Moldovan Bank Scandal: Authorities Aware of Fraud, State Intervention Suspected

A recent report by Kroll, an international consulting firm, has shed new light on the massive fraud scandal involving three Moldovan banks. The investigation revealed that the banks had attracted deposits from Russian institutions to provide collateral for new loans, but these deposits did not exist and were falsely created in the books of the banks.

The Fraud Scheme

The credit documentation related to dubious transactions was lost under mysterious circumstances just days before the banks were placed under external administration.
A van containing the documents was allegedly stolen, only to be found burned later on.
The Kroll report identified a key role for the so-called “Shor Group” in the large-scale fraudulent scheme and named several Moldovan-based individuals who received benefits from or are connected to the fraud.

State Intervention Suspected

Evidence suggests that Moldovan authorities were aware of the ongoing fraud in some banks, but failed to take action.
In September 2014, the government adopted legislative amendments allowing for state aid to commercial banks in “situations of systemic financial crisis.”
Just a few months later, in November 2014, a secret government meeting decided to provide financial assistance worth 9.5 billion lei to some “needy” banks.

State Guarantees and Unsecured Loans

The Moldovan government provided additional guarantees for the three “problem” banks in March 2015, amounting to 5.34 billion lei.
The allocated money was not enough, and just four months later, the government adopted another secret decision to provide an additional 5.34 billion lei.
In October 2016, the “Law on the Issue of Government Bonds” was passed, which allowed for the transfer of a loan worth 13.6 billion lei from the NBM to the government, guaranteed by public debt.

Former PM Leancă Speaks Out

In an interview with NewsMaker, former Prime Minister Iurie Leancă stated that the International Monetary Fund (IMF) had expressed concerns about the state aid provided to the banks and the lack of transparency in the process.
Leancă also confirmed that the authorities were aware of the fraud but failed to take action.

Conclusion

The ongoing investigation has raised questions about the role of the Moldovan government in the scandal, with many calling for greater transparency and accountability. The scandal highlights the need for robust regulations and oversight mechanisms to prevent such fraudulent schemes from occurring in the future.