This could be a scene right out of “WALL-E”. Each day, hundreds of garbage-fed trucks dump their containers in the so-called ecological waste deposits built in Romania in the last decade. Built on public money and broken promises. And each day the “wise guys” – a local idiom naming the perennial clients of the ministerial or public administration informal networks – benefit from the tons of dumped waste, mocking European obligations and transforming them in money-making tools. As more and more garbage gets dumped, the wise guys largely open up their pockets.
And the pockets can hardly shelter the piles of money prescribed in through a recipe that should have treated the symptoms of an older affection – the depositing of municipal waste. In present day Romania, about 99% of the municipal garbage ends up in landfills, while straight ironed jackets sign consultancy and execution contracts on waste management, pledging transparency in spending public funds. Backing the underground private circuits upon which the country has been erecting – most of the time chaotically – its waste management system has become the norm.
Keep in mind this phrase: waste management system. It’s the name of the new paradigm by which Romanians will collect, transport, sort, recover, recycle and deposit municipal waste. A bombastic expression, filled with the promise of a multilayered change. Nevertheless, for most Romanian authorities this is nothing but a euphemism, behind which a monster of an industry, built on networks of money and hubs of influence, silently unfolds. It’s all about money. Skyrocketing sums.
Just doing simple math based on figures provided by the Ministry of Environment, the Ministry of Finance and the European Commission shows the following: developing the integrated waste management systems in Romania has already sponged up 150 million euro of the pre-accession funds (ISPA – a EU financial instrument dedicated to infrastructure and environment projects) while another 1.8 billion euro are still to come through the Operational Programme Environment. In exchange, people should benefit from a system that allows the selective collection of waste (split into plastic and aluminum, paper and cardboard, and glass), plus further operations such as recovering and recycling. Depositing would be last on the list.
Not in Romania, where waste-management reports sent to the European Commission are adjustable by a tweak of pen – something which officials, under the ask-not-to-be-named clause, admit true while hiding behind the formula “it’s all about how one can interpret the law” – while the field reality is grim: waste is almost 100% landfilled, in spite of the hundreds of millions of euro invested in closing dumps and opening ecological deposits. 49 municipal dumps and about 2,000 in rural areas are still functional, despite the European requirement to close them.
The situation has recently triggered an infringement procedure against Romania. The European norms ask not only that old landfills (dumps) be closed, but also that modern deposits be opened. Ecological landfills include sorting centers, composting facilities and levigate treating units. Not to mention the comprehensive infrastructure needed to back the selective collection targets, i.e. special colored containers plus the appropriate pick-up vehicles. All this means consultancy, technical assistance and execution contracts for each objective, plus the commitment to organize separate tenders to lease the respective public waste services and those related to the administration of ecological deposits.
Central legal profusion, local confusion
The scheme is complicated enough to confuse a whole bouquet of people, including city managers, heads of local administrations, mayors and vice mayors, local and county advisors and John Does. Still, it’s not complicated enough to hinder “wise guys” in tracing the garbage money – you are producing about 400 kilograms of waste per year! – and fertilize benefits under the umbrella of a system which could infuse into the national budget about one billion euro in revenues and create about 200,000 new jobs. All that with just one condition: proper management. So far, all the system has brought about is a bunch of balloon-like promises to those it should serve, namely the citizens, and numerous stacks of bucks to those accountable to implement it.
This being the case, all that authorities do is shrug shoulders and blame the status quo on what they call “flawed” legislation corroborated with “too ambitious” European targets and spiced up with the common man’s “ignorance” and lack of education when it comes to litter. Meanwhile, companies of “clients” are more than prosperous, in a diagram that touches a paradox: fines paid from public money for failing reduction targets on landfilled waste are cashed by the Environment Fund managed by the Ministry of Environment and return on the market as co-financing obtained by companies providing waste services. Practically, the companies accountable for failing to secure those targets use the faults of the system to finance their private interests. The consequence being that an extension of public contracts is solicited and generally voted for by local authorities.
Public interest, private results
What may look like a big hunk of Kafka is nothing compared to the future just drawing near. In the next nine years, the Romanian municipal waste systems have to reach a 50% recycling target, to recover with energy production 40% and to deposit only 10%. The recycling objective for this year stands at 46% and it will gradually increase to 60% in 2013. Failing to reach it will bring about both an infringement procedure and 200,000 euro/day fines according to the European officials. At present day only 1% of the municipal waste in Romania is recycled, while the European target stands at 42%, according to data from Eurostat, the European statistics bureau. Only one EU member state is in a worse situation and that is neighboring Bulgaria, which in 2009 landfilled all the waste in the country.
