Mediafax Group asked for a reply, so they are getting one

6. The Taxes of Mediafax Group

(message sent by Orlando Nicoară on July 21st, 2014, 07:21)

Dear Sir,

In the same spirit of correctness that you call on, I think it would be fair if you mentioned that Mediafax Group pays its taxes on time, both its current taxes as well as those for which it was granted a rescheduling. The rescheduling of taxes is a normal procedure, and any other company can resort to this solution for paying its taxes, of course, as long as it complies with the laws which regulate such a form of payment. Considering that your entire article is based on the claim that Mediafax Group isn't paying its taxes, a statement which is untrue, as I've said above, please make the necessary corrections within the article.

Thank you,

Orlando Nicoară,

CEO

Mediafax Group

6.2. The rescheduling of taxes is not a natural thing to do (response to opinion no. 6 )

(message sent by sandu, on 21.07.2014, 08:26)

A needed addition to what the CEO of Mediafax said is that the rescheduling of debts is an exception, not the rule, and nothing praiseworthy. The debts must be paid on time and whoever doesn't do that distorts the fairness of the business environment. For years, PRO TV set a bad example when it comes to fairness in business, they were a typical proof of the fact that their way worked. Perhaps it changed its habits now that there has been a change in its shareholder structure. Time will tell whether PROTV will move in the right direction, whether it will rely again on new tax exemptions and reschedulings, but for now, what we are seeing is the bad part of the legacy. When the employees get their wages paid through partnership contracts (PFA) and not even the taxes owed for those contracts are paid on time, I can't see how they even have the nerve to make economic shows. I agree to the notion suggested by MAKE that there would have been other TV networks more entitled to run campaigns entitled to run campaigns of fiscal awareness.

6.3. untitled (reply to the opinion no. 6.1 )

(message sent by anonymous, on July 21st, 2014, 08:31)

Your comparison is strained, Greece was granted a reduction of the debts as well as a rescheduling, Mediafax Group gets a rescheduling, without a cut of the debts or the accrued penalties!

6.4. Rescheduling of taxes is a normal thing (in response to the opinion no. 6.2 )

(a message sent to Orlando Nicoară, on July 21st, 2014, 08:37)

In an economy where the financial deadlock has returned to the proportions it had in the beginning of the 2000s, when the norm for collecting bills has become +90 days and the VAT must be paid within 30 days, allow me to think that rescheduling is a normal thing. And I want to add that any company can ask for such a rescheduling and can get it, if it brings collaterals for the rescheduled amount. Other than that you are mistaken, PRO TV has no connection to Mediafax Group and never did.

/b >6.6. A mention (a response to opinion no. 6.4 )

(message sent by MA, on 21.07.2014, 09:50)

The law does not describe the crisis as a case of force majeure but the crisis does exhibit the signs of one such case. What you are saying, Mr. Nicoară, could be correct.

It's just that the rescheduling of the payment of taxes has always been granted only to specific companies, in a discriminatory form, using rather unclear criteria... A favor remains a favor.

Failure to pay withholding taxes has in some cases led to legal action being taken against some companies... while for others it didn't. Things which get applied differently lead to doubts... And we've heard this line "Company A has no connection to company B" plenty of times before...

6.7. Sweet Balkan area habits.... (response to the opinion no. 6.4 )

(message sent by sandu, on 21.07.2014, 12:58)

I am unwillingly participating in a ridiculous argument. The financial deadlock has no importance when it comes to the payment on time of the debts to the state or to the business partners. The delay of the payments only gets done out of ill-faith or incompetence. I am sure that in any economy there are some people who think they're clever by taking on expenses they can't afford, betting they would get exemptions, payment reschedulings etc. What is normal remains normal and as soon as those clever guys disappear from the game, so does the financial deadlock. I am not confusing Mediafax and PROTV, I am actually lumping them together by choice. The gypsies of Strehaia use the same method of "management". Switching between companies pompously called "profit centers" has the same objective of fiscal optimization.

Aside from the replies he got from our readers, I will list for the benefit of Orlando Nicoară a few mistakes that he's made.

It is not true that "the entire article [mine] is centered around the statement that Mediafax Group doesn't pay its taxes".

The issue of the article is not the behavior of Mediafax Group SA, but rather the inappropriate discretion of finance minister Ioana Petrescu when it comes to her CV, and only then the inconsistency of her urges to fiscal discipline, made through companies that have unpaid fiscal debts.

In reality, in that second matter, I am referring to the fiscal indiscipline that is the feature of companies controlled by Adrian Sîrbu, either as owner, or as director (and Mediafax Group S.A. is just one of them).

I had a pretty clear image on that subject since back in 2001-2002, when I wrote over 70 articles about his fiscal offenses (at the time, seven years of unpaid VAT and other taxes by PRO TV, repeated cancellations of its fiscal debts, which culminated with the payment of a state aid of 276 billion lei "for culture"), tolerated by the government, in exchange for its media influence.

