THE ASF, THE INSTITUTION OF THE DRĂGOI CLAN? The takeover of Electroargeş SA, blocked by the initiative of a former member of the Board of Directors of SAI Muntenia Invest

The Financial Oversight Authority does not hesitate to amaze us every day through its rulings made in certain cases, in which either the Drăgoi family is involved, or its employees appear ephemerally, who make allegedly totally disinterested complaints meant to obstruct any initiative regarding profitable companies.

One such case is the takeover of Electroargeş SA by the majority shareholder who actually made a mandatory public takeover bid according to law 297/2004 amended through the law no. 24/2017. More specifically, following the actions taken by lawyer Daniel Stoicescu, on behalf of a minority shareholder - Amattis SA (a company controlled by Ala Procopenco), the ASF issued its decision no. 1329/2020 rejecting the public takeover bid for Electroargeş SA by Cardinal Main SRL, legally represented by its administrator Silviu-Bogdan Dumitrache.

The ASF claimed that the issuer does not meet the legal requirements for the takeover bid to be performed, both from a financial point of view, and because of the existing litigation in which Cardinal Main SRL is involved, regarding the purchase of 16 million Electroargeş SA shares.

We mention that the author of the notification to the ASF following which the public takeover bid was halted, lawyer Daniel Stoicescu, was, until 2018, a member of the Board of Directors of SAI Muntenia Invest - a company that is controlled by SIF Banat-Crişana, dominated by the Drăgoi family. Stoicescu allegedly exercised his mandate within SAI Muntenia Invest - a company directly interested in the securities market in the area, including in the Argeş county, where Electroargeş SA is located, during the period where it represented the interests of Constantin Relative Investments SRL - controlled by the chairman of the Board of Directors of Electroargeş SA, as well as the interests of the companies controlled by Ala Procopenco.

Moreover, the representative of Cardinal Main SRL claims that lawyer Daniel Stoicescu used in his argumentation information he obtained using his work as a former financial analyst within the Directorate for the Investigation of Organized Crime and Terrorism (DIICOT). According to Silviu-Bogdan Dumitrache, Daniel Stoicescu notified the ASF that there were certain disputes within the majority group of shareholders, which aside from Cardinal Main SRL, also includes Constantin Relative Investments SRL, represented by Constantin Ştefan. Regarding the latter company, Daniel Stoicescu concluded, in January 2016, as a lawyer within the Bucharest Bar, a legal counsel contract with it, which he allegedly violated when he became, starting with February and March 2016, a representative of Ala Procopenco, a natural person who owns several companies which Constantin Relative Investments SRL is involved in civil litigation with.

That was also ascertained through the decision no. 819/12.09.2018 of the Bucharest Bar, signed by reputed lawyer Ion Dragne (its dean), a document which shows that the facts reported by Constantin Relative Investments SRL represent a disciplinary offense, according to art. 85 paragraph 1 of the law 51/1995 and art. 265 paragraph 1 and paragraph 2 of the Bylaws of the lawyer profession, and Daniel Stoicescu was going to appear before the Disciplinary Commission of the institution in question, in order to be sanctioned.

Given the whole backstory of the aforementioned lawyer, who at one time worked for the Drăgoi family as part of SAI Muntenia Invest, as well as for Ala Procopenco, his complaints addressed to the ASF concerning the mandatory takeover bid of the block of shares of Electroargeş SA were taken under consideration by the leadership of the public institution. We don't know whether the employees of the ASF have verified the veracity of the information sent by the person in question and particularly whether the data in question was current, or whether the lawyer in question had any interest in stopping that deal.

Stoicescu, from the DIICOT to SAI Muntenia Invest

From a cursory reading of the CV of lawyer Daniel Stoicescu we note that between 1999-2001 he was a trade negotiator with the Rasdaq, main broker for SVM CEC Valori Mobiliare SA, in other words for the financial vehicle created by Camenco Petrovici to support the financial scheme in the Fondul Naţional de Investiţii (National Investment Fund) business conducted by the GELSOR group, owned by Sorin Ovidiu Vântu, whose representative was Ioana Maria Vlas. In other words, Daniel Stoicescu was a broker with SVM CEC Valori Imobiliare SA precisely during the period when million of citizens were being fooled by the FNI scam operating under the banner of CEC.

In spite of all that, nothing prevented him in 2002, meaning during the Năstase government and a Parliament dominated by the PSD, to become the head of the Investigations Department in the Audit Body of the National Securities Commission - the precursor of the ASF - and to actually become the head of the Monitoring and Investigation Department of the CNVM in 2004.

The professional trajectory of Daniel Stoicescu continued its meteoric rise, and climaxed in 2006 with his hiring as specialist in financial analysis in the Department for the Investigation of Organized Crime and Terrorism (DIICOT), where he worked until 2012, when he became a lawyer. Just three years later, in 2015, the former financial analyst of the DIICOT and former executive in the CNVM - the current ASF - became a member of the Board of Directors of SAI Muntenia Invest, the company that manages SIF Muntenia for the Drăgoi family. Besides, SAI Muntenia Invest is controlled by SIF Banat-Crişana (SIF1), where the man in charge is Bogdan Drăgoi, son of general Dan Drăgoi.

What is certain is that, while Daniel Stoicescu was a member of the Board of Directors of SAI Muntenia, a company directly interested in the securities market in that area - including Argeş County, where Electroargeş SA is located - he became a representative of Constantin Relative Investments SRL and then of a group of companies led by Ala Procopenco, which is also interested in acquiring shares, but which is engaged in litigation with the company represented by Constantin Ştefan. Moreover, later, in 2018, after leaving the Board of Directors of SAI Muntenia Invest, Daniel Stoicescu became a member of the Board of Directors of Cluj-based company Carbochim SA, a company that, in 2016, foreclosed on Electroargeş SA, based on final court rulings, to collect almost 5 million lei. In the meantime, Stoicescu became a shareholder of both companies.

