Self-exiled oligarch’s scheme. How did Plahotniuc earn on Moldovan energy flows?

A constitutional crisis erupted in Moldova, following which the richest man in the country, the head of the Democratic Party and the “owner” of almost all state bodies, Vladimir Plahotniuc, left the country and his post in the party (exactly in that order). He controlled the state’s energy affairs and knew well how to earn money, even if it was illegal. We are going to tell you about one energy scheme of this oligarchic mind.

Vlad Plahotniuc

Oligarch with almost unlimited influence.

The (former) chairman of the Democratic Party, which heads (at least until June it was so) all government agencies, including the Constitutional Court.

Political background of escape          

Moldova attracts indecently much attention last month. The constitutional crisis in the country broke out, which resulted in serious changes in the government. At least there is such an appearance.

But it all started back in February, when parliamentary elections were held.

In the elections, the socialist party which is supported by the current president, Igor Dodon, who sympathizes, as it is said, with the Kremlin, received the majority. The Democratic Party and the political bloc “ACUM” (unites the Party “Action and Solidarity” and the Platform “Dignity and Truth”), which are considered pro-European, were also included. At the same time, “pro-Kremlinism” and “pro-Europeanisms” are very conditional, and are mainly expressed only in the slogans of election campaigns, depending on the targeted audience.

The coalition, for the creation of which the Constitution of Moldova allocates 3 months, has not been formed yet. Motley parties passed to the parliament. The only common thought – don’t want to negotiate with the Democrats.

To get a match almost instantly. The Democratic Party is headed by oligarch Vladimir (Vlad) Plahotniuc. He is the owner of almost everything in the country, if not the whole country. He owns the reins of power in all key institutions of power in which members of the party serve. And they serve everywhere – the law enforcement system, the Prosecutor General's Office, the Supreme Council of Magistracy, the Supreme Court and the Constitutional Court. By the way, out of six members of the Constitutional Court, five are members of the Democratic Party, and Judge Raisa Apolski is related to Vlad Plahotniuc.

Negotiations between the parties were slowly and rumors about repeat elections were already beginning to circulate (in which Plahotniuc was expecting more interesting results for his party). While the rooster, in the form of the Constitutional Court, did not bite. Surprise: on the night of June 7, the Constitutional Court decided that the term for creating the coalition had expired, whereas the three-month period had to expire on June 9th.  

The reaction was instant. The deputies became more active: they agreed on the creation of a coalition, and on the composition of the government almost overnight. A temporary coalition was formed between the Socialist Party and the political block ACUM – radically different forces. Maia  Sandu was appointed the head of the new government, and on the same night the new government took the oath in the presence of the President Dodon.

Everything happened in the meeting room of the Parliament, without lights and with the microphones turned off, as the technical staff did not come to work that day. At the same time, diplomatic representatives of different countries were in parliament – as the safest place. The Democratic Party was out of work and began to bring thugs to the administrative buildings.

The “manual” and “democratic” Constitutional Court made a new move in the interests of Plahotniuc – ruled on the illegality of electing a new speaker and the Prime Minister, on the illegality of all parliamentary decisions, resolutions and legislative acts adopted on this and subsequent days. The court later removed the President Dodon from his duties for refusing to sign a decree dissolving the parliament. The deputy chairman of the Democratic Party was appointed the acting president, and incumbent Prime Minister Pavel Filip, who immediately signed a decree dissolving the parliament and setting a date (September 6) for early parliamentary elections.

Dual power reigned for several weeks in Moldova – there were two prime ministers and two presidents (one of them acting).

Democrats called the actions of the parliament that created the coalition at night a coup d'état. In favor of the Kremlin, of course. And Dodon (the pro-Kremlin president), in turn, called these events “a desperate attempt of the Democratic Party to usurp power in the country”.

