PUBLIC MINISTRY NATIONAL ANTI-CORRUPTION DIRECTORATE MODEL AND ORGANIZATION OF DNA

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1 MODEL AND ORGANIZATION OF DNA

2 DNA - Specialized anti-corruption prosecution structure Set up in September 2002 following the ratification by the Romanian Parliament of the Criminal Law Convention on Corruption of the Council of Europe Fundamentally restructured in 2005 to allow the investigation of high level corruption Based on the Spanish model of the Fiscalia Anticorruption. Special structure, integrated in the Prosecutor s Office attached to the High Court of Cassation and Justice.

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4 Councilors of the Chief Prosecutor Technical Service Service for Classified Information and Database Management on Corruption Economic Financial and Administrative Department Chief Prosecutor of DNA Deputy Chief Prosecutor of DNA Deputy Chief Prosecutor of DNA Service for International Cooperation and Programs Service for Human Resources, Professional Training, Registration Desk, Archive and Public Relations Office for Public Information and Relations Section for Combating Corruption Section for Combating Corruption Offences committed by Military Personnel 7 Territorial Services 7 Territorial Services Territorial Structure Section for Combating Offences connected to those of Corruption Criminal Judicial Section

5 Internal organization territorial division PUBLIC MINISTRY

6 The complex structure of DNA s Personnel Personnel composition: o 145 prosecutors (132 occupied positions) o 220 police officers (181 occupied positions) o 55 specialists o 196 auxiliary, administrative staff

7 Gender distribution of the personnel Prosecutors - 51% women, 49% men Police officers - 12% women, 88% men Specialists - 37% women, 63% men Auxiliary clerks - 90% women, 10% men Age average Prosecutors 41 Police officers 41 Auxiliary clerks 40 Specialists 47

8 DNA Prosecutors Leadership 5 Operative prosecutors at the level of the central structure 45 at the level of the territorial structure Pleading prosecutors at the level of the central structure 15 at the level of the territorial structure Non - operative prosecutors 6

9 Focus on high and medium level corruption offences. The competence is set by the law, as follows: Bribery offences Offences assimilated to corruption Offences against the financial interests of the European Communities Abuse of office Misappropriation of public tenders if the value of the bribe is over 10,000 if the value of the damage caused is over 200,000 when committed by persons with certain high level public positions (i.e. Members of Parliament, Romanian Members of the EU Parliament, Members of Government, magistrates, prefects, mayors, police officers, heads of public authorities and public institutions, directors of national companies etc.) regardless the value of the damage. if the damage caused is over 1,000,000

10 THE COMPETENCE IN CASES OF TAX EVASION Until 2013, DNA has the exclusive jurisdiction to investigate crimes of tax evasion with higher injury Euro In determining that power was envisaged that such scale tax evasion, in many cases, is caused by corruption of officials of the tax administration from 2013, DNA investigates tax evasion offenses only when it is taken in conjunction with corruption offenses or assimilated to corruption

11 Investigation means DNA prosecutors have the same investigative powers as the other prosecutors in the Romanian Public Ministry. For interception and recording of conversations DNA benefits of the support of its own Technical Service

12 Volume of activity for 2014 The total number of criminal investigations conducted by DNA in 2014 is 9.111, of which: o317 cases sent to trial o1167 defendants o107 companies

13 Practical experience 2014 The main efforts concentrated on high profile and complex cases Of the defendants have been sent to trial in 317 criminal cases, 392 were people with prominent public functions, management, control, or other important public offices (303 in 2013), as follows: 12 officials, 330 are civil servants, 35 judges, 25 lawyers, 81 police officers, 16 soldiers, and 447 Other (businessmen, employees companies, etc.) Among them: 9 Members of Parliament, 1 State Secretary, 1 Counselor of a minister, 1 Army general, 2 Prefects, 6 Presidents and 1 Vice-Presidents of County Councils, 21 mayors and 4 deputy mayors, 5 presidents and 2 vice presidents of national public institutions, 12 directors of companies, 5 commissars of Financial Guard. Criminal assets in value of ~200,000,000 were frozen defendants have been convicted in final court decisions. ~ 30,000,000 were confiscated in these final decisions.