At the other end of the top is Germany which succeeded in recycling 48% of the total waste produced in 2009, closely followed by Belgium and Sweden. As for recycling plus composting (compost is a natural fertilizer obtained from fermenting organic remainings of waste plus mineral compounds) Austria leads the way with a 70% rate, followed by Germany, the Netherlands, Belgium and Sweden. In seven EU member states, Romania included, less than 10% of the municipal waste is recycled or composted.
Partly, the explanation could be provided by the authorities’ lack of competence in efficiently managing European funds contracted throughout the last decades. The money should have gone into creating the waste management systems. But the long way from landfill to deposit was paved with problems. On the other hand, an underground network of political and economic complicities has undermined all efforts to clean up the mess, endangering the public interest. Behind the curtains of a tailored institutional chaos, tens of services and construction works contracts sucked up the public money.
And other “partnerships” are about to be launched in the backstage. Former directors within the Ministry of Environment, incumbent local advisors feeling a bit hungry, Environment police commissaries, famed politicians or heads of local departments who split up money with a fatherly generosity, all these people caught in the web of unfulfilled waste targets have drawn their own game, playing it by their own rules.
Roaming above the dumps
So, no Pixar animations here, like in WALL-E, no Disney marketing, no popcorn or air-conditioned cinema halls. This is how bare reality looks. Roaming the sky above waste cemeteries – the final destination of municipal garbage in a system made to suck up public money in the detriment of the citizen – seagulls cut through the air in a dazzling scary and almost apocalypse-like dance. A loud metal croak is heard, ignoring the razzle-dazzle of trucks ransacking piles of litter. Crows and seagulls charge the overexposed frame. But there’s another frame, invisible to the public eye. Men have learned from the birds, growing familiar to the glide. In four cases investigated in Galati, Braila, Buzau and Bacau we found two common elements: the greedy plunge of birds and the under-the-radar charge of men. This is the story of the scavengers.
I. Galati. “Counted, weighed, divided”
Implementing the waste management system began in Galati seven years ago through an ISPA project (a financial instrument dedicated to infrastructure and environment projects) that provided some 23 million euro to close the old dump and construct a modern waste deposit, featuring sorting and composting units. The project should have paved the way for selective collection. The 23 million were meant to push Galati on the map of the most successful environment projects. However, what the entire plan succeeded in was spurring controversy after controversy. When this investigation was carried out (September-October 2011), the ecological deposit plus the related facilities were built but not functional, while the acquired equipment – containers, bins and trucks – stood locked up in a deposit.
Just like in the biblical scene of the feast of King Balthazar, an invisible hand is drawing the rules in Galati. “Countered, weighed, divided” has transformed on the Danube’s shore in “assisted, executed and acquired”. The explanation requires going back in time. The first to show up were consultants, in 2006. Their presence, compulsory by European norms, was scripted like in a play by Ion Luca Caragiale (a Romanian playwright renowned for mocking flaws of society).
A member of the committee which organized the consultancy bid at the Central Finance and Contracts Units Phare in Bucharest, told us under anonymity that one of the participants had the decisive support of Adrian Mihailescu, who was in charge with the ISPA-Environment program on behalf of the European Commission. The auction winner was a trans-national consortium comprising Carl Bro/Grontmij, Romair, IGIP and Iberinsa. Starting with January 2007, Mihailescu heads, according to his own CV, the Romanian branch of Carl Bro/Grontmij. In other words, he now works for the company he backed as independent supervisor at the 2006 public bid.
A former high official in the Ministry of Finance, who worked in carrying out the ISPA programs, added some more grey to the whole picture by saying that the “Mihailescu pattern” is not an exception, but a mere rule. “In Romania, such conflicts of interest don’t raise eyebrows. There are a lot of people who take advantage of their positions within the system and then leave using all the insider information they could gather”.
The most favored company clause
Another company of the above mentioned consortium champions all records when it comes to privileged contracts with the state. Romair Consulting, a business shepherded by Gheorghe Boeru – a character placed by the media at either ends of the political cleavage, connecting him with the financial pits of both left and right-wing parties – supplies technical assistance and supervises waste management projects in half of Romania. The never-ending success of such consultancy companies resides in a simple strategy, reveals an anonymous source: they use dumping prices to win auctions on technical assistance and cover current spending (much higher than mentioned in the offer) using tailored-to-fit tender books on execution contracts.
In Galati, the ecological deposit and the adjoining facilities were erected by the Greek company Mesogeos SA, together with the Romanian partner Valceana SA. Moreover, the needed infrastructure was provided by Iridex and Gradinariu Import Export. Iridex Group, a company controlled by a former Conservative Party senator from Buzau, Corneliu Pascu (a person close to the Conservative leader and media mogul and former Securitate informant Dan Voiculescu) is another pawn omnipresent on the map of contracts attributed in European financing projects.
