totalitarianism today

Connecting the RAFO refinery corruption scandal with the rising Romanian fracking oligarchy.

Sometimes truth is stranger is fiction. Truth is frequently stranger than fiction when one traces the evolution of various petrochemical companies and industries. 

Marian Iancu, a Romanian businessmen, acted as president of the UK-based oil company Balkan Petroleum, (in short, BKP). Romanian prosecutors charged Iancu and a number of his business cohorts with organizing a criminal group. The Iancu "syndicate" used Delaware-based companies in his takeover of a state oil refinery through an alleged corrupt privatization and in its eventual resale to controversial Russian businessman Mikhail Chernoy. In addition, various organized criminal activities were allegedly based in the RAFO refinery, located in Eastern Romania. Truth is more sordid than fiction.

The RAFO refinery in Onesti, currently owned by Petrochemical Holding GmbH.

Iancu was no small fish in the world of Romanina petrochemical refineries. The particular refinery in question- RAFO Oneşti- ranks as one of the largest oil refineries in Romania and Eastern Europe, with an annual total refining capacity of 3.5 million tonnes of oil. It was privatised in 2001 with the major stock of 60% being sold to Imperial Oil and Canyon Servicos for around $7.5 million. The British company Balkan Petroleum, who Iancu headed, bought the refinery from those companies in 2003. After Iancu was found guilty by the Romanian courts in 2006, Calder- A bought the refinery and reimbursed unpaid debts to the state budget. Currently, Calder-A (or Petrochemical Holding GmbH) operates a chain of 290 gas stations, of which it owns 45, the rest being business associations.

What brought a down a good old boy of the Romanian apparatchik? Wikileaks certainly played a part in adding to the pressure initially stoked by the fantastic Romanian Centre for Investigative Journalism, who revealed the dirty underside of RAFO back in 2003. But it was probably the Wikileak that really got the Romanian legal system moving towards a prosecution. According to an article in the Bucharest expat press:

A November 7, 2006 cable from the US embassy analyses the privatisation of RAFO refinery, described as the ‘Trojan horse’ of the Russian mob in Romania, according to daily ‘JurnalulNational.’

“The RAFO oil refinery is embroiled in a web of corruption, money laundering, fraud and criminal charges involving shady entities in Romania, Russia, Ukraine and Bulgaria. Russian-Israeli organized crime figures Mikhail Cernoy and Iakov Goldovskiy are believed to be behind the purchase attempt by the Dutch-registered company Calder-A,” the cable released by the publication reads.

The document also adds that the Romanian government at the time was the subject of a heavy lobby effort, including from the Austrian government, to approve the Russian take over of RAFO. In the analysis, the US embassy wrote that the refinery’s 2001 privatisation was regarded as one of the biggest failures in Romania’s post-communist privatisation history.By 2006, RAFO had posted net losses of USD 448 M andowed USD 500 M in tax arrears to the state and private companies.“In October 2001, the then PSD government privatized RAFO in a notorious deal with aconsortium including controversial Romanian businessman Corneliu Iacubov and a Portugal based company named CanyonSericos,” the cable said. It also noted that Iacubov was under investigation for organised crime, tax evasion, embezzlement and money laundering and had been connected “to past fraudulent schemes involving bond sales and investment funds.”

The document also revealed that Calder-A was “100% owned by Austrian-based Vienna Capital Partners,” and managed by Bulgarian businessman Todor Batkov, “whose connections with organized crime are well known in Sofia.” “Current RAFO manager Marin Anton has stated that Russian businessmen and organized crime figures Mikhail Cernoy and Iakov Goldovskiy are behind Austrian-based Petrochemical Holding, which controls Calder-A. Cernoy and Goldovskiy have allegedly pressured RAFO’s suppliers to limit its access to oil during the dispute to apply pressure on the domestic oil market,” the document said.

During the last few days of October 2006, as the papers for RAFO were changing hands, an explosion at a RAFO-Onesti catalytic refining installation "killed two or three workers". Given that RAFO went from the hands of one criminal syndicate to another, a few dead workers could provide the needed incentive to invest in an equipment upgrade. USAID has been partnering with Bechtel in the area ever since the 1990's with the purpose of modernizing postcommunist countries' oil and gas refining activities. Were RAFO's owners considering the possibility of additional financial assistance for such an upgrade from Russian, Bulgarian, and American investors? 

The excitement continued well into 2010, when the Bucharest Court of Appeals sentenced Corneliu Iacobov and Toader Gaurean to seven and six years in prison, respectively, for defrauding the RAFO Onesti oil refinery.  Marin Marin was sentenced to seven years in prison, for abuse of office. On the other hand, the Court of Appeals acquitted Liliana Luchian and the other defendants who had been charged with money laundering. I can only assume the flustered Liana Radu was among those declaraed innocent..... On the other hand, Stolojan was not spared the prominence and publicity of his investment decisions.

