procedure is not conducted in a transparent manner, this reduces competition - which means that the service provided will be at a higher cost, often of doubtful quality, because the basic concern in this case will not be providing the best service/goods. Also, the authority will not be interested to ask the completion of works on time, it is likely that it will delay the commissioning. Also, very often, poor quality requires reparation or renewing the delivery of services/goods or to replace them over the time. The lack of transparency in a tender will discourage other applicants to submit an offer in future and will encourage the method to extract the rent for tenders (percentage from the sum for attributing the contract, the so-called "otkat" (bribing)). Another effect of some agreements during the course of a tender, in addition to costs, could be inflating the needs of procurement services / goods of an institution for which the competition for price offers are organized  or if they are divided in small agreements, procurement from a single source (under an urgent need  of motivation). "

This investigation has been produced as part of the “Shining a Light on Corruption in Moldova” Project, implemented by the Centre for Investigative Journalism and Freedom House, with the financial support of the Ministry of External Affairs of the Kingdom of Norway.