ECONOMY

Anti-corruption drive launched by Romanian gov’t

BUCHAREST (Reuters) – Romania launched an investigation yesterday into dealings between two major private companies and the state, in the first signal the new centrist government is determined to crack down on corruption. The General Prosecutor’s office said it was investigating how oil refiner RAFO and tire maker Carom were able to amass debts to the state worth about 3.0 trillion lei ($104.2 million) in unpaid excise duties and other taxes. «For the moment, 19 persons are under criminal investigation and their property was frozen,» said the General Prosecutor’s spokeswoman, Simona Frolu. RAFO officials have rejected any wrongdoing. Carom officials were unavailable for comment. The centrists that came to power after Nov. 28 elections on a tough anti-graft ticket have pledged to clean up the country ahead of joining the European Union in 2007. The new government has already suspended a controversial decree signed by the previous Cabinet to recoup debts of around $500 million from the two firms to save them from bankruptcy. The prosecutor was also investigating the circumstances of the privatization of RAFO. Romania’s new centrist Prime Minister Calin Tariceanu said the investigation was a tangible example of his government’s determination to put an end to rampant corruption 15 years after the collapse of communism. RAFO officials say the company’s reorganization plan, which included a debt-for-equity swap with the state, was approved by a court and any debts were accumulated by former owners. They said they welcomed the investigation but rejected government statements pre-judging the case, saying it was damaging the refinery’s business.