Public procurement

Who dribbles the law in the file of the National Stadium?

Intrarea din strada Ismail Foto: CIJM
Author: Victoria Dodon
10/02/2016 7944

The National Stadium situated in the centre of the capital city, where the most important football matches were played in former times, is derelict for almost ten years. In 2006, the Communist governance decided to renovate the sports arena and, without conducting any tender, the company Basconslux was designated to do the demolition, the costs of the works at that stage being estimated at eight million lei. Nevertheless, this company, that was the winner in a number of public tenders, was not paid, although it performed the works. In 2013, after a long correspondence with the authorities, Basconslux started a law cause against the State and won it, the Ministry of Finances being obliged to take out of the treasury 14 million lei, including the late payment interest. The Finance authorities disagreed with that decision, invoking that the designation of the company was done under the table. After the Supreme Court of Justice issued the final judgement, the officials submitted to the Superior Council of Magistracy a complaint against the actions of the judges, requesting the punishment of the magistrates involved in that case.

Entrance from Tighina street, good nowadays only as a parking Photo: CIJM

In 2006, according to a Decree issue by the Government led by Tarlev, the Sports Agency was empowered to identify an investor to rebuild the National Stadium, and the Agency for Construction and Territorial Development was entitled to manage the works of reconstruction of the sports complex. Shortly after that, the authorities of the Ministry of Construction and Territorial Development designated the company Basconslux LLC to carry out the demolition works, based on a permit issued by Chişinău Municipal Council. Back then, the authorities promised to that company eight million lei after finishing the works and the sports fans were said that the arena would open its doors in 2009.

In July 2013, six years after the execution of works, the representatives of Basconslux attempted to recover their money through a lawsuit. Lawyers explained that there was a works contract under which the company had to perform the demolition works at its own expenses, "with further reimbursement of the incurred expenditures", as well as a letter signed by A. Turcan, Deputy Director of the Agency for Construction and Territorial Development, and by Vasile Tarlev, ex-Prime Minister, as a guarantee for the payment. In the same time, they said a report on the acceptance of works was issued, being signed by the representatives of several State institutions and approved by the Ministry of Construction and Territorial Development. The company claimed it had sent to all the concerned institutions requests for the payment of the debt, but it received just answers that no financial resources were foreseen in the State budget for that purpose in 2007-2013.

Works executed without any procurement contract?

In the framework of the lawsuit, the representative of the Ministry of Finance argued among other that no contract had been signed between the institution and Basconslux LLC. "To be valid, an alleged works contract has to undergo the public procurement phase and be registered at the State Treasury, what has not been established in this case", the lawyers of Ministry of Finance argued. The representative of the Ministry of Construction and Regional Development did not confirm in the court the existence of such a contract either. "The public procurement of services shall be done based on a written works contract, following a strict procedure prescribed by law and cannot be replaced by letters, telegrams, etc.", they stated, specifying that, according to the law, the general time limit for starting a court action is three years and not more.

The land over five hectares, subject of dispute between
Basconslux SRL and authorities

The representatives of the Ministry of Youth and Sports (the successor of the Sports Agency – the editor’s note) declared in the court that their institution was not aware of the way how the company Basconslux had been selected to perform the demolition works and that the contractor had not submitted any procurement contract on the execution of works, nor any other document to confirm that it had been selected in the framework of a public tender.

However, in July 2014, the Court of Centre district of the capital city issued a favourable decision for the company Basconslux LLC, compelling the Ministry of Finance to reimburse the costs of the demolition works: more than eight million lei, as well as the late payment interest estimated at approximately six million lei. The judge Garri Buffalo grounded his decision on the fact that an exchange of letters or telegrams may give evidence of a works contract and that the limitation period started to run in 2013, when the complainant was informed that it would not have the money it claims, not in 2007.