The noble-hearted Ovidiu Tender, a bleeding heart businessman?

Other names that floated to the surface, whether through association, coincidence, or complicity. Take Romanian businessman Ovidiu Tender, for example, who was said to have his eye on African oil a few years ago. His name came up in the embassy cable leaks that originally implicated Iancu. In 2003, Tender was involved in the money laundering scandal that led to the arrest of NATO official Willem Matser. 

More recently, however, Tender's biggest headache lies in his somewhat covert role in the shale gas explorations currently taking place in Timisoara. So why is it that Tender's wikipedia entry reads more like a Nobel Prize nomination than a businessman's resume? Why doesn't it mention Tender's Nuclearmontaj company, which operates a lucrative contract with the Cernavoda nuclear plant? And why on earth isn't the EU or the US concerned about the fact that Ovidiu Tender is THE go-to guy for management of spent, sealed radioactive sources in Romania and other postcommunist states? Color me concerned.

Romania's grassroots frack-attack.

October 19th protest in Pungesti. Photo credit: Bogdan Cristel, Reuters.

Romanians in the tiny farming village of Barlad have been protesting the promises of "progress" since early this summer, when the Romanian government announced and agreement with Chevron to mine shale gas from the ground. Initially, Prime Minister Victor Ponta's centre-left coalition publicly deplored the previous government's decision to grant shale gas concessions. Ponta even went so far as to put a moratorium on drilling. But the moratorium expired in December 2012. Since then, the PM and President Traian Basescu emerged overnight as some of Europe's most devout worshippers of hydraulic fracking. 

Here's what stands out. In one of the EU's poorest countries, respect for the environment is not a view held by the elite and impressed upon the voting public. Instead, the arrows go from the grassroots upward. Sustainable development is a position embraced by many villagers, peasants, and Romanian middle-class residents who remember the environmental degradations of communism and who live close enough to the land to value it more than the paper money they know is subject to the vagaries of politics and economic development.

Vasile Laiu standing outside European Parliament with a "No hydraulic fracking in Romania" sign.

From the grassroots, Orthodox priest Vasile Laiu has become the inadvertent spokesperson for an environmental movement rooted in traditional respect for local economies and the natural world. In response to pressure for economic development, Laiu offers a larger conception of life which encompasses not only consumer life (pace US of A) but also the life of all living creatures in a given locality. 

"I cannot remain indifferent when the environment is concerned," Laiu told the press. "Life is more valuable than any money they offer us," he continued. There is an accidental dose of irony in the fact that Laiu represents the will of Romanian villagers and farmers for their land's future just as the rest of the world struggles to get back on the sort of sustainable development track preferred by Laiu and like-minded Romanians.  

Luiza Ilie reports:

Clad in his black habit, Father Vasile Laiu, an Orthodox priest from the nearby city of Barlad and one of the most outspoken local opponents of fracking, asked people to kneel, then led them in prayer.

Up to 50 villagers that have been taking turns staging a round-the-clock vigil, blocking access to the lot, said they were preparing for a long haul. They have pitched tents and dug a lavatory pit.

"Can we live without water?" one of them asked the crowd on a microphone. The air carried faint smells of incense.

"No," the demonstrators replied.

"Can we live without Chevron?"

"Yes."

To its discredit, Chevron refers to studies by the U.S. Environmental Protection Agency and the Ground Water Protection Council in order to buttress its claims of environmental safety. The fact that the EPA hasn't "confirmed" a "direct link between hydraulic fracturing operations and groundwater contamination" fails to address a host of other environmental issues, including sinkholes, changes in soil quality, and damage to existing ecosystems.

Chevron promises "direct benefits", including "jobs and payments to contractors and suppliers and, during the production phase, taxes and royalties". DAFORA is the Romanian company expected to receive significant economic benefits from the drilling. But these taxes and royalties will not offset the cost of the environmental degradation. Taking a long view, local Romanians prefer a "progress" that is sustainable, like a vegetable processing plant, abattoir or wind energy park.

The local protests have put a damper on Chevron's plans to begin drilling. Last month, Chevron officials even went so far as to remove their equipment from the vicinity. Tom Holst, the CEO of Chevron Romania, announced that his company would being working when "safety standards were met". Putting on his best poker face, Holst said, "Our work requires a good relationship with the local population because the work is likely to extend over a period of thirty years". He knew better than to mention concerns about damage to company equipment, since nothing makes for worse PR than oil executives whining about possible vandalism by Orthodox priests.

