Tag Archives: Ilan Shor

High-Level Corruption Threatens Moldova’s European Aspirations

Every April 7, Moldovans take stock of the progress the country has made since the youth protests of April 2009, which popularly became known as the “Twitter Revolution.” Nine years ago, this civil unrest led to the demise of Communist Party rule and ushered in a coalition of pro-European parties into power. However, hopes for a more democratic and accountable government not only failed to materialize, and many perpetrators of the brutal police crackdown in April 2009 have since been promoted to key state positions by the now ruling Democratic Party (Anticoruptie.md, April 7, 2017). This sense of impunity, coupled with poor economic conditions domestically, discourages young Moldovans from investing any hope in their country’s future. According to the latest poll by the International Republican Institute, 76 percent of respondents do not think that young people have a “good future in Moldova,” while 96 percent said “corruption is a big or very big issue” in the country (Iri.org, March 29, 2018). A recent joint report by the European External Action Service and the European Commission stated that “corruption still remains widespread, and independence of justice, law enforcement as well as national anti-corruption authorities need substantial improvement” (Europa.eu, April 5). Thus, endemic corruption and democratic backsliding not only undermine Moldova’s European aspirations, but also create fertile ground for political instability and civil unrest, this time against a nominally pro-European government.

The same European Union report on Moldova’s record of implementing the Association Agreement with the EU recalls that the change of the electoral system in July 2017 went against the recommendation of the Council of Europe’s Venice Commission and the Office for Democratic Institutions and Human Rights of the Organization for Security and Cooperation in Europe (OSCE). European democracy watchdogs have repeatedly warned Moldova not to introduce the mixed electoral system, because it is likely to exacerbate the country’s corruption problem by allowing wealthy businesspeople to influence elections in single-member districts (Venice.coe.int, March 19; see EDM, January 10). This concern is a major reason why the EU is withholding 100 million euros ($124 million) in macro-financial assistance, earmarked for Moldova last year. According to Vice Chair of the European Parliament Committee on Budgets Siegfried Muresan, EU funds would have arrived already had it not been for the controversial change to the electoral system (Europalibera.org, February 1). On a recent visit to Moldova, Muresan emphasized that at least three or four of the ten EU conditions for the first tranche (30 million euros) have not been met (Adevarul.roCotidianul.md, April 6). Indeed the EU-Moldova Memorandum of Understanding sets clear deliverables in terms of public-sector governance, the fight against corruption and money laundering, energy-sector reforms, etc., but it also demands respect for effective democratic mechanisms, including a multi-party parliamentary system and the rule of law (Europa.eu, November 23, 2017). The latter is much more difficult to achieve, and given how the investigation into the billion dollar bank fraud is going (see below), the government appears to be barely trying.

One billion dollars (12 percent of GDP) was siphoned off from three Moldovan banks prior to the 2014 parliamentary elections. “The theft of the century,” as it has come to be known, is a litmus test for the Moldovan justice system. Moldova’s National Bank hired the New York City–based investigative consultancy Kroll to conduct a financial forensic investigation. Already in its first report, presented in April 2015, Kroll identified controversial businessman Ilan Shor, who controlled the three embattled banks, as the main figure behind the fraud. The consultancy firm’s second report, from December 2017, pointed to 77 companies linked to Shor, who is identified as one of, “if not the only beneficiary” of this highly coordinated fraud (Candu.md, May 4, 2015; Bnm.md, December 21, 2017). Yet, despite being convicted by a lower court to seven and a half years in prison in June 2017, Shor appealed the ruling, and the case has been stalled (Deschide.md, April 2, 2018). Shor remains at large, and in the meantime, he became mayor of a large town, took over the leadership of a political party and is gearing up to enter the parliament. Keen observers of Moldovan politics know that this would be impossible without the protection from the head of Moldova’s ruling Democratic Party, oligarch Vlad Plahotniuc, who used Shor’s depositions to imprison Plahotniuc’s political and business rivals (former prime minister Vlad Filat, oligarch Veaceslav Platon and mogul Chiril Lucinschi) in swift closed trials. The symbiotic relationship between Vlad Plahotniuc and Ilan Shor is the embodiment of high-level corruption that makes the EU increasingly frustrated with Moldova.