Mr. Orlando Nicoară, why do you think that Adrian Sîrbu was rewarded with such huge funding by the state?!; in other words from the taxes paid dutifully by BURSA...

When I raised that question on the Honorary Council of the Romanian Press Club, the response of the biggest media mass-media executives was: "Who would be so stupid to pay their taxes?!"; after a while, they booted me out of the "organization".

I am fully willing to provide details, a willingness that even the State Department of the US has benefited from (in the documents it published on the internet, you will find information about the fiscal behavior of PRO-TV led by Adrian Sîrbu, where I am nominated as a source) and the Securities and Exchange Commission, which started an investigation of Central European Media Enterprises, in Washington, following the articles published in Romania, by BURSA.

It's true, I should mention here that it's been about a year since Adrian Sîrbu no longer manages PRO TV, as he was replaced with Cristoph Mainusch (from German network RTL), by the new owner of Central European Media Enterprises, Time Warner, the buyer of the Eastern European network of TV stations owned by Ronald Lauder.

Which also coincides with the beginning of the audit of the tax administration at the companies controlled by Adrian Sîrbu, who has become relatively small in terms of media influence, compared to the empire he used to lead.

On the other hand, in his replies posted on the BURSA website, Orlando Nicoară says that "PRO TV has no connection to Mediafax Group and never did", whereas on his blog (http://www.orlando.ro/2011/11/14/scurt-istoric-grupul-pro/#comments ), on November 14th, 2011, he wrote that the companies are "related": "Even though we are "related" through Adrian Sîrbu, the 4 companies have independent management and different shareholder structure, Adrian Sîrbu is the CEO of CME, a company which holds 100% of ProTv SA + MPE and is a majority shareholder in Mediafax Group and Alerria".

So, Mediafax and PRO TV did have something in common, but they no longer do and as Cristoph Mainusch keeps laying off Sîrbu's employees at PROTV (first the "executives" and then dozens of the rank and file) and relocates PRO TV from the building which it rented from Sîrbu, it will increasingly have less and less in common with Mediafax, going towards nothing at all, or even getting to be on different sides.

Thus, we expect PRO TV to change its fiscal behavior towards fairness.

On a different note, I am sorry to disappoint you, Mr. Orlando Nicoară, as I am unable to state, like you are asking me to do, that "Mediafax Group pays its taxes on time, both its current taxes as well as those it has been granted a rescheduling on", because, when we asked the Tax Administration of Bucharest, on May 7th, 2014, to inform us whether Mediafax Group pays its taxes, we got a response from it about one month later, on June 10th, which directed us to the ANAF website, where that information does not exist.

Still, doing investigative work, we can post the timetable of the fiscal debts of Mediafax Group S.A., since its creation, in August 2010, up until the first quarter of this year (I am presenting it hereinafter, with the mention that, since we did not get it through an official avenue, I would not vouch for it). (see chart)

It would seem that this proves three things:

- that yes, there is indeed a progressive accrual of the unpaid debts, since the creation of the company, for three years, and then, two quarters after the principle agreement no. 326741/12.03.2013, there were two quarters when the outstanding debts started to decrease, which could be a sign that Mediafax Group S.A. began paying off some of its debts (but I have no way of knowing whether the payments are indeed on schedule);

- that the company probably had a business plan drawn up and that as a result, it was stipulated that it would no longer finance itself by not paying its taxes;

- that even though Mediafax Group S.A. was created in 2010, its media entities that it publishes are a lot older and as a result, the almost continuous accrual of debts for three years appears inexplicable, if they used to be solvent before that.

Now that we have come to this point, it would be appropriate to mention that the total debts of Mediafax Group S.A. are not limited to the outstanding debts owed to the state budget, instead they are 15 times higher than that: 68,374,578 lei (see http://www.mfinante.ro/infocodfiscal.html).

On the other hand, in the spirit of fairness, I want to mention that the loan taken out by Adrian Sîrbu and his companies from ING Bank, on November 12th, 2001, of 21.6 million dollars, plus 3 million Euros, was constantly rolled over (probably every five years), and has now reached 28 million dollars, plus 4 million Euros, for which Sârbu used the shares of his companies as collateral, including those of Mediafax Group S.A.

That is why the rumors that Adrian Sîrbu is looking for a buyer for his media companies seems likely, but I want to say that maybe they are just ill-intentioned rumors.

Amid this situation, the probes which led to the arrests of ten people tied to Adrian Sîrbu, who are suspected of tax evasion and money laundering, seem to provide a justification for prime-minister Victor Ponta's behest which he has addressed to Adrian Sîrbu, to pay his taxes, even though Sîrbu says that Ponta is lying when he says that conversation happened.

At any rate, I've fulfilled my duty to respond to Orlando Nicoară, even though I don't think this was the answer he would have wanted.

In reality, Sîrbu and his machinations have stopped being of interest to me years ago, and I wouldn't have written this article, had Orlando Nicoară not asked me to.

What I am now concerned with is Ioana-Maria Petrescu, not Adrian Sîrbu.