14 Immunities In 2014, DNA requested the Parliament to waive the immunity in view of issuing arrest warrants for 1 Senator and 6 Deputies investigated for corruption: 4 requests were rejected: 3 by the Deputies' Chamber and 1 by the Senate. 3 requests were admitted by the Deputies' Chamber on November 18 th, 2014 In 2014, DNA requested the waiver of immunity in view of opening of 11 criminal proceedings against 1 minister and 10 former ministers: 6 requests submitted to the President were accepted 1 was rejected and 1 was admitted by the Deputies' Chamber 2 were admitted by the Senate on November 18 th, request is pending at the European Parliament.

15 TIPOLOGY OF THE OFFENCES Ministers and state secretaries - Misappropriation of funds or changing the destination of some funds of the ministry - Employing various people in public positions Parliament members - Interventions to various public institutions (ministries, justice, police etc.) in order to illegally solve various problems - Illegal financing of the political parties Holders of local power - Defrauding public tenders favoring of certain people. - Underrating goods in different commercial operations (sales, orders of compulsory execution etc.) - Illegal restitution of real estate (confiscated during the communist regime)

16 TIPOLOGY OF THE OFFENCES II Magistrates and police officers Issuing favorable decisions for the persons who pay bribe or interceding for the same purpose with their colleagues in criminal or civil trials. Customs and border police officers Favoring other persons in smuggling different products (cigarettes, alcohol etc.) Directors of national companies and public institutions - Defrauding public tenders - Conducting illegal or preferential payments to different commercial companies - Carrying out financial activities incompatible with their function. - Using confidential information for their personal benefit

17 CHALLENGES Legal and institutional framework repeated changes: - the immunity rules extended to cover the former ministers (not only the acting ministers) - procedure for immunity waiving declared unconstitutional and changed - initiatives to change the procedure for appointing/dismissing the Chief Prosecutor of DNA and the Prosecutor General of Romania - failed - initiatives to soften the investigative means of the prosecutors by changing the Criminal Procedure Code Defense tactics with the purpose of delaying the investigations and trials Independence of DNA challenged by public attitudes expressed by high profile people

18 DNA Independence challenged (European Commission Report) - Comments made by politicians on particular cases - Calls to dismiss senior DNA prosecutors - Protests against the arrest of senior politicians or Mayors - Protests against court decisions - Attempts to influence the development of cases in the courts

19 TAX EVASION/V.A.T. FRAUD Value Added Tax fraud is the most common form of tax evasion and illegal VAT reimbursements Romania cost 7 billion each year, over two times more than the budget deficit The main methods of VAT fraud: - intra- Community transactions; - Illegal VAT reimbursements; - Vale reduction of goods in customs; - Insolvency method; - "CAROUSEL"

20 VAT fraud in intra-community transactions Some companies buy goods from EU, VAT free and they sell it in the domestic market adding VAT. Companies collect VAT, but forget to pay it to the budget.

21 Illegal VAT reimbursements False invoices, ghost firms performing fictional exports or overvalued prices acquisitions and subsequent exports, are the main strategies to hijack the state and force it to pay VAT refunds.

22 Value Reduction of goods in customs Value Reduction of goods in customs, especially those from China or Turkey, is one of the most popular methods of tax evasion. Value of the goods has direct effects on the tax which the importer must pay.

23 Insolvency method As modus operandi: a company from Romania imports custom products at very low levels, pay low fees related to that amount, then sell products with several hundred percent added, somewhere around the real price. But when they have to pay their taxes and VAT from the products to which those operations were applied, these firms disappear.

24 "CAROUSEL" This tax evasion method involves a phantom firms network. Through this network, products are provided to the market, using only one set of tax documents.

