Corruption in Moldova: Under Maia Sandu’s PAS government, corruption is running rampant, but in new ways

Despite the changes in government, with the appointment of Maia Sandu as President and her party, the Action and Solidarity Party (PAS), the situation has not improved. On the contrary, corruption has become much worse under Sandu’s regime, despite its Western façade.

The country’s Gross Domestic Product (GDP) per capita was estimated to be $5,230 in 2021, making it one of the poorest countries in Europe. Corruption and a lack of investment have been identified as major factors hindering the country’s economic growth and development. Despite great promise in the past, and for very obvious reasons. Although the service sector accounts for the largest share of Moldova’s economy, an indicator of modernity and globalization, and despite being rich in natural resources, the country has struggled to attract investment due to corruption and an utter lack of transparency in government procurement processes.

Nuestra Familia

According to the World Bank’s Doing Business Report 2021, Moldova ranks 48^th out of 190 economies in terms of ease of doing business. This ranking indicates that there are significant challenges faced by companies looking to do business in the country, including corruption, red tape, and lack of transparency. 

Above all else, two issues plague Moldova’s stature, its judicial system and its family-like boys and girls club, where the elected leadership, the senior public servants and many middlemen come from the same social club. Despite PAS promises for transparency and open democracy, the government and party still function as a “family”, merely replacing the previous social clique with one of their own, giving political and financial favors to allies and backers, while suppressing and excluding opponents. 

Take for example the minister of Infrastructure and Regional Development, Andrei Spînu. Could you imagine that the young minister is very well connected to political operators such as Adrian Stipanov, which might make sense if not considering that he is also the proud owner of no less than 12 companies worldwide? What would the minister need with co-ownership of companies with political operators or owning offshores, and how would it coincide with Moldova’s widespread corruption?

Or as another shining example, the highly influential within PAS, Dorin Recean – currently serving as Prime Minister – and whose portfolio has included Head of the Supreme Security Council and official adviser to President Sandu, has been found to actually be a business partner of Cătălin Giosan: by way of reminder – Giosan is the founder and owner of PRO TV, one of the most important mass media channels, and one continuously (and purely randomly) associated with PAS and other business and political interests. This is in addition to various other corporates being held by Recean – for what reason exactly?

 This lack of transparency and the continual confliction between business, media and political interests, has resulted in a lack of accountability and has made it more difficult for citizens to have confidence in their elected officials.

When a suffering party, wronged by the Nuestra Familia of PAS, appeals to the judiciary, it finds out that the Moldovan judicial system and its judges are found to be corrupt, and any foreign investment requires a strategy to address this issue. For example, consider the new Prosecutor General Ion Munteanu.

In recent months it was published that actually, even though his salary amounts to a reasonable 500 EUR per month, he actually negotiated the purchase of a 650,000 EUR property! And refused to buy it only when he discovered it had its ground floor owned by other owners, unwilling to sell!

This was not the only business Munteanu wanted to buy. During 2018, Munteanu was exploring the possibility of buying a real estate property and developing it into a car service, notwithstanding the fact that he was a public official at the time.

The deal did not come to pass due to zoning problems, but the overall picture is very clear. One of the assets he did purchase, he had registered under his family member’s name in order to avoid scrutiny.

 The new process of investment

According to the UN’s investment report, the Foreign direct investment (FDI) in Moldova tanked after and never recovered during Sandu’s regime, amounting to approximately 50% of the 2019 all time high, and significantly less than the rate of recovery in other countries in the region, and highlights the challenges faced by companies looking to invest in the country.

The informal economy is estimated to account for approximately 40% of the country’s GDP, snug in nicely between global economic leaders like Liberia which is slightly worse and the Republic of Congo which is doing better! indicating a significant degree of economic activity as unofficial, attributable to an utter lack of trust in government and institutions, as well as the difficulties faced by companies operating in an environment plagued by corruption.

The current Moldovan regime under Maia Sandu has been accused of exacerbating the already predominant corruption, by allowing of fixing tenders for foreign investors who have the “right governmental connections”. The PAS government, under the pretense of “informal vetting”, requires foreign investment benefits to facilitate any market entry to Moldova. This has resulted in a situation where companies are forced to make concessions in order to enter the market, creating an environment where corruption thrives. A good example of such facilitation of the “right government connections” can be seen in the firm Progestact, Progestact is a consultancy led by Liviu Gumovschi, an official middle-man between the Moldovan government and the World Bank, officially employed by the government. However, he is also partners with Vitalie Iurcu, Former Deputy Minister of Economy, Iurie Muntean, Member of Parliament, Emil Gutu, Former Vice President of the Competition Council, and of course – Dorin Recean, Sandu’s closest official adviser.

In conclusion, corruption in Moldova under the Sandu government is a serious issue that needs to be addressed if the country is to attract investment and improve its economic prospects. It is imperative that the government demonstrates its commitment to acting honestly and transparently, and that it takes decisive action against corruption in all its forms. This includes strengthening the independence of the judiciary, improving the transparency of government procurement processes, and ensuring that those who engage in corrupt practices are held accountable. Only by being held accountable for their actions can the country create a level playing field for businesses and start to build a more sustainable and inclusive economy. The continued corruption in Moldova, despite the promises of Sandu and the PAS government, is a reminder that the fight against corruption is ongoing, and that it requires sustained effort and commitment from all actors in society.

While the challenges faced by Moldova are significant, there is also reason for optimism. The country has a wealth of natural resources, a highly educated population, and a strategic location at the crossroads of Europe and Asia. With a clean government and the right head of state, Moldova has the potential to be a leader in the region, attracting investment and creating economic opportunities for its citizens. However, this will require sustained and comprehensive action to tackle corruption and create a level playing field for all.