A few months later, the Court of Appeals rejected the decision of the first instance court, arguing that public procurement of services shall be done based on a written works contract, which cannot be replaced by letters and that, in reality, there was no document confirming that the company Basconslux LLC was selected to demolish the National Stadium. The judges of the Court of Appeals also invoked the limitation period of three years and the fact that the launch of the lawsuit in 2013 was "belated".

In April 2015, Basconslux LLC won a new lawsuit at the Supreme Court. The judges Iulia Sîrcu, Galina Stratulat, Iuliana Oprea, Ion Druţă and Ion Corolevschi issued a final judgement which recognized the works contract and maintained the first instance court decision.

The Ministry of Finances in search for truth at the Superior Council of Magistracy

On the other hand, the Ministry of Finance put its foot down. The representatives of the institution submitted meanwhile two motions for revision of the Supreme Court judgement, but both of them were rejected as unfounded. Nevertheless, on 19th of August 2015, was submitted a complaint to the Superior Council of Magistracy, requesting the punishment of the judges "who are responsible for the prejudice at a particularly large extent to the State budget."

Maria Cărăuş, Deputy Minister of Finance, re-evoked in the letter a number of irregularities committed by the judges while making that judgement: the request for summons filed by Basconslux LLC was signed by a person who was not legally authorised; the document was filed without paying the State charge of 50,000 lei, as required by the law and the Court of Appeals refused to comment on this issue; the request was accepted, even if the limitation period of three years was exceeded; the works contract was recognized as valid, despite the fact that it was not registered at the State Treasury, as provided by the Law on the procurement of goods, works and services for the State’s needs, in force at that time. A few days later, the judge-inspector Valeriu Catan issued a decision for the rejection of the notification of the Ministry of Finance, arguing that "the allegations against the magistrates are not part of the list of disciplinary offenses specified by Article 4 of the Law on the disciplinary liability of judges."

On the 18th of September 2015, the Ministry of Finance, in the person of ex-Minister Anatol Arapu, challenged the decision of the Judicial Inspection, requesting the examination of the case by the plenum of the Disciplinary Board of the Superior Council of Magistracy. The subject was scheduled to be debated on Friday, 12th of February, at the meeting of the admissibility panel of the Disciplinary Board.

The issue of the National Stadium was also discussed at the meeting of the Superior Council of Magistracy held on Tuesday, 9th of February. During the deliberations on filling the vacant position of President of the Supreme Court, the current president and the only candidate in the contest, Mihai Poalelungi, was asked by the member of the Superior Council of Magistracy, Tatiana Răducanu, judge at the Supreme Court, to comment on the fact that the State was compelled to pay 14 million lei to the construction company that demolished the arena. "You say that every judge is responsible for his/her decisions, but your voice is not heard. That means that you tolerate everything that happens at the Supreme Court. Do not hide anymore behind the judges. You are in charge of the Supreme Court, you must be an example", Tatiana Răducanu said. "Do not make yourself out to be an example", President of the Supreme Court retorted.

Maria Cărăuş, Deputy Minister of Finance, says that the notification submitted to the Superior Council of Magistracy was the last lever which might be used by the institution she represents. "A final and irrevocable judgement was issued on this case. The enforceable title (on the payment of the amount of money) submitted to us contained errors, but it had been sent to the business entity. The last lever that the ministry could use was to file a complaint to the Superior Council of Magistracy", Maria Cărăuş stated.

The Deputy Minister also said that the amount of 14 million lei was not paid to the construction company, because there is no finality in the case yet. "According to the law, the ministry must enforce the court judgements within a six-month period of time. We are compelled to enforce the judgment, only when this term expires. The ministry does not make such payments before the expiry of the six-month period, because it does not have resources available for this purpose", Maria Cărăuş added.

"If the motions for revision of the judgements are rejected and the creditor submits a corrected enforceable title, the Ministry of Finance will be obliged to enforce the judgement of the Supreme Court", specifies an official response issued by the institution to the Centre for Journalistic Investigations. According to the same document, in 2015, the State budget allocated nearly 62 million lei for the enforcement of national and international court judgments.

