Public procurement

Works Worth Millions Abandoned on the Construction Site at the Presidency Building

Foto: CIJM
Author: Anastasia Nani, Eugenia Pogor
21/03/2016 19827

The 7th of April 2009 meant scattered hopes and, in the same time, the depletion of the budget by the urge to repair the buildings of the Parliament and of the Presidency destroyed during the violent protests. While the Parliament building was renovated in the meantime, an abandoned construction site lies opposite, at the Presidency building. Under the pressure of the crisis, the renovation works were stopped back in 2011, 106 million lei being spent before that, a sufficient amount for performing half of the works. The authorities have not allocated any funds to preserve the building, therefore at least what was done could not be kept. As the prices of the building materials and the labour costs went up since then, the officials do not exclude that they will conduct a new tender, which will be challenged by the managers of the construction company which won the tender in 2009.

Seven years ago, thousands of young people protested in the centre of the capital city, claiming the right to democracy and to a better life. As a result of the backstage arrangements invoked later, the peaceful protests were turned into violent riots and, within several hours, a rain of stones destroyed the buildings of the most important State institutions. Meanwhile, the Parliament building was renovated. In May 2015, the degree of completion of the works was estimated at 80%, 362 million lei having been spent, according to a response submitted to the Centre for Journalistic Investigations by the Ministry for Regional Development and Construction. 

In the same time, the building opposite, the Presidency, is a construction site for seven years. Although during the events of April 2009 were only destroyed the first three storeys, the authorities decided to renovate the whole ten-storeyed building whose total area is ​​13,000 square meters. The edifice was built during the period 1984-1987, being intended as the headquarters of the Supreme Soviet of the Moldovan Soviet Socialist Republic (MSSR) and it was never repaired. The works, initially estimated at about 218 million lei, were stopped back in 2011, because of the lack of resources. A total amount of 106 million lei was spent during two years. This money was used to repair the roof, to assemble the stained glass windows brought from the Czech Republic, to lay a part of the granite pavement, the building being enclosed by a metal fence and inside - a marble flooring was installed here and there, the partition walls were covered with plasterboards, new lifts were installed and 66% of the electro-technical networks were set up.

According to the estimates of 2009, nearly 123 million lei more had to be allocated for finishing the repair works. But the authorities have not allocated any money at least for the preservation of the building. "To stop the works for a month or two is one thing, and to stop them for years is quite another thing. Over several winters, the works performed outside have particularly suffered", says Ivan Cantarajiu, owner of the company Acar-Cantarajiu, designated in 2009 to execute the repair works.

"Obviously, when the period for work execution is long-lasting, the quality is inevitably touched. If the works are performed during a short period of time, in more normal conditions, the quality is better. Both the interior, and the exterior works have suffered to some extent, because the outside works were not finished. Inside, much depends on temperature, humidity, that we cannot keep at a high level, especially in winter time, when it is cold outside", confirms Nicolae Malacinschi, deputy director of the Directorate in charge of managing the Government’s buildings of the State Chancellery.

The authorities estimated that, under the new rates, there will be need for about 180 million lei more, i.e. about 70 million more than it would have been necessary when they started the works. In such circumstances, the representatives of the General Directorate in charge of managing the Government’s buildings do not exclude that a new tender could be organized, what raised the discontentment of the managers of Acar-Cantarajiu. Ivan Cantarajiu delcared that, if the tender is however announced, they will challenge the new competition.

"The agreement between the beneficiary and Acar-Cantarajiu provides that it will be terminated when its object is put into operation. I do not know what are their ideas, but they do not have the right to hold another tender. According to the Public Procurement Law, there is no reason for launching a repeated auction, as the contract was not fulfilled because of the beneficiary who has not honoured its obligations. Which will be the specifications? I consider the agreement which is still in force needs to be extended, after a review of the prices", Ivan Cantarajiu told us.

President Nicolae Timofti served his office in an urban villa

Meanwhile, the term of President Nicolae Timofti came to an end, but the Head of State never got to enjoy good working conditions. Over four years, Nicolae Timofti has never checked the situation on the construction site. The office of the Head of State was in a former urban villa on Nicolae Iorga street. "Mr. President Timofti has worked in not so favourable conditions throughout his presidential term. Currently, the staff of the Presidency, which consists of over 70 employees, is based in three buildings. This causes a discomfort in the process of communication. We cannot benefit from the modern information networks, I mean the internal ones. Not to mention the problem of physical communication, or the movement of documents takes place in the most banal way - in a bag. There were also security problems. I will avoid giving too many details, I will just say that one can jab one’s arm through the window from the street. People do not realise that it is a very serious issue", said Ion Păduraru, the head of the Presidency’s office, who visited the construction site on Stefan cel Mare street not more than once.

