Petrom rejects report of scandal and bankruptcy

BUCHAREST – Romania’s national oil company Petrom yesterday rejected as groundless reports that banks have blocked its accounts and started bankruptcy proceedings after a local manager allegedly wrote bad checks worth $7 million. SNP Petrom is one of Eastern Europe’s main refiners and a major purchaser of crude oil on the world market. The Bucharest financial daily Bursa quoted Nicolae Cinteza, a senior central bank official, as saying that Petrom is in crisis for failing to pay checks and that any company in such a state should «have been declared bankrupt immediately.» He was not available for further comment. But Petrom’s spokesman told Reuters the firm was financially sound and that the incident was unlikely to rock the company, which last year had a turnover of some $3 billion. «Petrom is not bankrupt… that’s nonsense. Our financial situation is solid. Petrom is able to pay all its bills and honor obligations under contracts with foreign partners as well as pay for crude oil purchases,» spokesman Gabriel Nastase said. A broker at Bucharest’s stock exchange said the incident had a limited impact on Petrom’s trading. Yesterday, Petrom closed at 1,040 lei, slightly down from Monday’s close of 1,170. Other media have also reported that six local banks had allegedly pushed for Petrom’s bankruptcy after prosecutors revealed that a manager at a Petrom subsidiary in the western county of Arad had written bad checks worth 250 billion lei ($7 million). The alleged fraud involved a local businessman, who got the checks as payment for providing fictitious diesel oil supplies, used them as collateral to raise credit from the banks and then eventually split the cash with the Petrom manager, public investigating magistrates told reporters. Although the central bank has taken steps to improve banking surveillance since the 1989 fall of communism, poor management and slow-moving structural changes in the mostly state-run economy continue to hurt banks. Petrom, slated for privatization this year, has two refineries with a total capacity of 14 million tons of crude per year (280,000 barrels per day). It processes 6.1 million tons of crude a year and has more than 650 filling stations nationwide.