How the stadium looks nowadays:

Closed down at the insistence of FIFA

The National Stadium was built in 1952 and was closed down in 2006 at the insistence of the International Football Federation (FIFA), which claimed that the football field did not meet anymore the requirements for the international matches. Over the years, Zimbru Chișinău and Dacia Chișinău football clubs, as well as the national football team played their matches on this stadium. The National Stadium also hosted 17 finals of the Moldovan Cup and two finals of the Cup of the USSR Football Federation. On this stadium, the famous football player, David Beckham, had his national debut in England’s national team on the 1st of September 1996, in a match with the Moldovan team within the rounds for 1998 FIFA World Cup France qualification.

At present, while the authorities and the company are involved in endless disputes, the grounds of 5.18 hectares on Tighina Street 12 are derelict. The abandoned stadium, where trees grew, is drowning in weeds, sand and waste, and the walls of the few old buildings around it have cracks. This can be seen in the video filmed by a drone in September 2015 (Video from stadion.md).

According to the cadastral data, 4.70 hectares of the grounds are currently managed by the Ministry of Regional Development and Construction, and the rest belong to various businesses, who, meanwhile, managed to privatise the plots. Among them: Pacinter LLC, which owns several sites arranged for lawn tennis; the Moldovan-American Joint Venture Interloto JSC; Inco-Graţie LLC sports club; Enki-Plus LLC and many natural persons.

The audit mission performed by the Court of Accounts at the Ministry of Regional Development and Construction and its subordinate institutions for the years 2013-2014 revealed again the disastrous situation of the National Stadium and of the buildings on its grounds. The report also noted that the lack of activity over the past six years caused in 2013 a loss of 1.8 million lei. "A critical situation has been revealed which is the result of the contradictory decisions and actions of the central authorities involved in previous periods and which had as an impact the demolition of goods, the cessation of the activity and the orientation towards closedown," the auditors of the Court of Accounts pointed out.

Igor Vieru, Deputy Head of the Legal Department of the Ministry of Regional Development and Construction, stated in 2014 for the publication Timpul  that the authorities were still in search of an investor. "The specialists have done a feasibility study concerning the State-administered grounds and concluded that a potential investor will have to build a sports complex including a football field, tracks for the athletes and sports rooms", Vieru said.

Empty promises and hidden interests

Meanwhile, the officials who came in turn to governance released a lot of statements about the need for developing these grounds. Among the respective initiatives, to note a public-private partnership with investors from Turkey, a residential complex, a hotel, an agricultural market or a new building for the USA Embassy. There were also proposals to build a new sports arena in another part of the city, for instance in the neighbourhood of the Circus or even in the suburbs.

David Beckham, playing in the match Moldova-Great Britain, on the Republican Stadium
in September 1, 1996 Photo: GettyImages

In March 2008, the Centre for Journalistic Investigations wrote  about a prior cooperation agreement between the Sports Agency and SC MGL Business LLC, according to which the company was obliged to build the new National Stadium with the capacity of 24 500 seats, investing 35 million Euro, to build near it a parking with the capacity of "not less than 1 500 cars" and to manage the stadium and the adjacent buildings throughout a 30-year period. The same company was going to be entitled to charge parking fees for 30 years, to organise on the stadium all kinds of sport and cultural events, to build near the stadium a four-storeyed shopping centre, two blocks of flats and a multi-storey car parking on any street in close vicinity of the arena (!). The company was also going to be provided free of charge 50 hectares of State land in Botanica district of the capital city. This deal “sewn with white thread” was not successful either.

