Romanian prosecutors conducted searches on Friday, November 7, at the headquarters of the steel mill Liberty Galați and in several counties, in a case of embezzlement and tax evasion that includes Russian gas giant Gazprom, Economedia.ro reported.
Specifically, two members of the board of directors of Liberty Galați are accused of having transferred emission certificates to and from Gazprom Russia, as an instrument of embezzlement and illicit tax optimization. In addition, the company allegedly took out loans that were diverted as payments to legal entities without operational justification and concluded fictitious service contracts to embezzle assets.
The investigation into Liberty Galați is part of the large-scale Jupiter 4 operation run by the Romanian police.
Prosecutors conducted seven home searches in the counties of Galați, Ilfov, and Bucharest, at the headquarters of a company and the residences of persons involved.
“Based on the evidence administered so far, it has been established that persons in management positions within the company acted to embezzle it through affiliated entities registered in other jurisdictions. They were also involved in creating tax evasion circuits. For this purpose, a series of purchase or service contracts, which did not have real underlying operations, as well as fictitious loan contracts, were used as supporting documents,” prosecutors say in a press release.
Between 2019 and 2023, the financial and material resources of the company in question, estimated at approximately EUR 300 million, were subject to multiple intra-group transactions based on fictitious justifications, which caused damage both to this legal entity and to the consolidated state budget.
According to prosecutors, the company was embezzled through three types of illegal behavior:
trading a large volume of greenhouse gas CO2 emission certificates with companies from the same group and with the Russian company Gazprom. These transactions effectively took money out of the Romanian company and moved it to other companies owned by Indian businessman Sanjeev Gupta.
money was also withdrawn from the steel mill and sent to other companies in Sanjeev Gupta’s group through loans, assignment of receivables, and guarantees.
fictitious management and consultancy contracts were signed, leading to the embezzlement of Liberty Galați’s assets. One example given by prosecutors concerns a consultancy contract worth EUR 40 million with a company in Singapore that “the payments had no real economic substance.”
The steel plant in Galați is on the brink of insolvency. It currently has 1,197 creditors, the largest being the Romanian state, through Eximbank and ANAF.
Output dropped severely in the last years. In 1988, 7.8 million tons of steel were produced on the steel platform. In the last two years, only 457,000 tons of steel have been produced.
Dorinel Umbrărescu, with his core business in road construction, and the richest Ukrainian Rinat Ahmetov, owner of the Metinvest group, among others, have reportedly submitted offers to take over the ailing integrated steel mill. The two are the only ones seeking the full acquisition of the steel plant. Two other companies are also interested in Liberty Galați, but they do not want the full acquisition of the steel plant, only to operate tolling contracts.
The government of Romania, the main creditor of the integrated steel mill Liberty Galati, agreed to the sale of the company’s core assets separately. The value of the core assets is evaluated at between EUR 800 million at the market price and EUR 400 million at the liquidation price.
(Photo source: company photo)
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