The situation was settled by foreign partners, who to varying degree finance Moldova. Even before the peak pressure, the Russian Vice Prime Minister Dmitry Kozak arrived in Moldova. He met with Dodon, and after a meeting at a press conference, “expressed the opinion” that it would be better for socialists in parliament to form an alliance with ACUM, and not with the Democrats, in order to return the country “from the current state to democratic normality”. Kozak's stay in Chisinau coincided with visits of the EU Commissioner for Enlargement and Neighborhood Policy Johannes Hahn and the Director of Eastern Europe Office of the US Department of State Brad Freden. And all three met with the President Dodon and with leaders of political parties, including Plahotniuc.

On June 14 card house fell down. On this day, Plahotniuc left Moldova – as it is said, after a conversation with the US ambassador to Moldova Derek Hogan in the office of the Democratic Party. The new head of the Ministry of Internal Affairs of Moldova, Andrei Nastase, said that Plahotniuc was afraid that he would not be allowed to leave the country, so he drove by car (through the territory of unrecognized Transnistria) to Ukraine, from where he flew to one of the European countries, but this is not certain. According to Moldovan media, he flew to London.

On the same day, Filip's government resigned. And the next day, the Constitutional Court overturned its decisions taken on June 7–9, by which it recognized the election of a new government and the decisions of the parliamentary coalition to be illegitimate.

On Sunday, June 23, Vlad Plahotniuc published a statement on Facebook that he was leaving the post of chairman of the Democratic Party, so as not to cast a shadow on its activities.

Now there are statements about the extradition of the oligarch from the United States. But there are no statements yet that he is really found in the US.

Plahotniuc and his energetics

Vlad Plahotniuc is a very many-sided personality, extending his activities to all areas of the Moldovan economy. The country called a “captured” state – the oligarchy of Plahotniuc in Moldova is monopolistic and inevitable. “Penny” privatization of large state-owned companies, sale of large real estate objects (“at a discount for cronies”), millions of contracts for the provision of public services to firms that belonged exclusively to people from the inner circle of Vlad Plahotniuc. The choice of schemes in the arsenal of Mr. Plahotniuc is quite wide, but there is one interesting story with a scheme in the energy sector.

All Moldova's energy industry is tied to Transnistria. Opponents accused Plahotniuc of attempting to federalize Moldova, in order to just attach Transnistria – to bring it to a more legal plane. The oligarch has very well-established connections and quasi-business schemes with this territory in a little-understood status. Plahotniuc was in close business relations with the Transnistrian oligarch Viktor Gushan and the actual dictator of the unrecognized republic, as well as with the former “president” Yevgeny Shevchuk. The status of Transnistria turned it into an ideal portal for the loss of money and withdrawal of funds to offshore.

The energy sector of Moldova is characterized by two deplorable phenomena: complete dependence on the import of Russian gas and the purchase of electricity from Transnistria that it did not recognize. These two “inevitability” are inseparably linked as the Moldovan SDPP, located on the territory of Transnistria, works using imported gas.

Capacities in Moldova cover only 20–25% of the country's energy consumption. The deficit is covered by supplies from Transnistria and Ukraine.

The installed capacity of the Moldovan SDPP is 2520 MW (according to data on the website of the Russian company Inter RAO, the owner of the power plant since 2005). The state district power station provides electricity to Moldova and Transdniestria that it does not recognize. The power plant runs on gas, which is supplied by Gazprom.

According to the latest data, Transnistria’s debt for gas exceeds $6 billion. Neither Moldova nor Transnistria, which actually use it, pay for it. Well... End users in Transnistria are likely to pay for gas at the price set by the local gas company Tiraspoltransgaz-Transnistria. But at the stage of this company, the money is “lost”. Money are not paid from the accounts of Tiraspoltransgaz, neither in JSC Moldovagaz (which controls all gas in Moldova and must pay bills for imports), nor to Gazprom. Gazprom is demanding payment for gas from Moldova, with which trading operations have been executed. It turns out that Moldova (its citizens) must pay for imported gas twice – in the form of gas that is used and not paid in Transnistria, and in the form of electricity imported from there.

It turns out Moldovan SDPP does not pay for gas, but sells electricity to Moldova for quite substantial money. Vlad Plahotniuc found a way out for this money.    