February protests in Barlad. Photo credit: Nita Prastie.

While pulling strings to make a home for Chevron deep within Romanian soil, President Basescu is getting tangled in his own trip-wires. The problem stems from Basescu's relationship with corporations- a relationship that undercuts his legitimacy as leader of a democracy. The Middle East (and the state of Alabama) is full of similar stories in which a politican does everything to woo development and ends up losing any semblance of integrity.

Rather than lose his deal with Chevron, Basescu seems to concede that his hands are rather soiled. Riding dirty, however, teaches the modern statesman to develop a tactical proficiency in the art of screaming "Fire!" and running the other way. Better to dissemble and distract- to conjure a boogeyman of fantastic proportions- than to let anyone look through your pockets. When Basescu saw the lights coming for him, he immediately issued statements to the press blaming Russia for the anti-fracking protests.

During an interview on Romanian television on the same day that Chevron removed its equipment from Pungesti, President Basescu, looking rather cheeky, accused Russia of conspiratorial "manipulations" in keeping Chevron out of Romania. In Basescu's view, Gazprom is the hand behind the curtains trying to keep Romania from becoming an energy exporter, thereby decreasing dependence on Russian oil and gas. In case you missed out on the Cold War, Basescu threw in a little reminder- the kind that sends chills up the spines of elderly Romanians- "Russia is not a lamb," Basescu bleated, "It is a great power". 

One can only hope that fear of Russia is not motivating the recent pro-fracking diplomacy of Barlad's elected officials. Mayor Constantin Constantinescu envisions fracking as a global trend that has gone viral. He wants to jump on the fracking bandwagon because "Britain and Poland are looking to exploit shale gas", and the mayor just cannot believe that officials in Britain and France "would do something bad for the people". His assumption lies at the heart of most pro-"development" positions which assume that money and jobs in the short-term benefit this abstract group known as "the people".

But what if money and jobs in the short-term don't benefit local citizens who will be forced to deal with the consequences and repercussions of environmental damage in the coming decades? What if local property values decrease as argiculture and farming suffer from diminished soil quality and the negative reputation associated with being grown in Barlad? 

The popular daily newspaper, Evenimentul Ziliei, jumped in line with Basescu's red-colored glasses and drew connections between protestors and Russian spies. Defending his fellow anti-frackers, geologist Gabriel Sava insisted that science and love for the land motivated his views.

"We are not with the Russians, we are not Russian spies.... We are patriots, that is the truth. Maybe some people don't even know how to write this word anymore, but that is what we are."

As a geologist for the Intergovernmental Panel on Climate Change (IPCC), Sava finds it difficult to ignore the relationship between climate change and excessive reliance on fossil fuels. To be forthcoming, I find it impossible to believe that the US missile defense agreement is unrelated to the agreement to let Chevron play pimp to the newly-prostituted Romanian land. Someone with the right security clearance could easily create a timeline that might draw interesting connections between the passage of the State Department's agreement to frack away in foreign lands and the US negotiations on missile defense in southern Romania.

The anti-fracking fight in Romania brings the all-American Wendell Berry to mind; his insights are buried close to the surface of village communities fighting to preserve a reverent relationship with the land around them. I have a feeling Mr. Berry might be impressed by the courage and wisdom of Romanians fighting hard to preserve the natural world they know full well can never be replaced or recreated. 

"Priest fights to stop fracking", iAfrica Business, 7 June 2013
Cristian Pantazi, "Exclusiv interview video", Hotnews.ro, 5 November 2013
Dimiter Kenarov, "A fracking wild party", Balkan Insight, 12 June 2013
Isabelle Wesselingh, "Father Laiu fights to save rural Romania from fracking," AFP, 6 June 2013
Luiza Ilie, "Romanian farmers choose subsistence over shale gas", Reuters, 27 October 2013
Marcel Barbatei, "Exploatările gazelor din şist, adevărate bombe chimice, mai periculoase decât cianurile de la Roşia Montană!", Cotidianul, 26 March 2012
Mirel Bran, "In Romania, peasant revolt against shale gas", 29 October 2013
Vlad Ursulean, "Shale gas revolution risks cutting Romania a bad deal", 17 October 2013
Vlad Ursulean, "Biserica protestatara din Barlad,", Tanaru journalist ratacitor, 7 April 2013

How to sell nukes and get away with it.

"Just because someone makes a pistol, it doesn't mean he is a murderer. Just because we help build centrifuges, it doesn't mean we are making a bomb."

