The government stops paying out compensation to former asset owners

• Former owners: The payments had been stopped for one year already

Having run out of shares in the Proprietatea Fund, and being pressured by the European Court of Human Rights to speed up the process for the compensation of the former asset owners whose assets were abusively seized by the Communist regime, the government has come up with a temporary solution.

The government yesterday decided to suspend for six months the issuing of compensation deeds for the properties nationalized by the communist regime.

However, the former asset owners say that the payment of the compensation had stopped about one year ago.

"Most likely «the clever boys» have already been paid, and now, the payments for the «commoners» have been stopped", said Adrian Iuraşcu, of the "Civic Force" political party and representative of some former asset owner associations. He said: "The issue of the compensations has been completely abandoned by the current political class".

He reminded that the "Romanian Civic Forum" has asked the ANRP, in November last year, to run an investigation, by clearly revealing nine problems of the compensations process.

Through an ECHR decision, the Romanian authorities are required to speed up the compensation process, by July 2012.

The European Court of Human Rights made this decision following the numerous lawsuits against the Romanian state, due to the procedure it used to return the properties seized by the communist regime to their former owners.

The compensation deeds can be compensated through the conversion of shares issued by the Proprietatea Fund or through the conversion into payment deeds. But the stake of the Romanian state in the Proprietatea Fund is almost completely depleted.

Right now the Ministry of Finance only has 2.69% of the shares of the Proprietatea Fund left, but that block of shares is stuck at the Central Depository because it has subscribed the shares, but it hasn't contributed with shares in other companies. As a result, the authorities only have 0.04% of the shares of the Proprietatea Fund left.

According to the law, the people entitled to compensation can opt for receiving up to 500,000 lei in cash, and receive the balance in shares in the Proprietatea Fund.

• Irregularities at the ANRP: The briefs allocated according to random criteria

Dorina Danielescu, the president of the National Authority for the Restitution of Properties, yesterday said that an ad-hoc audit was conducted concerning the activity of the ANRP and the execution of its budget in 2010 and 2011.

Dorina Danielescu said that 38,000 unsolved cases were found for the 2005-2011 period, of which 21,000 have yet to be allocated to anybody.

The president of the ANRP has said that in 80% of the cases, the briefs do not include any certificates to prove the inheritance rights of the plaintiffs.

Another issue which the institution is facing concerns the manner in which the briefs were allocated. "Following the investigation we have found that the briefs were allocated at random, as no criteria for their allocation existed", Mrs. Danielescu emphasized.

She also said that some of the plaintiffs presented medical certificates to speed up the compensation process. However, sometimes the medical issues which they claimed they had were ridiculous. Among them, Mrs. Danielescu mentioned "tachycardia, urinary tract infections, former smoker".

The medical certificates grant their owners priority when it comes to being granted the compensation.

• 688 briefs, overvalued

The president of the ANPR said that in 2008, the Romanian Court of Auditors has conducted an investigation, following which it was found that 688 briefs had been overvalued and therefore caused losses to the state budget.

Dorina Danielescu also said that many employees of the ANRP did not meet the employment requirements and as a result, the work of the institution was delayed or was not conducted correctly: "The avenues of attack were not used in many rulings rendered by the court". She said that those people, including the former presidents or vice-presidents of the ANRP, will be sentenced to "the payment of the damages".

The president of the ANRP warned that the findings of the internal audit, conducted by specialists of the Ministry of Finance, and which were presented yesterday to the Government are part of the process to fix the problems of the compensation process.

She said that this will allow compliance with the decision of the European Court of Human Rights, which stipulates that by July this year, the compensation process must be remedied.

• The Romanian Civic Forum had requested the investigation of the beneficiaries of the conversion deeds

In November, the Romanian Civic Forum sent a letter to Dorina Danielescu, requesting an audit of all the names of the beneficiaries of the biggest conversion deeds and their data (petition number, the date it was registered with the ANRP and the date the case was solved - by granting shares in the Proprietatea Fund, and cash, respectively), as well as checking whether they had been submitted by lawful owners or by assignees.

The president of the ANRP is also being asked to check the list of persons who were awarded compensation of more than 500,000 Euros, both rightful owners and assignees, respectively, to review the appraisals made in the case of briefs exceeding 200,000 Euros, to review the number of briefs assigned between 2009 and 2011 which were granted money or shares in the Proprietatea Fund, to review the duration of the cases which were assigned to their rightful owners, to communicate to the National Tax Administration Authority (ANAF) the names of the individuals which bought the right of ownership and were then registered at the Central Depository as rightful owners.

"All of these people were supposed to pay income tax, as it is well known that it is only the rightful owners are exempt from paying the income tax, according to the law no. 247/2005", the letter of the organization states, which goes on: "The names of these people have to be sent to the National Office for Fighting Money Laundering in order to check the origin of the money which the ownership deeds were bought with".

