The NIF (National Investment Fund) scandal goes to the IMF (International Monetary Fund)investigation

Romania still feels the consequences of NIF, which lead to the decrease of the population trust in the banking system and in the banking deposits.

Romania has a good system of financial crime fighting. But it will take a lot of time until it applying it. So, the investigations of this kind of crimes, like that of the National Investment Fund (NIF), progress very slow. This opinion belongs to the resident representative of the International Monetary Fund (IMF) in Romania, Graeme Justice. His intervention was needed in order to have theNIF scandal in the Romanian authorities’ attention again.

Investigations without any result

"In the stand-by agreement from the year 2000, the Romanian Government agreed to take action against the ones responsible for the NIF crushing. In four years time there was no certain result ", said Justice. The IMF official also said the Romanian financial system still feels the consequences of the fund’s collapsing, mainly because the ones guilty for that weren’t punished and the people’s trust hasn’t been regained. This lack of trust resulted in a small amount of bank deposits. That’s why the banks had to finance using their profit and the funds of their banks headquarters from abroad.

Justice also explained the negative effects that the financial frauds and the money-laundrying have on the macro-economical environment. This way the people’s trust in the financial institutions disappears and the development of the capital and monetary market is blocked. Also, the capital isn’t used in order to make profitable investments, slowing down the economic decrease. The risk is much higher when we talk about a country which is in transition, like Romania. This makes it very vulnerable to the fraudsters in the financial system especially when its institutions are developing or at the beginning of their commercial activities. The worst thing is that the specialists in solving this kind of crimes don’t exist.

The personnel is missing

The Vice Governor of the National Bank of Romania, Mihai Bogza, also stated that the central bank "worried about the evolution of the investigation concerning NIF", because not punishing the ones guilty leads to the decrease of the people’s trust in the banking system. "The same person involved in the NIF case was also involved in the bankruptcy of the Romanian Bank of Scont. If this person isn’t stopped, this kind of frauds can happen again. There has to be a discouraging effect which could be obtained only by punishing the guilty people", said Bogza. Bogza says that besides the NIF crushing the reorganization, the cleaning and the changing of the capital of the Romanian banking system cost 3.7-3.8 billion US dollars, in the period 1990-2003. Most of these expenses were made in order to cover the losses determined by the financial frauds.

The Big Companies Avoid Romania

The companies considered to have an honorable behavior and an open attitude against corruption aren’t so well represented on the Romanian market. This proves that the country, at a global level, is seen as having a high degree of corruption, added Bogza. He believes that the big companies prefer to loose a contract instead of bribing people to obtain it.

REACTION

The Prosecutor’s Department of the High Court of Annulment and Justice states that one cannot talk about a permanent postponing of the investigation of the NIF case, taking into account the large amount of work that the financial expertise asked by the Court mean and the large number of the sides involved. The first charge took place in the 4th of June 2000, when 13 employees of Sov Invest SA, of the House of Savings and Dispositions and of the National Council of the Moveable Properties Values were sent to justice. After about two years, some other files have been connected to these. The file of this case started from 15 volumes and now has about 500 volumes. Another obstacle was the recovery of the database from Sov Invest. Last Tuesday the Supreme Court took the decision of postponing the trial concerning the indemnifying of the NIF investors for seven more months.