Electricity in schemes

A gap in payment for gas from Transnistria, as well as dependence on electricity imports from Moldova, allows the oligarch's inventive mind, not limited to stereotypical ideas about law and conscience, to create an effective scheme:

Use the “free gas” –> get contract with Moldavian SDPP done –> create a gasket company –> withdraw money to offshore.

Such a scheme operated from 2014 to 2017, when Moldova bought electricity exclusively from the SDPP in Transnistria. And this is a very interesting story.

In 2014, Energocapital became the intermediary between the Moldavian SDPP and the state-owned energy company Energocom – “the central supplier of electricity in Moldova”. Plahotniuc stood for Energocapital (then he was the deputy chairman of the Democratic Party) and his “allies” in Transnistria represented by the former “President” Yevgeny Shevchuk.

The company was registered in Tiraspol three weeks before DTEK, which gained access to the cross-section, refused to supply electricity to Moldova due to hostilities and instability of generation in Ukraine. In just three working days, Energocapital receives a license to sell electricity from the Moldovan regulator (the National Energy Regulatory Agency, which includes most of Plahotniuc’s people) for half a year. Until 2017, the license was renewed 4 times. The need for “Energocapital” in the regulator was explained by “disagreements between business partners in Chisinau, Tiraspol and Moscow”. Like, they will allow the parties to agree, and almost guarantee the security of supply. From December 2014 to the end of March 2017, the total amount of electricity supplied through the gasket was estimated at about $400 million.

So, the gasket was quickly established with the support of all the necessary bodies. Now a company is needed, on whose account, the money “withdrawn from unmanaged Transnistria” will flow.

Among the founders of OJSC Energocapital are two companies: Bas Market from Tiraspol and Ornamental Art Limited from Hong Kong (data from investigations of the Moldovan rise.md). Bass Market at the end of 2015 was already liquidated, and the Hong Kong company remained the sole owner of the gasket. The owners of Ornamental Art Limited itself are too deep into offshores, which are graphically displayed on the diagram, which was built by rise.md.   

In mid-January 2017, Ornamental Art Limited went to court in the city of Causeni in right-bank Moldova with a claim for dividends. Attention! A theatrical performance called “Simple and elegant money withdrawal”. It had to receive dividends as the sole shareholder of Energocapital. $16 million was required.  

The court. Energocapital did not dispute the decision at all, and started paying the required amount just next week (although 3 months is granted for such payments, not to mention the right to appeal the claim). From February 9 to 16, 2017, from Energocapital's accounts in Victoriabank (which, by the way, also belongs to Plahotniuc) $7.5 million were transferred to Ornamental Art Limited to companies. Hong Kong received dividends in the amount of $19 million according to the Transnistrian Republican Bank. According to the same agency, the amount of payments was 2.5 times higher than in the first 9 months of 2016.

It turns out that Moldavian SDPP received Russian gas from Transnistrian Tiraspoltransgaz for which it did not pay, produced electricity from it, and then sold it through Energocapital to Moldova. The received Moldovan money “Energocapital” through its “own” bank transferred to offshore by the decision of “its own” court. In offshore trail is lost in favor of Plahotniuc.

The case with this scheme came to light when the government changed in Transnistria. It was friendlier with Moscow than with Plahotniuc. After the change of government, in March 2017, the Transnistrian Republican Bank appealed to the Arbitration Court of the self-proclaimed republic demanding to recover from Energocapital an administrative fine for violating local legislation on currency regulation and control. This lawsuit, unlike the Hong Kong lawsuit, drags on for years.

Plahotniuc and electricity imports from Ukraine

In spring 2016, Ukraine, having adjusted the operation of the power system, planned to resume exports to Moldova. Vlad Plahotniuc, for obvious reasons, did not support this. There were even rumors that he was confused by the fact that DTEK would be engaged in export. Then the Moldavian authorities signed a contract with the Moldavian SDPP and continued to use the services of Energocapital.

