Madalin Enache and Octavian Popescu review white-collar criminality, anti-corruption, corporate criminal liability and international cooperation in Romania
1. What trends, in terms of activity or focus, have you seen in the prosecution of business crimes in your jurisdiction in the last 12 months?
By far the most relevant matters and cases in the last year, actually a continuation of a trend developing over the last 3-4 years at an always more accelerated pace, have been those regarding white-collar criminality, mainly anti-corruption (active and passive bribery) and financial fraud (tax evasion and money laundering). In both areas an extensive focus has lately been placed on the pecuniary consequences of these, namely for a more effective recovery of prejudices or of illegal funds obtained through such crimes.
In terms of the persons being investigated or tried, the main view is still on natural persons (from the public or private sector) yet there can be noticed an increased emphasis on corporate criminal liability, jointly with that of the representatives, employees or agents considered to have perpetrated the wrong-doings.
However, what is notable in the last year is that a greater than before number of State officials, of all levels (ministers, deputies and senators, high-ranking officials or local public clerks), have become involved in criminal cases, mainly (and most prominent) corruption investigations.
This has also influenced, to a significant extent, the business environment, partly because of the reluctance of public officials to decide or execute contracts or official papers (that could expose them to ulterior charges of passive corruption or abuse of office), or of the rather ambiguous political and economic context, in which legislation can sometimes hinder commercial activities or expose it (from a legal stand point).
2. Are enforcement agencies particularly focused on any specific industries or crimes?
The zero-priority of the Romanian State has been for the last several years to fight and eradicate corruption, especially in the public sector. Furthermore, high attention has been placed on the manner in which private businesses obey rules and regulations, particularly in terms of fiscal obligations and payment procedures, reason for which tax evasion and money laundering are also top priorities for the specially designated law enforcement authorities. However, being situated at the borders of the European Union has required Romania to pay particular attention towards organised criminality (drugs, people and other types of cross-border trafficking).
This has been established through several public papers by Romanian State officials, the main one being the MCV European Commission Report (the Cooperation and Verification Mechanism), which regards judicial reform and the fight against corruption. As it was mentioned therein, “Judicial reform and the fight against corruption remain important issues for the Romanian society, able to inspire large-scale public demonstrations, and further support to the consolidation of reform is still needed to ensure the irreversibility of progress.”
The fight against corruption is the main area in which Romania has already acknowledged its vulnerabilities when joining the EU and the recent years have seen an accelerated recrudescence of this type of criminal investigations and trials, in the context of an increasing attention and (financial) effort put into the development and strengthening of the National Anticorruption Directorate (DNA) – more prosecutors and police officers, better infrastructure, adapted procedures to expedite investigations, etc.
In parallel, tax evasion and money laundering have received a more accentuated attention from the prosecutors, changes and restructuring in the organisation of the tax authorities, plus a more effective and efficient cooperation with the Prosecutors’ Office and Economic Police determining an increased number of these type of files, with important positive impact on State and local budgets.
Thirdly, the highly specialised Directorate for Investigating Organized Crime and Terrorism (DIICOT) has become more and more involved in the fight against national and international delinquency, acting in areas such as drugs, people trafficking or organised criminality, especially since cross-border highly organised criminality and money laundering operations are a growing disorder of the present global society.
In terms of areas of society or industries to which enforcement authorities have a particular focus on, this clearly has to be the public sector or public funding-related businesses, with misbehaving politicians and officials being main targets for authorities, along with private contractors “subscribed” to publicly funded works and projects.
3. Are enforcement agencies more or less focused on pursuing cases against corporations or individuals?
As mentioned above, an important number of politicians or officials have been charged lately with (especially) corruption, whereas more and more companies have been faced with accusations of tax evasion and money laundering. It is, however, obvious that the Romanian authorities pursue cases on both ends, individuals and corporations alike being investigated if considered suspects of having committed crimes. Nonetheless, the practice of decades of pursuing solely individuals (since corporate criminal liability did not exist) has left relevant traces in the practice of the prosecutors, as they always identify the individuals and afterwards, if the case, indict also the corporation that they represented or were used in the crime or which benefited from it.
Of these the most notorious are the corruption charges brought against the former Chief Prosecutor of DIICOT, who is accused of several crimes having been committed both in her capacity of high magistrate and former member of the National Agency for Properties Restitution (ANRP), whereas the most notable cases of charges brought to a corporation are those against HP Romania (IT company – accessory to abuse of office) or Romastru (pharma company – giving bribe).
4. Does the legal framework concerning the prosecution of business crimes allow for extraterritorial enforcement? Are such matters being pursued?
There is no distinction as per the Romanian Criminal Code (RCC) in terms of territorial applicability to certain types of crimes. Hence, as a rule, RCC can be applied to crimes committed outside Romania:
However, even if these principles of law have existed since the previous criminal codes, there is no relevant or publicly available case law to indicate any such prosecution or criminal trial of crimes committed abroad.
Generally speaking, in both cases the state where the crime is committed has the needed legal authority to investigate and try the criminal matter itself (also, if the case requires, by requesting the extradition of the Romanian national).
5. What judicial or legislative developments have impacted the prosecution of business crimes in your jurisdiction in the last 12 months? Are there any significant proposals for reform of the legal framework that governs business crimes in your jurisdiction?
The major event in the last years in the Romanian legislative environment from the criminal perspective has been that of the implementation of new Criminal and Criminal Procedure Code, along with significant modification of some other laws or regulations applicable in the field, in February 2014.