25 DNA ACTIVITY in combating tax evasion in PRACTICAL EXAMPLES Even if the DNA does not have exclusive competence in tax evasion, it continued investigating these crimes when tax evasion was associated with corruption offenses; During 2014 several cases regarding 248 offenses of tax evasion were completed with reference to court;

26 EXAMPLE 1 chickens file 16 defendants arrested, over 50 million euro registered damage Several businessmen from Romania, developed a mechanism for selling chicken meat, without paying taxes. Modus Operandi: Fictional operations regarding intra-community deliveries of products using phantom companies from Bulgaria, Hungary and Cyprus. In reality the products remained on the market in Romania. During the prosecution it has been proved that the criminal network was protected by officials of tax administration and even by a prosecutor from the Prosecutor General Office.

27 EXAMPLE 2 - football players transfers File Eight defendants caused a damage state through tax evasion of nearly $ 1.5 million. They also caused an over $ 10 million damage to four clubs. The criminal activity covered 12 transfers of some football players made from 4 clubs in Romania during Mode of operation: the contracts signed abroad were altered / forged, and in clubs accountancy were registered much smaller amounts than the real ones. The black money were laundered" through succesive transfers between defendants accounts. The case was completed in 2014 with an imprisonment conviction (between 3 and 8 years ).

28 EXAMPLE 3 electric transformer file During , the Transport Minister while he was a local political leader and parliamentarian, developed a scheme in order to fraud a public institution - ELECTRICA, which was serving all Moldova region. Through several "ghost companies, old electrical machines were reintroduced into civil circulation for national electric system. The electrical transformers were discarded because they were older than years. Finally, these machines were repainted and the company of the minister was selling them to public institutions as if they were new products. The products were stored without being used because they were unnecessary. Found injury euros. The Minister and his accomplices were sentenced to gail between 5 and 7 years. At sentencing, the minister was in public activity.

29 EXAMPLE 4 - "Agricultural machinery" Case An MP and a local political leader in southern Romania have created a scheme through which they committed criminal tax evasion. They were bringing agricultural machines from Germany, Holland, etc. who were registered to a company from Romania. This company from Romania was identifying buyers in Romania. After that, this company delivered the products using a link - a Bulgarian company, controlled by the Parliament member. The cars were delivered in the same day to the recipients from Romania, and no company involved in the circuit was paying VAT. The market competition was eliminated by charging lower prices because they do not pay VAT. The damage is estimated at over 1,000,000 euros. MP was indicted for crimes similar to those of corruption - trade acts incompatible with the function.

30 International Cooperation EPAC/EACN European Partners against Corruption / European Network against Corruption a DNA prosecutor is the Vice- President of the network since 2010 GRECO Group of States against Corruption IAACA International Association of Anti-Corruption Authorities IACA International Anti-Corruption Academy OECD (ACN) Anti-Corruption Network for Eastern Europe and Central Asia

31 International judicial cooperation January 1 st November 1 st, active international MLA Requests Austria (1), Belarus (1), Bulgaria (4), Czech Republic (1), China (1), Cyprus (2), Hungary (4), Germany (2), Holland (1), Egypt (1), Switzerland (1), Greece (1), Israel (3), Jordan (1), Italy (6), Liechtenstein (2), Moldavian Republic (2), Saudi Arabia (1), Serbia (1), Slovakia (1), Spain (2), United Arab Emirates (1), USA (3), Turkey (2) and Ukraine (1) 10 passive international MLA Requests Austria (1), Czech Republic (1), France (1), Hungary (1), Germany (1), Italy (2), Norway (2) and USA (1)

32 European assessment on DNA DNA, one of the first 5 anticorruption institutions at the level of the European Union (Anticorruption Report of the European Union) DNA maintained a significant track record in difficult circumstances. This track record constitutes one of the most important ways in which Romania is advancing the CVM objectives. (Cooperation and Verification Mechanism Report of the European Comission)

33 EUROBAROMETER Successful investigations in the field of corruption offences

34 Sociological study 50.3% of the population considers that DNA is involved to a large and very large extent in combating corruption. (Survey performed by INSCOP Research, published on May 20th 2014)

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45 Thank you for your attention!