In April 2017, exports from Ukraine were resumed. DTEK Trading and Energocom signed a contract for the supply of Ukrainian electricity from April 1, 2017 to March 31, 2018 (this contract was later extended for another year). It was envisaged that DTEK will sell 90 GWh of electricity per month. Understandably, Moldavian SDPP, which belongs to Inter RAO, also took part in the tender, which this time did not receive the contract. Firstly, DTEK’s price was cheaper ($50.2 per 1 MWh instead of $58.5 per 1 MWh offered by Transnistrians, which even later reduced it to $54.4 per MWh), and it was no longer possible to turn a blind eye.

Secondly, Moscow, and Moldova (Dodon came to the presidency that time), wanted to make the electricity supply scheme more transparent. And we remember that the previous leadership of Transnistria, close to Plahotniuc, was replaced by a closer to Moscow. Both sides, both Moldavian and Transnistrians, with a refreshed viewpoint in favor of the Russian Federation, decided to liquidate Energocapital’s gasket.

Representatives of the Democratic Party tried to negotiate with the authorities of Transnistria about the victory of SDPP (the main taxpayer in the territory of the unrecognized republic) and about saving the intermediary company at the electricity price of $ 9 per 1 MWh. But they failed. Apparently, the oligarch completely broke loose, and Moscow wanted to at least predict its activities, as it was impossible to control it.

Interestingly, without having agreed with Plahotniuc on its gasket, Transnistria itself lost much. SDPP is the largest taxpayer on its territory and the largest enterprise whose capacity (as well as profits) had to be reduced.

Under the contract, DTEK covered about 30% of Moldova’s electricity needs. Given that the country itself provides only 25% of electricity. From April 1, 2019 and until March 31, 2020, the state owned Energocom continued to supply electricity to Moldova – an intermediary in the purchase of energy from Moldavian SDPP and the Ukrainian DTEK Pavlohradvuhillya. Energy from these enterprises is purchased in the proportion of 85% by 15%. This information was provided by the Moldavian media, whereas in the Ukrainian information field there were no reports about the extension of the contract for the export of electricity to Moldova. According to energy-charts.de, Ukraine sold 43 GWh of electricity to Moldova in April, and less than 26 GWh in May.

 

Last week, the Maia Sandu’s government announced that it would break the contract for the supply of electricity from Transnistria and cover the entire shortage due to imports from Ukraine. This is stated in paragraph 2.4 of the Government’s Program for 2019, adopted on June 20:

“We will conclude electricity supply contracts with Ukraine and terminate the contract for the supply of electricity from Transnistria”.

The Russian side did not miss the opportunity to express its opinion on such plans:

“The owners of the state district power stations are Russian companies, but the issue should be decided based on the interests of the Republic of Moldova. The one who sells electricity cheaper is to be its seller. We do not intend, contrary to the laws of competition, to lobby the interests of a Russian company. This also applies to other relations that exist between our countries and our business”, said the Vice Prime Minister Dmitry Kozak.

The further development of events depends too much on political processes (what a surprise!) The temporary coalition is temporary, as it unites political opponents solely on the basis of friendship against Plahotniuc. We will continue to observe who will pull the blanket over himself. European integration under the influence of ACUM is likely to entail attempts to isolate itself from the Russian Federation, attempts will begin to establish “energy independence”. In some form that is accessible to Moldova. Supplies from Ukraine at the end of the tender – fit perfectly well. And gas may be obtained from Romania, and this issue has been under development for quite a long time.

If the socialists will outweigh, cooperation with Transnistria will continue, and there are even options that will move into some more legalized level. #LegalizeTransnistria, so to speak. Federalization, re-registration, any other forms of interaction in the legal field. The main – Plahotniuc’s gasket is eliminated (you can create your own, if needed).

And Mr. Plahotniuc is a very tenacious character. And it is hard to believe that he was upends. The tentacles of corruption can be revived even if the kraken is beheaded. Especially if Mr. “democratic oligarch” has so many “his” people.

 

Kosatka.Media

Tags: corruption

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