Endemic corruption, exacerbated by changes to the electoral system, led to Moldova’s demotion from flawed democracy to a hybrid regime, according to the Economist Intelligence Unit’s Democracy Index (The Economist, February 4). The risks of Moldova becoming synonymous with corruption are manifold, yet two main threats stand out. First, if it continues to only pay lip service to fighting corruption, Moldova will fail to advance its European integration efforts. Second, if the highly disputed mixed electoral system indeed produces a rather unrepresentative outcome in the parliamentary elections scheduled for the end of 2018, the country could plunge into another cycle of political instability, which could be exploited by foreign actors such as Russia. With all that in mind, it is nonetheless becoming apparent that the main fault-line in the Moldovan political debate is less of an East-West divide, but rather rivalry between those defending democracy and good governance and those content with clientelism and corruption. Both the nominally pro-EU oligarch Vlad Plahotniuc and the drudgingly pro-Russian President Igor Dodon are, in fact, progenies of Communist Party leader Vladimir Voronin’s regime, which Moldova’s millennial generation rose up against in April 2009, only to grow disheartened a decade later.

 

Note: This article was written for the Washington based Jamestown Foundation and the original can be accessed here.

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From Messiah to Pariah

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On the ides of October Moldova witnessed a public political execution like it has never seen before. The leader of a ruling coalition party and former Prime Minister Vlad Filat was stripped of his legislative immunity and arrested in the Parliament chamber in connection with the billion dollar bank scandal.  After the initial 72 hours detention, on Sunday evening a judge extended the arrest warrant for another 30 days. Ironically, the three coalition leaders had a friendly meeting the day before Filat got arrested, where they agreed to dismiss the prosecutor general. The next morning things turned very differently from what PLDM leader had hoped was going to be a personal victory for him.  Much like in April 2013, when Filat was getting ready to reclaim his seat as Prime Minister, Constitutional Court issued a surprise decision banning Filat from holding that office. In both cases he got masterfully played by his arch rival Plahotniuc.

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This was a complete shock for the society and the political establishment. Curiously, a few days before the event, as my wife and I were habitually discussing current events, she suggested that Filat may as well go to jail given the plea bargain that his brother-in-law had just taken, I disagreed. I contended that it would make Filat a martyr, akin to Iulia Timoshenko. It was not the first time I underestimated my wife’s intuition and overestimated the importance of a political leader. In my defense, too many people were all but praying to Filat’s image 5-7 years ago. I remember friends telling me how they ‘believe in Filat,’ trusting that he will take Moldova to the Promised Land of Europe. It is true, many people tend to follow their leaders religiously, ignoring their flaws and glorifying their virtues. In that sense, Filat was a Messiah and he unabashedly savored that status, becoming convinced that he had a special mission. No wonder that some of his followers tend to get overly dramatic: “What a sin that the one who thought about our children’s future, is now being crucified on a cross with 72 nails.” By the same token,does it make Plahotniuc God, since he allowed/arranged this to happen? I bet some zealous Democrats would say yes.

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PLDM could have maintained their high ground had they gone into opposition back in 2013 while continuing to fully support EU integration agenda in Parliament; however, as we may all have heard, power not only corrupts, but is also the ultimate aphrodisiac. Well, Filat had the misfortune of falling prey to his own flaws as described in excruciating detail by Ilan Shor in his self-denouncement leaked to the press. The document explicitly incriminates Filat of taking over $200 million in bribes, but it also puts Leanca on an even shorter leash. Leanca already confirmed the part of Shor’s testimony, which, you would be surprised, makes Plahotniuc look as a savior, having only the best interest of the people at heart.  In these conditions, there is no way Filat can now escape prison, despite his heartfelt and emotional self-defense speech in parliament, during which he all but begged his fellow party members not to betray him. But the question is – Has he betrayed his party, if at least part of those allegations are true? Unfortunately, this trial will inevitably be perceived as politically motivated, thus it will have little legitimacy even if Filat was guilty. One thing is sure, if killing people’s dreams would qualify as murder, he should get 3 million life sentences without parole.

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Politicians need to learn that public adoration is short-lived, especially when you constantly fail to practice what you preach.  Deceiving and threatening people into submission is not a good option either. You can fool all the people some of the time, and some of the people all the time, but you cannot fool all the people all the time. The wisdom of Honest Abe should come as a sober reminder to all, including Plahotniuc.  Once thing is comforting, now that both Filat and Plahotniuc are out from politics for good, we shall never hear about them again. Is my intuition wrong?

PS: Albeit too little too late, politically, it is still in PLDM’s best long-term interest to quit the ruling alliance and go into an intransigent opposition, without waiting for Filat to get convicted. Besides, to restore some credibility PLDM desperately needs a fresh face at the helm and Strelet (Filat lite) simply doesn’t cut it. Maia Sandu or even Liliana Palihovici would be a much better alternative. As things stand now, presidential elections next spring are likely to cause early parliamentary elections. It would offer PLDM a chance at redemption. That is provided that PLDM has what it takes to let go of power and withstand in opposition, if not – it was nice knowing you PLDM.

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