Finally, in September 2015, following the directive of the former Prime Minister, Valeriu Streleţ, the Government set up a working group in charge of assessing the capacity of building a modern multipurpose national stadium. The group was chaired by Sergiu Palihovici, General Secretary of the Government at that time. "Several meetings were held in order to clarify the status of the grounds and see if we can return to the State at least some of the privatised plots, because, over the course of time, the State “had done its best” to lose its right of property on a number of plots of land. The conclusion was – no, the grounds still owned by the State were sufficient for the construction of a multipurpose sports complex, but not of a football stadium at international standards", the former Secretary of the Government explained.

Currently, Moldova doesn't have an arena where international matches would be plyed
Photo from the archive: stadion.md

Palihovici also said that, after many discussions, a site was identified near Stăuceni, a suburb of the capital city. "We launched discussions among the National Olympic Committee - which insisted on having a complex sports ground with tracks and infrastructure for practising a number of sports, the National Football Federation - which came up with the idea of ​​a simple football field, without any other elements, and the Ministry of Youth and Sport – the structure through which the Government could manage the project. One week before I quitted my position, I had received an informative note with the conclusions made after the discussions between the different organizations and an amount of money was going to be allocated for a feasibility study", Sergiu Palihovici stated. But things still remain at a dead end.

Nicolae Juravschi, president of the National Olympic Committee, believes that the stadium is derelict because of the lack of political will. "For so many years, there are discussions, declarations, articles are written in the press every day, but in fact there was never a will to make the things budge. A clear decision needs to be made in this sense", the Member of Parliament said. According to him, a modest stadium of nearly 20 000 seats would cost at least 20 000-30 000 Euro. “The State needs to have a national arena. For me, the place does not matter, either in the centre, or elsewhere, it's important that it exists. I am very much concerned about the fact that a lot of grounds were sold to different companies. It was not fair to do it", Nicolae Juravschi considers.

Basconslux erected blocks of flats for judges and prosecutors

Over the past years, the construction company Basconslux LLC was the favourite in a number of public tenders and was the target of many journalistic investigations. This is the company which is building five blocks of flats on Vasile Alecsandri Street, in the historic centre of Chişinău, as well as a building on Ceucari street in Râşcani district of the capital city, intended for 41 judges and 92 other employees of the judicial system who covet flats at lower prices.

Basconslux LLC has already built residential buildings for prosecutors. In 2010, the company won the tender for the construction of a block of flats on Melestiu street, near „Valea Tran­da­fi­ri­lor” park, for 252 families of prosecutors, a fact reported in an investigation of the Centre for Journalistic Investigations. 

This company, founded in 2003 by the businessman Nicolae Madan, has built elite housing in all sectors of the capital city, and houses in the town of Vatra. This is also the company which built the new surgical block of the National Clinical Hospital in Chişinău, put into operation in 2014. The daughter of Nicolae Madan, Rodica, became the first deputy director of the company when she was just 17 years old. "From 2003 up to now, we have built more than 14 complexes and, currently, eight other buildings are at the phase of works. Our most important projects are the ten-storeyed building on Eminescu street 39, which is our first success, the residential complex on Lev Tolstoi street 24/1, which also hosts the offices of our company; the building on Mircea cel Batran avenue 39, the latter being the most complex one in terms of amount of works", the young lady said in an interview for the site rasputin.md. 

Nicolae Madan owns 55% of the share capital of Calipso Residences LLC from Constanţa, and the other 45% belong directly to Basconslux LLC. According to the website mold-street.com, in 2015, the Romanian company benefited from investments estimated at over one million dollars coming from its Moldovan owners. The money was intended for finishing the construction by Calipso of a building on Eliberării Street, in Constanţa.

After our insistent attempts to discuss with the representatives of Basconslux LLC, the lady in the antechamber cut it short: "Our lawyer said there is no discussion on such points". We are still open to find out the company’s position.

The investigation has been done in the framework of the Campaign „Public Money Is My Money Too”, conducted by the Centre for Journalistic Investigations (CJI) and the Association for Efficient and Responsible Governance (AGER), within a project funded by the European Union and the National Endowment for Democracy.

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