Moldova’s “Billion Theft” Scandal: Core Laundering Mechanism Revealed

A staggering $2 billion was laundered through a complex scheme, with $600 million returned to Moldova and $300 million used to pay off other loans. However, experts estimate that up to $900 million may have been lost or stolen.

The Scandal Unfolded

The scandal, dubbed the “billion theft,” involves a network of banks, officials, and individuals linked to the Shor Group. At least 81 bank accounts were set up in two Latvian banks to facilitate money laundering through the Core Laundering Mechanism.

• Credit decisions were made by bank boards without proper approval, with some meetings taking place without all members present.
• Documents related to dubious transactions went missing, allegedly stolen and later found burnt.

State Involvement

Evidence suggests that Moldovan authorities were aware of the fraud but failed to take action. In 2014, a secret government meeting decided to provide financial assistance to troubled banks, worth approximately one-third of Moldova’s annual budget expenditure.

• The decision was made without disclosing the sources of funding or specifying which banks would receive aid.
• The National Bank of Moldova (NBM) was tasked with distributing the money.

Experts warn that this state intervention may have been an attempt by interested parties to improve the financial situation of robbed banks at the state’s expense.

Further Revelations

In 2016, former Prime Minister Pavel Filip published a transcript of the secret government meeting, revealing that only one official, Minister of Internal Affairs Dorin Recean, raised concerns about potential abuse.

• The authorities continued to provide financial assistance to the Three banks, which then granted loans worth approximately 25.5 billion lei to companies linked to the Shor Group.
• A second state guarantee was signed in March 2015, followed by another secret decision four months later to allocate an additional 5.34 billion lei to troubled banks.
• The allocated money was loaned to the Three Banks from the NBM’s reserves and eventually transferred to public debt through a government-backed bond issue.

Consequences

The scandal has raised questions about state accountability and the potential misuse of public funds. The Moldovan authorities have been accused of complicity in the fraud, with some calling for greater transparency and action against those responsible.

• As the investigation continues, experts estimate that the total amount of losses could be as high as $1 billion, with a significant portion possibly lost forever.
• The scandal has highlighted the need for greater transparency and accountability in government decision-making.