So reasoned Friedrich Tinner in a conversation with an IAEA official concerning his family's business relationship with Pakistani nuclear bomb emperor A. Q. Qhan.

Of course, Tinner wasn't suggesting he didn't know that Khan was using the centrifuges to make a nuclear bomb. (The extent to which he knew this was made abundantly clear by Douglas Franz and Catherine Collins in The Nuclear Jihadist.) Tinner was just trying to point out that he, himself, did not in fact make the bomb. 

The situation was not that of your usual reality TV show. Back in 2004, the International Atomic Energy Agency (IAEA) supplied the Swiss authorities with a list of two companies and 15 individuals suspected of dealing in nuclear material with Iran and Libya. A few months later, Swiss engineer Urs Tinner was arrested in Germany under suspicion of helping Libya obtain nuclear weapons technology.

In 2005, Urs Tinner was extradited to Switzerland, where he lived with his family when he wasn't busy setting up nuclear labs in Dubai or Kuala Lumpur. Urs' father, Friedrich, and brother, Marco, were also arrested by the Swiss authorities on suspicion of breaking the law on war materials by illegally exporting nuclear bomb-making equipment to Libya.

In 2010, the Tinners twiddled their thumbs in Swiss courtrooms waiting to find out what happens to a family that makes loads of money from the making of illegal nuclear weapons. The Tinners, a father and two sons, were charged with illegally supplying centrifuge components to the Libyan government as part of a clandestine nuclear arms program run by A. Q. Khan. They maintained their innocence, claiming their work as spies for the CIA blew the cover off Libya’s now-abandoned atomic ambitions and toppled the Khan's nuclear ring.

Khan’s network also supplied Iran and North Korea with parts and plans for building a nuclear bomb before in 2003 and 2004, before it was discovered and brought down. The Tinner family had played a key role in helping Khan establish Pakistan’s nuclear weapons programme since the mid-1970s. Yet imagine their surprise when the 2000's found them under investigation for covertly manufacturing parts for centrifuges needed to enrich radio-active material into weapons grade explosives.

David Albright, the founder and president of the Institute for Science and International Security (ISIS), watched the Tinner case from its inception. “They knew what they were doing and they only stopped because they got caught,” Albright said. In a report, Albright wrote that the CIA most likely “forced” the Tinners to flip on Khan and to work for them. Urs Tinner, one of the sons, confirmed on Swiss tv that the CIA had, in fact, approached him. 

Albright called the cards as they fell in this case. Perhaps he even nudged them a little. Back in 2010, he predicted that the CIA wouldn't "jump in and save the Tinners publicly”, though the US intelligence community would be pleased by a plea bargain "since no more information about its operatives would come out". Albright also urged the US to cooperate with the Swiss authorities to resolve this case.

According to the International Service of the Swiss Broadcasting Corporation:

In September 2012, the Federal Criminal Court accepted a plea bargain in the case of Swiss engineer Friedrich Tinner and his two sons, ending a long-running probe into the family, who were involved in a nuclear smuggling ring. All the defendants are now free, but they will have to pay fines and legal costs.
 
In its ruling, the Bellinzona court passed a suspended sentence of two years on the father and sentences of 50 and 41 months on his sons Urs and Marco, respectively, for violating federal law on war materiel exports. Given the time the sons have already spent in detention, they will not have to return to prison.

Not a raw deal for a family convicted of nuclear smuggling, especially since the US government policy involves declaring preemptive war and reigning bombs on states (like Iraq) allegedly developing nuclear weapons. The Tinners got off easy, I reckon.

Fast forward to March 2013, when the Swiss authorities went above and beyond the call of duty to please their friends at the CIA. Once the court issued its final judgement, the Federal Prosecutor's Office destroyed the file with all information about the Tinner family's involvement in the nuclear scandal. This included 58 pages of information on the manufacture of nuclear weapons, together with other documents with information on uranium enrichment, among other exciting details about the Tinner trio- details and connections that will never be known. 

If you just can't help not helping yourself, here's more (to help, of course):

"The Tinner Case: Time for a Frank, Open Evaluation" by David Albright and Paul Brannan (ISIS)
Urs Tinner (Arm Control Wonk)
"Operation Sabotage" by Eli Lake (The New Republic)
"ISIS Special Report: Libya, A Major Sale At Last" by David Albright (ISIS)
"The Point of No Return" by William Langewiesche (The Atlantic Monthly)
"Closing the Tinners' Swiss Criminal Case" (ISIS) 
Friedrich Tinner's home in Haag, Switzerland (New York Times)
 Press Release Rejecting Tinners' Appeal (European Court of Human Rights)
The Swiss-CIA Nuke Connection (Oracle Syndicate)