Because of the shortage of budgetary resources, the works will not be resumed this year. This project was not a priority for the previous governments either. The political analyst Igor Botan argues that the presidential institution is a fundamental one and it should be treated as such by the citizens, as well as by other public authorities. According to the expert, money for the renovation of the Presidency building should be found in a country where billions have been stolen.

"The building is too large and too pompous for this institution. We can remember that there were projects to transform it into a Justice Palace, but, well, anyway this building must be repaired and a kind of brainstorming should be held within the society about how this building might be used by public authorities of the Republic of Moldova", Igor Boțan stated.

During the events of April 2009, the office of the former President, Vladimir Voronin, remained untouched. The desk of Vladimir Voronin and the meeting table, the chairs, the TV set, the telephones, the portrait of Ştefan cel Mare and even the gifts received from other Heads of State are still kept in this office. The chandelier in the lobby of the Presidency was not damaged either. "Just the dust needs to be cleaned from it and it could be used as before. It's a rarity, it's quite expensive and it's beautiful", Nicolae Malacinschi stated.

The repair works at the Presidency, the subject of a report of the Court of Accounts

Acar-Cantarajiu, the company which proposed a price of 251.2 million lei, won the tender for the repair of the Presidency building shortly after the protests, when the Party of Communists was still in power. The company had only one competitor, Visconti-Service LLC.

A report issued by the Court of Accounts in 2010 on the use of public funds by the State Chancellery for investments and capital repairs in 2009 pointed out that on 24th of April 2009, the General Directorate for managing the Government’s buildings had illegally launched the tender, despite the lack of money and of expertized project documentation. On the same day, 24th of April, the working group appointed the company Acar-Cantarajiu as the winner of the tender and the contract was signed. “The contract signed in such circumstances was registered by the Agency for Material Reserves, Public Procurements and Humanitarian Assistance and by the Territorial Treasury of Chisinau. The above-mentioned contract did not specify the relationship and the justification of expenditures between the parties involved in the implementation of the repair works and reporting: the beneficiary, the general contractor and the subcontractors, although the list of subcontractors who had given their written consent for the participation in the public auction was annexed by the contractor to the offer", established, among other, the auditors.

"Signing contracts without any guarantee for financial coverage has become a usual practice in our country and this fact raises a major concern from the perspective of the efficient public money spending. Often, contracts are concluded although no more than 10-20% of the required funds are available. Consequently, the works do not reach their finality for years and, as a result, they lose their quality, value, and even opportunity. This issue confirms again the pressing need for planning the procurements in a strategic way: a contract shall only be signed, if 100 % of the amount required for performing the works are available, the others shall wait for their turn. Having thousands of projects started and not bringing them to a successful conclusion is not fair. The multiple irregularities identified in relation with the case under consideration reinforces our belief that a lot of procurements are not strategically planned, because of vested interests, so they are done in a corner, hastily", commented Olesea Stamate, President of the Association for Efficient and Responsible Governance (AGER).

Transactions worth millions with the State

In fact, over the years, both Acar-Cantarajiu, and Acar-Construct, the second company owned by Ivan Cantarajiu (both of them located on Petru Zadnipru Street in the capital city) have won tenders of millions of lei of public money.

For instance, Acar-Cantarajiu executed the renovation of the building of "Artico" Centre for Children and Youth, a project worth about 100 million lei. A survey conducted formerly by the Centre for Journalistic Investigations  brought out that in 2009, just one year after signing a contract of 84 million lei, the director of the Centre, Aurelia Hîncu, without the approval of the Ministry of Education, to which "Artico" is subordinated, and in the absence of financial coverage, signed two additional documents with the construction company for design works worth over 11 million lei. After a hard litigation with this company, in 2011, the Government was compelled to pay the debt, including the penalties of about three million lei in order to avoid the alienation of a part of the Centre’s property.

Meanwhile, in February 2009, content that the works at "Artico" had been done in record time, Vladimir Voronin, President of the country at the time, awarded to Ivan Cantarajiu the Order of Labour Glory and to Aurelia Hîncu and Oleg Mistreanu, project supervisor, the Civic Merit Medal.

The two companies also had good affairs with the State after the year 2009. Acar-Cantarajiu won the public tenders for roof repair at one of the buildings of Holercani pension, a project of 1.8 million lei, for renovation works at "Nicolae Testemitanu" University of Medicine and Pharmacy - 4.5 million lei. Acar-Construct performed the rehabilitation of Pommer Mansion and of the access road to the park in the village of Țaul, district of Dondușeni (4.3 million lei) and the partial reconstruction of the ventilation system at the National Bank of Moldova (about 555 000 lei).

According to the latest reports of the National Bureau of Statistics, issued in 2012, Acar-Construct had a revenue of 7.4 million lei (its main activity is civil construction engineering - editor’s note ) and Acar-Cantarajiu – a revenue of 242 000 lei (main activity: rent of own property).

An article drawn up in collaboration with Free Europe

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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