A failed business
The distance between “Neacsu” restaurant in Galati – a kind of “Rick’s Cafe” a la roumaine, without the “Casablanca” touch, but populated by whores, provincial shady businessmen and “honorable” people whose reputations are still unstained – and the offices of local authorities can be reduced to a few kilometers and a series of pestilent combinations. On this exact trajectory, an umbrageous business was being negotiated at the end of 2008. The deal was to activate a network of political interests and insider information to thwart a public contract. Let’s begin with the official info. The contract to construct a new landfill in Galati was signed in July 2008, asking the Greek firm Mesogeos to finish closing the old dump and open a modern deposit by the end of 2009.
But, looking into the web of companies swarming the European funded environment projects, we found that there are two companies functioning by the same name in Galati: Mesogeos SA, the parent company and Mesogeos Group SRL, apparently with no connection to the former. The latter was set up in the fall of 2008, having as shareholders two companies: Selin Group and VS Link, plus a private stakeholder, Daniel Sandulache. According to one person closely involved in the second company, Sandulache had a big trump: insider information. Getting back to Selin Group, the company belonged to Mihai Selin, a controversial businessman, currently standing trial for fraud, being accused of having orchestrated a 50 billion lei deceit in 2007.
According to sources, Mesogeos Group SRL should have benefited from the sub-contracting of some construction works. In order to look as credible as possible, the Greek firm consented that their name be used to set up the local company. However, after months of negotiations, just a few hours before the final contract should was to be signed, Mesogeos SA backed away.
“Mesogeos had been informed that the sub-contracting company should have a certain type of political support”, people close to the deal told us. So the contract was granted to the “right” kind of company at the beginning of 2009. Mesogeos Group SRL had been created for nothing. The company to take over the contract was Floreal Trading, an obscure business based in Sendreni, a village near Galati. Floreal was controlled by people close to Paul Cristea, the Liberal mayor of Sendreni. And Paul Cristea had his fate closely tied to the one of Mircea Razvan Cristea, vice-mayor of Galati.
The failed get-together of Mesogeos SA (a former company director based in Bucharest, Gabriela Manta, describes it as a solid business, while independent sources say Mesogeos was the “mother of all cons”) and Mesogeos Group SRL, with the replacing of the latter by a shady politically-supported company, provides a critical reading into the story of local, economic and political interests which hamper the smooth development of European funded projects. People from the public system have no problem in abusing their positions to gather information that would turn them into valuable pawns on the chessboard of such projects. Three years after construction works started in Galati, the ecological deposit is not ready yet. The sorting and composting facilities are accessible only by foot, because the road is still unpaved, and all the equipment acquired within the project is stored in deposits. What is more, despite the fact that the financing memorandum stipulated a 1,600 container acquisition for the selective collection of waste, only 660 containers were bought in the end.
A small artifice
An underground struggle is taking place in Galati to lease the public services in managing the new ecological cell and the waste management system of the city. The current waste operator, Ecosal, a public utility company controlled by the mayor’s office, has recently succeeded in receiving, through a local council ruling, the management of the sorting and composting units built. Aparently, after the final reception of the new ecological waste cell, the deposit will be administered by Ecosal as well. Still, there is a huge thorny issue: ISPA financing memorandums require that public auctions be organized in order to select the companies that will manage such services.
Ion Ionescu, the head of Ecosal and a close friend of the incumbent Social Democratic mayor Dumitru Nicolae, has resorted to a small artifice, appealing to a certain provision that would allow the company he runs – as a public utility service – to get the management of the new deposit and related units by direct attribution through local council ruling. Nevertheless, experts auditing European funded projects claim that what is happening in Galati is nothing but nonsense, emphasizing on the formal obligation to carry out a public auction in order to select the managers of the newly-built waste management facilities. On the other hand, Ionescu says he has already got the Brussels OK on the issue and can take over the management of these units.
And he comes up with a paradox-like argument in order to explain why he had transformed Ecosal Prest from a commercial business into a public utility service in 2007. “In 2007, I was running a private company having the local council as a single shareholder, but any other company could have signed up at an auction, should one have been organized. Because of this I decided to turn the company into a public utility service in order to avoid auctions. A private company would seek nothing but financial gain if it wins a bid, whereas Ecosal is not allowed to scoop profit. So I work in the interest of the community, with the lowest prices on the market”.
When asked to provide a formal frame to understand such a situation, the Ministry of Environment explained the exact opposite: leasing the waste management services, through public bids, allows that costs be kept minimal through competitive practices. The dissolution of authority in 2011 Romania is just about complete: petty business-like conglomerates of interests take the shape of feuds, providing utopian arguments on serving the citizen’s best interest instead of any efficient solution.