The ANRP should also emphasize the number of people or companies which are assignees in more than two cases.

• Prime Minister Ungureanu says he is willing to apprise the prosecutors about the irregularities in the ANRP

Prime Minister Mihai Răzvan Ungureanu yesterday said that he was willing to apprise the prosecutors about the inadequate management of the National Authority for the Restitution of Properties (ANRP).

He said, in the government meeting, that there is already an audit report on that subject.

"In this case, I am willing to go with the investigations which have already been made, with the audit which has been presented to the me, all the way to notifying the prosecutors", Ungureanu said.

Dorina Danielescu, former chief-prosecutor of the DIICOT, was appointed as the president of the ANRP in October 2011, after the resignation of Crinuţa Nicoleta Dumitrean.

Her resignation came after the arrest of ANRP vice-president Remus Baciu on counts of corruption, as he was accused of having received over 400,000 lei in exchange for speeding up the solving of petitions of former owners.

The compensation deeds are certificates issued by the Central Commission for Setting the Compensation, on behalf of the state, which incorporates the lien of the owners against the Romanian state, in proportion to the awarded compensation.

• • The idea of capping the payment of compensations had been brought up last year

In October, the Romanian Center for European Policies (CRPE) published a report, according to which the Government has proposed a law which would cap and reschedule the compensations awarded to the former owners whose properties were illegally seized by the communist regime.

The government's proposal came in response to the pilot decision of the ECHR (ed. note: European Court of Human Rights) of October 2010, which gives the Romanian state a mandatory 18-month deadline to solve the issue of the restitution of properties which were nationalized during the communist regime, the report also states.

The government is considering capping the compensation paid out at 300,000 lei and rescheduling it over a period of 15 years, according to some initial proposals.

The new law may include deterioration periods for the petitioners, who will have 90 days to fill out their applications, mandatory deadlines for the decisions of the local authorities, deadlines by which the local authorities would be required to solve petitions and a simplified chart for determining the amounts of the compensations payable for buildings, the CRPE document also states.

"The government's core elements - the setting up of administrative deadlines by law, for which the authorities can be sued if they fail to honor them, as well as entitling the courts to make final decisions when it comes to the restitution requests - comply with the recommendation of the European Court of Human Rights", the report says.

• • Gheorghe Piperea: The inglorious finale of the notion of compensating former owners through the Proprietatea Fund

Lawyer Gheorghe Piperea said: "This measure announced by the government marks the inglorious demise of the idea of compensating former owners through the Proprietatea Fund. The government doesn't have any more shares in the Proprietatea Fund and the budget doesn't have any money left to bear the compensation in cash. In 2005, I said that the Proprietatea Fund was a giant with feet of clay, which would not provide a solution in the burning issue of the compensation of owners of nationalized buildings, hoping I would be wrong. Unfortunately, I was right. In spite of all this, the compensation will need to be paid, because the issue also affects tens of thousands of people who were promised compensation in cash, by the government in 2001 by the very government who now claims it is overwhelmed by the issue, because it was unable to return the nationalized properties in kind. And that is not just because the deadline given by the ECHR in the pilot-decision Atanasiu vs. Romania in which the Romanian state is required to solve all of the compensation requests, but also because justice has to be done in this matter.

The justification provided for the suspension of the compensation procedure seems to be reasonable. After all, if the audit found that there have been irregularities in the management of the compensation process, why isn't the ANRP disbanded? Why aren't the deeds which were issued illegally annulled? Why aren't the deeds which ended up in the hands of speculators through disputable assignments, including in the ownership of funds which are now major shareholders of the Proprietatea Fund? I said that the suspension of payments only looks reasonable, but it isn't. I suspect that, with this being an electoral year, president Băsescu will pull the miracle solution out of the hat, just like he did with the wages of public sector workers. In one case and in the other, the president said himself that there was no money. In fact he is actually threatening judges with the disciplinary sanctions if they dare to sentence the state to pay damages. But if he feels there are votes to be gained, even if it's just a few, the president will find the money to pay the compensations. Which he obviously won't be able to actually get, but it can't hurt to make a promise and not keep it, because after all talk is cheap. Whether the tens of thousands of holders of holders of compensation deeds will allow themselves to be hoodwinked by such a maneuver it remains to be seen. But it is well known that quackery only goes so far.

One thing is for certain: there is very little time left until the Romanian state needs to come up with a concrete method of compensation. If it doesn't, the sanctions will be drastic. First of all, all of the more than 1,000 cases suspended through the pilot case will automatically be admitted; second of all, the Romanian state will be subjected to sanctions, which can even go as far to the exclusion from the ECHR".