Prosecutor’s Office: Fictitious Transactions in the Privatization of Air Moldova

Anti-corruption prosecutors and the Crime Assets Recovery Agency froze around €15.6 million (301.6 million lei) from the statutory capital of Air Moldova, a state enterprise dubiously privatized in the autumn of 2018. 

The sequester took place earlier this week, following a decision taken within a criminal case opened for money laundering in extremely high proportions.

“In fact, a series of fictitious transactions have led to the privatization of the airline. In order to avoid the risks of alienating the company’s assets, a sequester was applied to the statutory capital of the company amounting to around €15.6 million (301.6 million lei).”

The prosecutor handling the case told ZdG that he cannot give details on the sequester, so as not to jeopardize the ongoing investigation.

“The €2.5 million (48 million lei) value of the company was speculative.”

The law enforcement bodies’ account on investigating how the only state-owned airline was privatized comes almost a year after the contract was signed and three and a half months after the change of political power. 

At the same time, the criminal case was opened while a Parliamentary Commission of Inquiry was also investigating the circumstances in which the state sold Air Moldova.

A few days before the prosecutors’ announcement, the Commission of inquiry for analysis of organization and conduct of privatization and concession of public property (2013 – 2019) presented a preliminary report on the privatization of the company. 

The Parliament employed expert Victor Neaga, together with Oleg Tofilat, to examine the case and the two came to the Commission with several findings on the subject.

Air Moldova was privatized in October 2018 for around €61.9 million (1.2 billion lei). From this sum, the state would receive, according to the sale and purchase contract, only around €2.6 million (50 million lei) – the rest representing liabilities accumulated by the company to various economic agents or the state budget. The price of the company was established following an evaluation, but its results were questioned by experts.

“The value determined in the evaluation report (of Air Moldova) is an absolutely abstract one. So, this value of the company, of around €2.5 million (48 million lei), was speculative,” noted the experts, who required an additional examination of the evaluation procedure of Air Moldova.

Air Moldova, reportedly owes over €8.8 million in liabilities to Shor’s companies

The preliminary report on the privatization of Air Moldova also showed that its biggest debts were to companies affiliated with Ilan Shor, the man behind the Avia Invest company, which manages the Chișinău International Airport. Shor was first detained in May 2015 and in 2017 he was sentenced to seven years and six months imprisonment for fraud and money laundering, but the court ordered that the sentence enter into force only after it becomes final. Between June 14 and 17, 2019 Shor left the country through Chişinău International Airport, avoiding border controls. 

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“We refer to Avia Invest, Airport Handling and the Catering company. Presently, the amount of liabilities to these companies is around €8.8 million (170 million lei). If the biggest creditors demanded urgent payment of these debts, it would be a big problem for Air Moldova,” the experts noted, concluding that there are suspicions that the state property has been intentionally misappropriated. 

“These debts were created intentionally, artificially, and the privatization of this company was staged as early as these debts accumulated. It’s a sensible proposal to find that the interest of the state has been harmed,” stated Vlad Batrâncea, deputy of the Socialist Party and member of the Commission, after the preliminary hearing of the report of the Commission of Inquiry.

Experts who have analyzed the privatization of Air Moldova have also established that in 2017 (just one year before it was sold) the company also benefited from a state aid worth around €3.9 million (75 million lei).

“In addition, the amount of around 783,469 euros (15.2 million lei) was included as a debt assignment between Avia Invest and the Civil Aeronautical Authority. After all, the total amount of state aid is around €4.6 million (90 million lei), money that was granted to the company in 2017,” pointed out the expert Victor Neaga. 

The new owners of Air Moldova didn’t pay any debts, experts have found. 

“Vague notions are used in the sale and purchase contract. There are no exact terms set for paying the commercial debts, and the debts have not been paid. The turnover of the company increased, so did the debts. If we compare the debts for the last year and this year, they are identical, with a difference of 3 percent,” said the expert, stressing that the impression from the transaction is that the privatization was done under the cover of Blue Air, a company that is not involved in the management of Air Moldova. 

Shor’s “trails” in Air Moldova

The state airline Air Moldova has ended up in the hands of two citizens of the Republic of Moldova, Andrei Ianovici and Sergei Melnik, who have lived abroad for several years now. 

Together, the two owners hold 51 percent of the share capital in the company Civil Aviation Group, which they founded on August 23, 2018, and was designated winner in the privatization contest of Air Moldova by the Public Property Agency. 

Civil Aviation Group was the one entity that submitted an offer to take over the only state-owned flight operator in Moldova. The two Moldovan citizens took over Air Moldova together with Blue Air Aviation, the joint-stock company from Romania, which manages the largest airline in Romania (Blue Air) and which owns 49 percent of the social capital of Civil Aviation Group, the legal owner of Air Moldova. 

In October 2018, one week after the founding of the Civil Aviation Group (the company that took over Air Moldova), the two Moldovan partners in this business became associates in another company, registered in Moldova, through an offshore company in the United Kingdom, managed by two Israeli citizens. 

On August 10, 2018, in the small town of Herzliya, the two Israelis decided to engage in business in Chișinău. During the same period Ilan Shor, the controversial mayor of Orhei, happened to be there. 

The links between the privatization of Air Moldova and Ilan Shor do not stop here. It was while waiting for the formalization of Air Moldova’s privatization that the company co-opted a businessman from Shor’s environment. Meanwhile, the two Moldovan citizens involved in the privatization of Air Moldova, never spoke publicly about their new acquisition and refused to answer ZdG’s questions.

Victor Moșneaga