Government writes off over EUR 1 bln of Romanian railway system’s debt

The Romanian Government has decided to write off the debts run up by the Romanian railway system, CFR, through a legal maneuver that overrides the existing legislation regulating the public debt. The special Government Ordinance was signed by the Ministry of Transportation and Infrastructure

February 2012 - From the Print Edition

Recently, the Court of Accounts found that the national railway company, CFR, had illegally spent EUR 13.4 million in 2010 through an international credit, and found the act “was committed in violation of criminal law,” according to the institution. The loan is said to have been granted by the Japanese Bank for International Cooperation for the modernization of the Bucharest-Constanta railway line.
Of the total amount spent illegally, EUR 10.65 million was used for the purchase of 16 rail maintenance vehicles not covered by the loan agreement, and EUR 2.81 million represented improper payments to builders, effected by false estimates submitted for manufacturers’ offers, general articles, expenses for consultants and CFR experts.
The Court of Accounts reported, “During verification indications that a criminal offense had been committed were found: a change, without the legal provisions, of the destination of reimbursable funding by illegal use of a loan of EUR 10.65 million. The case will be referred to law enforcement and criminal investigation agencies, following the Court’s own procedures on these facts.”
The Court concluded that the misuse of EUR 13.47 million was caused by mismanagement of the company and lack of personnel in the project implementation unit. The CFR leadership had objected to the findings identified in the inspection, but the team of inspectors agreed with the comments. The institution is seeking to establish the amount of consulting costs unduly paid, to recover the amount, and to establish the appropriate level of staffing on the project implementation unit.