Furthermore, these laws have also been subject to several modifications in the last two years since their implementation (the last one being performed just recently, through Government Ordinance no. 18/May 18th, 2016), mainly these refer, from a business perspective, to increased penalties in financial and economic crimes compared with those enacted by the original Criminal Code and changes of procedures (the most relevant being in relation to obtaining financial data, search warrants, asset freezing and procedural rights).
At present there are other legislative initiatives in general public discussion, meant to further adapt the substantial incriminations and the procedures to an always changing society and because the corrections which the judiciary system itself observed are needed in order to provide a coherent and cohesive criminal law structure.
6. How common is it for enforcement agencies in your jurisdiction to exchange information and cooperate internationally with other agencies? What are the consequences of cross-border cooperation on prosecutions of entities and individuals in your jurisdiction?
International and cross-border cooperation has become more and more an intrinsic part of the activity of Romanian criminal investigation authorities. This manifests mainly in police and prosecutors cooperation, especially in relation to organised criminality cases (drugs, money laundering), but also in numerous extradition requests being analysed and granted by the courts of law in Romania or of Romanian citizens to our country. In addition, another very relevant part of this positive occurrence is that of the financial data being obtained from foreign authorities and banks, which is always needed by Romanian authorities in order to seize or confiscate money or assets which have been expatriated by persons charged or convicted of crimes.
One of the most notorious cases has been lately that of Radu and Diana Nemes, charged in Romania for tax evasion and constituting an organised criminal group, who were arrested in absentia, and who were, after two years of investigations, identified and apprehended in USA, later on being extradited to Romania, as per the request of the national authorities. Another relevant situation was that of the Romanian police finding and extraditing a famous hacker, Guccifer, accused of several counts in USA.
In addition, efficiently fighting cross-border trafficking is also mainly implying a very close cooperation between police authorities in different states, Romania having a very good implementation of the international standards in this respect and, along with the other EU countries but also with its closest neighbours, having had great results mainly based on this type of approach to cases, investigated jointly with foreign divisions.
7. What unique challenges do entities or individuals face when enforcement agencies in your jurisdiction initiate an investigation?
Probably the biggest challenge in such cases is the fact that the criminal investigation authorities have yet to get accustomed to giving full importance and effect to the presumption of innocence. Entities and individuals alike are faced, numerous times, with having to provide evidence of their lack of criminal involvement, even if the principle should imply the opposite approach from the authorities.
In addition, a unique aspect of the Romanian prosecutors’ methodology is that of, immediately after initiating an official action or requesting preventive measures against a person, providing a press release on their website, by which to publicise their work. These statements include the names of the persons, along with a brief description of the charges brought, usually these being immediately taken over by the media.
This has always provided difficulties to people defending their reputation and public image when such cases occur, since the media is quick to draw guilty conclusions and this remains as a stigma in the public opinion, no matter if, at the end of a trial (usually after some months or years), that person is found innocent.
Furthermore, defendants are prohibited (either formally, officially, or by the power of relevant cases) from taking a public stance when they are charged, not being allowed to provide information from their criminal file or, if they do decide to do so, rarely have the authorities decided to take action and request preventive measures against the defendant, considering this action as an involvement and a pressure put on the judicial system.
8. Do enforcement agencies in your jurisdiction provide incentives for individuals or entities to self-report a business crime or otherwise provide assistance to the government? If so, what factors should individuals or entities consider when assessing whether to self-report a business crime or cooperate with a government investigation?
Self-reporting in case of having perpetrated a crime is viewed by the authorities as a positive attitude, which entitles, ex lege, the author of the crime to a reduction or even exclusion of his criminal guilt.
For instance, in case of corruption crimes, denouncing it before the authorities find out about it exonerates the respective person, natural or corporate, of criminal prosecution. In the case of other crimes, acknowledgment of guilt can result in a reduction in the limits of the sanction, usually by 1/3. Moreover, cooperation with the authorities can also be considered as a mitigating circumstance, leading to a possible reduction in the limits of the sanction by an additional 1/3.
9. Do enforcement agencies in your jurisdiction use non-prosecution agreements ("NPA") or deferred prosecution agreements ("DPA")? If so, how do such agreements work in practice and what can entities or individuals do to reach an NPA or a DPA with enforcement agencies? If not, do you believe it is likely that such agreements will become part of the legal framework in the next five years?
One of the major changes in the new criminal legislation enacted after February 2014 is that of the introduction of DPAs, which has changed extensively criminal procedures especially in terms of their duration or expedition. NPAs are not regulated in Romania and it does not appear that they are envisaged as a possibility by the legislative or judicial system.
The DPA procedure is provided by the Criminal Procedure Code (art. 478 and the following), which states that the defendant and prosecutor alike can request/initiate a DPA if the crimes are not punished with imprisonment exceeding 15 years (note should be made in relation to this, since before May 2016 this limit was only seven years). The DPA is concluded by the case prosecutor and defendant directly yet it must be ratified by the chief prosecutor and, also, validated by a court of law.
The judicial practice has seen, since its implementation, many such DPAs, the vast majority (if not all of them – no statistics in this respect have been made public by the Prosecutors’ Office) being initiated by the defendants who considered that this is the only manner in which they could ensure for themselves a more lenient punishment, usually with suspended execution of the jail sentence. There is no rule in relation to how or when a DPA can be initiated, since it is usually a matter of opportunity and procedural choice (by the defendants). The only condition is that it must be made in writing.