Something to nibble
Despite the fencing of Ecosal with the direct participation of director Ion Ionescu and mayor Dumitru Nicolae, the waste management market in Galati still has some leftovers for hungry businessmen in the industry. RER Ecologic Service, a company that is part of the RER group, has managed to cram on this market as well, by leasing some 20 trucks to Ecosal. Nobody at the mayor’s office was willing to either explain or provide information on the value of the contract between Ecosal and RER Ecologic Service. “Ecosal probably lacks the appropriate number of trucks to collect the municipal waste”, says Bogdan Epure, the quality management director of RER Ecologic Service.
It’s a funny kind of explanation, especially since Ecosal operates with some 30 trucks and will also receive 10 brand new ones bought with the ISPA money. Ion Ionescu is brief on the issue: “To be honest, I don’t need RER. But I had to sign that contract because of political pressures”. Such an allusion is a long distance shot, considering that the Galati manager of RER Ecologic Service is Ion Dumitru, a Liberal Democrat politician and relative of Liberal Democrat deputy Cezar Preda who has set up the RER group and, in spite of having formally withdrawn from the company, is still said to be orchestrating the business.
Dumitru’s double quality – he is both the manager of a company that has a contract with the public authority and also a local representative in the city council – violates the incompatibility norms that the locally elected should abide by. Article 90 of law 161/2003 stipulates the following: “local advisors and county advisors who are president, vicepresident, general director, manager, administrator or member of a board, or accountant, or that held other top management positions, or that are shareholders or associates in privately-owned companies or state-owned businesses cannot sign services, construction works and product supplying contracts with the bureaus of local authorities which they belong to, or with other institutions and state-owned companies controlled by the respective local authorities or with companies set up and ran by the local or county councils”.
However, incompatibilities seem to bother the least in Galati, where authorities are much more preoccupied by the upcoming and unavoidable auction that should be organized to subcontract the waste management service. On paper, one of the basic ISPA requirements is that different companies manage the facilities constructed with European money, in order to differentiate the collection from the transportation of litter. So, as Ecosal has already received under its umbrella the sorting and composting units, an auction to lease the waste collection system is almost compulsory. In the block-start RER is silently awaiting.
RER’s ambitions to break into the waste collection market heat up the spirits in the rather quiet local organization of the Liberal Democrat Party in Galati. Its octopus-like commercial web once included Mihai Turcu, the incumbent head of the Environment Police (a controlling unit of the Ministry of Environment) in the city.
Turcu, a histrionic kind of personality, is such an explosive man that the few square meters of his office are barely enough to contain his overrated ego. Information from the Trade Bureau shows that a company controlled by Turcu – Diplomat International – owns a small part of RER’s shares. The commissary is visibly disturbed that, because of some backstage games, he had been forced to minority in the company.
Actually, what Turcu is forgetting when trying to make a point on the issue is that in 2000, in an attempt to seize a larger piece of the “cake” and expand to the neighboring city of Braila, he set up a waste business with the help of some venous Italian businessmen suspected of tight connections to the Mafia. The plan included two companies: Brai-Cata, which now controls a third of the waste collection market in Braila, and Gal-Cat, which never stood a chance on the Galati market. Nevertheless, Turcu has not lost hope. “One day the market economy will have its saying and Galati will see some two-three companies on this niche”, he said confidently, waving his hands in the air in large threatening gestures like getting ready to confront a shadow enemy.
He stresses his argument by underlining the importance of competition on the Galati market. “There had been another firm on the market, but it was forced away because the landfill manager would not accept waste collected outside the city. It had a few contracts with some villages and mayor Dumitru Nicolae refused them the right to dump waste at the landfill. What does this mean? This is monopoly, with the help of the mayor’s office, that of the local council and of the prefect’s office”, Turcu says. He refrains from naming the company, and with good reason. The “other” firm is Urban, stakeholder at Brai-Cata after Turcu’s Italian partners withdrew in July 2008.
One thing is certain: Turcu, the Environment Police head, is much more interested in the “fair” division of the waste collection market in Galati than in the lack of selective collection in the city. Or in the fires that spark up, from time to time, at the old landfill – now undergoing closing procedures. And the dump could provide even more nasty surprises, like this: 800,000 euro were doled out at the beginning of the year and channeled to Mesogeos’ account to prod the company to finish what it should have done under the provisions of the ISPA financing memorandum. A mind-blowing technical explanation was provided: “by the time construction works started we noticed that the geometry of the old deposit (surface and height) did not match the one mentioned in the project”.
- This article was developed with the support of the Soros Foundation in Romania, as part of the program Investigative Journalism. The content of this article does not represent the foundation’s official stance.