Romanian Court Closes Consultancy Fee File On RomTelecom’s Privatization

The Court analyzed prosecutors’ appeal against its decision of January 30, 2008 to launch a probe against 11 former dignitaries in relation to a $8.4 million fee, plus taxes, paid to Goldman Sachs International for consultancy services during RomTelecom’s privatization.

 

The Court established the prosecutor who handled the case “failed to mention whatsoever” evidence on allegations of embezzlement, negligence of office, corruption, abuse of office and undermining the national economy against Radu Sarbu (ex-head of Romania’s former privatization regulator FPS), Sorin Pantis (former communications minister), Petrisor Peiu (former chairman of RomTelecom’s Board), Vlad Tepelea (former chairman of FPS’s Board), Flavius Baias (former secretary of state with the Justice Minister), Victor Babiuc (former defense minister) and Decebal Traian Remes (former finance minister).

 

In 1997, Romania’s IT&C Ministry launched privatization procedures to sell a 21.21% stake in landline telecom company RomTelecom. The Romanian authorities signed a consultancy agreement on the matter with Goldman Sachs, which was supposed to receive its fee from RomTelecom, after the privatization.

 

Later that year, the IT&C Ministry transferred its stake in RomTelecom to former privatization regulator FPS, which sold the shares to Greece’s OTE in 1998.

 

The IT&C Ministry and FPS staff then realized the initial stages of the privatization, including the consultancy agreement with Goldman Sachs, had been conducted outside the legal framework and issued subsequent documents to legalize the mentioned stages of the privatization.

 

One of the subsequent documents mentioned Goldman Sachs was to receive its fee for services rendered from FPS instead of RomTelecom.

 

The inquiry into RomTelecom’s sale aimed to establish if FPS was legally entitled to pay the consultancy fee and related taxes. 

 

The Court ruled FPS’ actions were legal and that there are no grounds to sustain FPS staff or the mentioned dignitaries failed to fulfill their duty and subsequently caused the state to lose money.

 

The Supreme Court’s ruling in the case is final and binding, therefore the file regarding the consultancy fee paid to RomTelecom’s advisor Goldman Sachs is now closed.