The fatal interlinking of business and politics in Eastern and South-Eastern Europe has made some politicians in CEE rich. That could soon change.
Sebastian Ghiţă has little reason to return to his home country of Romania. Serbia, which he fled to in December, has granted him political asylum. The supreme court of Serbia recently rejected the extradition request issued by the Bucharest court of appeals. Ghiţă, a former string-puller and advisor to the government who had made millions by age 29, will stay in Serbia for an indefinite time.
Like few others, Ghiţă symbolises the interlinking of business and politics in Eastern and South-Eastern Europe, a fatal interlocking aimed to protect one’s own people while neglecting the general public interest. Ghiţă found riches in the private sector, in the IT industry to be precise, and invested his money in media willing to toe the government line. By becoming a parliamentarian in 2012, he then placed himself – at least in theory – at the service of the people. In practice, his primary concern was to secure his own wealth. Ghiţă owns assets worth approximately 130 million euros. The basic monthly salary of a Romanian MP is about 1,200 euros.
The Czech Republic’s second richest man didn’t earn his money in politics either. Andrej Babiš, the son of a diplomat who grew up in Paris and Geneva, founded Agrofert in 1993, which he built into one of the country’s most important groups with 250 national and international subsidiaries. The Czech Republic’s largest media group, Mafra, also belongs to Babiš. Today Babiš is the head of government – brought into office by his own party, ANO. The election campaign was based on his promise to run the state like a company. He has proven himself in the private sector, after all. No matter that Babiš was forced to step down as minister of finance in May 2017 over suspicion that he avoided paying taxes and influenced the media. No matter that the EU’s anti-fraud office, OLAF, is investigating him for subsidy fraud. His hotel complex, Stork Nest, near Prague received a two-million-euro subsidy earmarked for small and medium-sized companies – which one of the country’s largest corporations certainly is not. The prosecutor’s office in Prague has stripped the politician of his immunity. Babiš was questioned with respect to the allegations in June 2018.
Montenegro’s president Milo Ðukanović, meanwhile, is considered to be beyond the reach of the law. Ðukanović, who was helped into office in the then Serbian province by Slobodan Milošević in 1991 at the age of 29 and later broke ranks with his political mentor – which won him the favour of Western decision-makers – has spent the greater part of his professional life in politics. Except for a 16-month hiatus, which he sat out as a delegate in the Montenegrin parliament, Ðukanović has been governing the small coastal state as prime minister or president – currently in the latter role – since the collapse of Yugoslavia. When he won the election again in April, Frankfurter Allgemeine Zeitung commented that the unwritten first article of the Montenegrin constitution states that the power is always where Ðukanović is. And the money is not far off either. Ðukanović’s wealth is estimated at 15 million euros. His brother is said to own more than 160 million euros by now. His sister, too, has accumulated wealth, and his son is said to receive 15,000 euros in rental income each month – through apartments given to him by his uncle, the international consortium of investigative journalists OCCRP reports. In transparency and asset reports, Ðukanović claims his public salary is 1,700 euros.
Ghiţă, Babiš and Ðukanović have filled different roles in their respective countries. Also, the histories of their home countries have less in common than one might think. All the same, all three of them represent a type of politician frequently seen in the newer EU member states, in candidate countries and even in many an old member state. With strong business networks, these politicians enter political office within a dubiously financed party system and use their political power to first extend privileges for themselves and their own clientele – for whom access to the state’s coffers is helpful – and then secure those privileges through their influence and the protective immunity that comes with the office.
Ghiţă’s software company had received public contracts worth 74 million euros before he handed the company over to his relatives and entered the Romanian parliament in 2012. Along with him came nine other neo-politicians, who had scooped up 450 million euros in public contracts as businessmen. The construction company Teldrum, which Romania’s current strongman Liviu Dragnea is believed to control through kingpins, landed government contracts worth 200 million euros from 2011 to 2015 alone.
Alert observers in Romania are now looking on as a political class that has operated under this principle almost without exception tries to maintain the system that feeds them and their children. The government is dismantling the rule of law in order to shut down anti-corruption investigations within their ranks once and for all. Institutional control cannot prevail on its own in Romania. The country has a separate autonomous agency, ANI, which monitors public officials’ assets and can take action against conflicts of interest. The EU insisted on setting up such an agency in the context of the accession process, and Romania was the first EU member state to implement it. Since ANI took up its work, politicians’ wives and children have become rich overnight, people in Bucharest say wryly.
Working towards EU accession forced Romania to carry out decisive judicial reforms and establish new institutions to fight corruption in its administration. Not all of them have proved toothless. In addition to ANI, the country set up anti-corruption prosecution office DNA, for example. It is taking such rigorous steps that the old system has started to totter.
Something has gotten in Sebastian Ghiţă’s way too. Something that was not envisaged in this form in the get-rich-in-Romania’s-political-caste manual: the public prosecutor’s office. Still partly independent, it works by the book rather than complying with standard practice. When he was charged with money laundering, fraud and influence-peddling, among other things, in December 2016 and prohibited from leaving the country, Ghiţă packed his things. He escaped Romanian police between Bucharest and his hometown of Ploiești, north of the capital. Ghiţă was last seen in Bucharest – at a party for the Romanian intelligence service, SRI.
Original in German. Translated into English by Barbara Maya.
This text and infographics are published under the Creative Commons License: CC BY-NC-ND 3.0. The name of the author/rights holder should be mentioned as followed. Author: Eva Konzett / erstestiftung.org, infographics & illustration: Vanja Ivancevic / erstestiftung.org. Cover picture: Bucharest, view from the Palace of the Parliament at Piața Constituției and Bulevardul Unirii. Photo: (CC BY-SA 2.0) Dennis Jarvis/Flickr
Of People and Numbers – Eastern Europe in your pocket
Fourteen years have passed since the European Union set off towards the east. The initial euphoria first gave way to day-to-day life and has now turned into disillusionment on both sides. In some places people have become or remained strangers, despite visible and hidden relationships, and personal, official and business relationships. Despite the numerous similarities and the value chains that now know no borders. And sometimes precisely because of them.
Of People and Numbers aims to highlight the political, economic, cultural and social realities of life in the newer members of the EU and the accession states of South-Eastern Europe on a small scale and compare them to Western European realities, at least as they appear in Austria. Are the two really always miles apart? When does the view from above fall short?
When preconceptions are put aside, a different world emerges. Of People and Numbers brings this world to you in images, figures and words. A monthly serving of Eastern Europe. Delivered to your smartphone each month.