Who is Ala Procopenco

Ala Procopenco is the ex-wife of Cătălin Chelu, a controversial businessman who died in 2014 and who was prosecuted on charges of embezzlement, tax evasion and money laundering, being accused of setting up 168 companies and 10 NGOs together with members of his family, which he used for stock exchange transactions, causing a prejudice of 20 million euros.

The case was file was drawn up in 2012 by DIICOT prosecutors - exactly the year that Daniel Stoicescu left the respective Directorate - for acts committed during 2001-2008. According to the DIICOT prosecutors, through the group of companies controlled by the members of the Chelu faction, over 780 million lei in shares issued by the SIFs were purchased through a single brokerage house, from which 760,000 lei in dividends were collected and 154 million lei was withdrawn from the accounts. The losses caused in that case were estimated at EUR 20 million, an amount corresponding to a stock exchange turnover amounting to EUR 80 million.

In November 2010, Chelu was being investigated in 50 cases which are still being worked on by police departments and the prosecutors' office, of which three being worked by the prosecutors of DIICOT on charges of violation of stock market legislation, tax evasion and money laundering.

Moreover, Cătălin Chelu was convicted in 2012, to serve six years in prison in the case "Mită la MAI", (Bribery at the Ministry of Internal Affairs) for an attempt to bribe former state secretary in the Ministry of Internal Affairs, Dan Valentin Fătuloiu, a ruling upheld by the Bucharest Court of Appeal, in September 2014. The controversial businessman never went to prison though, because he fled to Jordan, where he died in in a hospital on December 8th, 2014.

Ala Procopenco is the person who submitted to the Financial Oversight Authority the dispute concerning the mandatory takeover bid in the home appliances maker Electroargeş. Her and lawyer Daniel Stoicescu claim that Cardinal Main SRL, represented by Ştefan Constantin (the president of the Board of Directors) - who is also the owner of the company Constantin Relative Investments SRL, which had filed a lawsuit against Stoicescu to the Bucharest Bar - and by the manager of Silviu-Bogdan Dumitrache, is not entitled to initiate the market operation, after a court ruled the cancellation of a stock trade which made the company a majority shareholder.

A dispute for the mandatory takeover bid of Electroargeş Curtea de Argeş (ELGS) was submitted with the ASF, precisely coming from the heirs of Cătălin Chelu, who at one time had control over the company in question. Specifically, we are talking about Amattis SRL, which belongs to Ala Procopenco, which shows that the County Court of Galaţi invalidated fraudulent trades with 16 million Electroargeş shares, representing 22.93% of the shares of the household appliances maker, most of the stake of Constantin Investments Relative SRL, meaning that Cardinal Main SRL, from the same area of interest of the chairman of the Board, Ştefan Constantin, is not entitled to make a takeover bid. The action in Galaţi was made on behalf of Bran Oil, which is owned by the same Ala Procopenco.

Investments Constantin SRL: The restitution of the 16 million shares, decided by the court, is impossible

Concerning the facts described above, in an address sent by Electroargeş SA to the ASF on April 8, 2020, signed by the Chairman of the Board, Constantin Ştefan, it is said: "Through civil ruling no. 132/02.04.2019 rendered by the County Court of Galaţi in the case no. 2897/121/2017/a1• , which was pronounced final through Civil Ruling no. 75/March 18, 2020 rendered by the Constanţa Court of Appeal, it was decided to annul the deal concluded between August 18, 2015-August 21, 2015 between Bran Oil SA, as seller and Constantin Relative Investments SRL (currently Investments Constantin SRL), as buyer, concerning 16,000,000 shares issued by Electroargeş SA and to require Constantin Relative Investments SRL to return the shares to the plaintiff. The aforementioned ruling is unprecedented for Romanian and European case law, as ELGS are immaterial movable assets and may not be the object of a restitution. The court ruling cannot be enforced, because the legal grounds of the ruling does not allow a direct transfer of shares. Depozitarul Central SA has refused to honor the summons of the court bailiff to perform a direct share transfer (addresses of the Depository no. 11603/April 02, 2018 and no. 17340/May 24, 2019). The court did not require the Central Depository nor the ASF to take any action. On the other hand, the two would not be ex officio able to perform the transfer, since they are not entitled to act as an enforcement entity. It follows that the court ruling cannot be implemented. Depozitarul Central SA has shown that no transfer of shares and/or enforcement measure can exist given that the Central Depository is not a party in the case and has not been forced to conduct the transfer, the shares are unavailable and we have the absence of the individualization of the 16,000,000 shares whose return is being demanded, given that Investments Constantin SRL holds 25,699,543 shares in ELGS( according to the address from the Depository no. 26457/August 14, 2019).

In all situations and cases, no transfer is possible on the BSE without payment and without the holder of the shares understanding that they may transfer them through the stock exchange mechanism. (...) Depozitarul Central SA also pointed out that, if it were to consider honoring such a request, overcoming all other legal obstacles, there should at least exist an identical request for the transfer of the shares made by Investments Constantin SRL ".

It also bears mentioning that lawyer Daniel Stoicescu, who defended Bran Oil's interests regarding the 16 million shares in court, also bought some shares of Electroargeş SA, according to the information included by petitioner Cardinal Main SRL in the address submitted to the ASF for contesting decision 1329/2020 by which the Authority rejected the public takeover bid of Electroargeş SA by Cardinal Main SRL.