SIF Moldova has terminated the contract with the lawyers arrested in the SIF Banat-Crişana case

SIF Moldova has terminated the contractual relationship with lawyers Nicolae Mergeani and Victor Prodan, who were arrested, on Monday, in relation to the DIICOT case concerning the embezzlement from SIF1 Banat-Crişana and SIF4 Muntenia, according to some market sources, which claim that yesterday, the management of SIF2 held an emergency meeting.

The two lawyers, who were members on the Board of Representatives of Shareholders of SIF Muntenia, are being prosecuted in the case of illegal retrocession of forests which led to the arrest of former deputy Viorel Hrebenciuc and his son Andrei Hrebenciuc, member on the Board of Directors of SIF Moldova.

The prosecutors of the DNA wrote, in their report, that suspects Nicolae Mergeani and Victor Prodan, as well as Carmen Elisabeta Drăgoi have made statements revealing the network of Cypriot companies used by the Hrebeciuc family in the case.

Costel Ceocea, the chairman of SIF Moldova, told us that the contract his company had with lawyers Mergeani and Prodan concerned only the representation in various lawsuits, similarly to the contracts it has with other law firms.

He says that, in the context of the two lawyers being investigated by the prosecutors of the DIICOT and of the DNA, a reevaluation of the relationship with them is needed.

"The legal advisors of the SIF do not have the right to represent the company in court", Mr. Ceocea explained, and he went on to say: "Thus, we have specific contracts for several particular cases with several law firms. They (ed. note: Mergeani and Prodan) did not represent us as administrators in the companies in our portfolio, they were not counselors with a «subscription»-type contract. Thus, we have an exclusive representation in the courts for some specific cases, just like we have with other law firms.

The companies have designated a number of lawyers (others than the lawyers apparently involved in activities considered illegal by the competent authorities!) and are being declared as people «involved» in relation to SIF2 and thus are subject to the obligations imposed by this relationship. The representation has been described as effective, and professional, due to the superior percentage of lawsuits that they won for the SIF".

Costel Ceocea confirmed the termination of the relationship with the two lawyers: "As soon as the first news concerning the possible involvement of the lawyers in question (ed. note: in criminal cases) broke, we took every required step pertaining to the reevaluation of our relationships with them order to avoid any threat to our reputation.

Thus, the relationships we had have been in the process of reevaluation for a long time now (amicable termination)".

Lawyers Mergeani and Prodan have also been involved in one of the first transactions conducted by Dragoş Bîlteanu while in charge of SIF1, specifically, the acquisition of Azuga Turism by SIF Banat Crişana.

Romenergo Holding Limited, Bîlteanu and El Lakis' offshore, sold the business of Azuga in 2012 to a company owned by lawyers Nicolae Mergeani and Victor Prodan, from which it was acquired by SIF 1, according to Rise Project, which also writes: "At the time, Carmen Elisabeta Drăgoi was appointed as the company's CEO. She was an accomplice of Andrei Hrebenciuc in the acquisition of 12,000 hectares that were illegally retroceded, an affair for which he was arrested in October 2014".

Azuga Turism has been temporarily closed.

• Trading in shares of SIF1 and SIF4 was suspended yesterday

Trading on the BSE in the shares of SIF1 Banat Crişana and SIF4 Muntenia was suspended yesterday as well, as Dragoş Bîlteanu, the president of SIF1, Najib el Lakis, a member on the Board of Directors of SIF1, lawyers Nicolae Mergeani and Victor Prodan and Stere Gardan, broker at Swiss Capital, were arrested by the DIICOT on Monday.

Yesterday night, they were taken to the Bucharest Court of Appeal, and it was proposed that they be arrested for 30 days. No verdict has been given by the time the newspaper went to print.

The representatives of the BSE told us that trading in the shares of the two companies has been halted, at the request of the Financial Oversight Authority (ASF) and that the BSE is waiting for more information from that Authority.

The Authority has told us: "In the context of the events of December 8th and 9th, 2014, the Financial Oversight Authority has asked the two issuers to draft and publish reports, in order to provide adequate information to shareholders and potential investors concerning the manner in which the companies are managed.

Also, the management of the companies is going to review and reveal to shareholders the impact that these events have in order to preserve an orderly market, and to allow trading in SIF1 and SIF4 shares to resume.

After the publication of these reports and unless new items appear that would have to be revealed to the public, trading in SIF1 and SIF4 shares may resume".

SIF Muntenia yesterday sent the communiqué requested by the ASF: "SAI Muntenia informs investors that the activity of SIF Muntenia is unfolding normally, and it is being managed by the Board of Directors of the management company, by the CEO and the managers mandated to perform the actual management of the ASF".

Gabriel Filimon, the managing director of SAI Muntenia Invest, was also heard on Monday at the DIICOT.

Mişu Negriţoiu, the president of the ASF, yesterday said that he is not habilitated to make comment about the actions of the DIICOT.

"The information about the irregular market actions - acting in concert or manipulation, has been made public by the ASF when it has proved necessary", Negriţoiu said, and he added: "It is precisely out of this desire to enforce discipline upon these companies (ed. note: the SIFs), that we do have a number of ongoing lawsuits with them. We will refrain from making comments".

SIF Banat-Crişana yesterday announced that Adrian Petreanu, administrator of the company, has resigned.

On Monday, the prosecutors of the DIICOT have conducted searches and have seized documents at the headquarters of SIF Banat Crişana, of Arad and Bucharest, at SIF Muntenia and at Swiss Capital, in order to dismantle an organized criminal faction, specializing in the manipulation of the stock market, embezzlement and money laundering. The loss amounts to 15-16 million Euros, according to some sources.

According to the DIICOT, between 2012-2014, the members of the faction have set up an organized crime group which sought to take steal money from SIF Banat Crişana SA and SIF Muntenia SA Bucuresti, by embezzling it (by misappropriation/trafficking). The money was later transferred through several offshore companies, which were also controlled by the members of the group directly or through proxies, in order to recycle the funds, to hide their source.