English
Reporter: You have experience with the stock market. From your point of view, who are the guilty parties in the case of Harinvest?
Dan Paul: "Harinvest" couldn't have done the trades on its own. It had several accomplices. All of them must be found and removed from the market in the harshest manner stipulated in the law.
Reporter: Do you think there have been deficiencies in the oversight of the market?
Dan Paul: I can't say yet, because I do not have a full report on the trades made by "Harinvest". I do not have a full picture of what happened. The Bucharest Stock Exchange has a supervision department, and those sell-out trades get done through the Central Depository and the Stock Exchange.
I want to tell you that the sell-outs are exceptions. They are not something that gets used by everybody, everyday. We need to separate the exceptional trades from the thefts. Somebody should have noted the frequency of these trades at "Harinvest" and start asking questions.
Reporter: We have information from sources, that the BSE and the Depository have notified the ASF about these trades.
Dan Paul: Informally, I have heard the same thing. I can't make a statement until I see how and in what manner the notifications were done. It needs to be seen at what level they were done, which articles of the law and regulations were used as a justification, the procedure that was followed.
Things need to be reviewed with care and seriousness, so that the guilty parties do not dodge the long arm of the law and the investors get their money back in the end.
This is the only way to deal with this shame that has affected the market, perhaps the same as in the FNI case.
In order to provide some reparations, at least partially, the investors need to get their money back quickly and in full, and the guilty parties need to be punished.
Reporter: The ASF is reviewing the possibility of the money being recouped from the Investor Compensation Fund (FCI).
Dan Paul: This is a whole different issue. It's one thing for investors to get their money back, and another thing to resort to the Investor Compensation Fund. As long as I am involved in this market, no honest brokerage firm will pay for a dishonest one.
The Investor Compensation Fund was created to compensate the victims of fraud. According to its bylaws and to the law, the Investor Compensation Fund does not have any reason not to pay.
The money must be recouped from the ones who took it, the money hasn't evaporated. The authorities must find out where it ended up.
Reporter: How?
Dan Paul: For example, they should analyze the Structure of the Board of Directors of Harinvest because no money leaves the firm without their knowledge. They need to find out what businesses they have that have grown spectacularly. It is a simple connection of causality. It is a hypothetical case.
The authorities can follow this lead I am giving them for free. I am speaking informally, rather than formally because I do not have an official part in this investigation. At the same time, I am also raising information to try and help solve this case. It is not acceptable for money to be stolen from the stock market so openly.
Reporter: I understood that you were upset by our headline last week: "The victims of Harinvest: - < < The BSE - a market of thieves > >".
Dan Paul: I was upset because, starting from an isolated case, you have extrapolated it to mean the entire stock market. It's just like when Mr. Traian Băsescu accused the entire press of acting in a certain way, and the owner of BURSA, MAKE, was upset by the generalization. Just like not all journalists are scum, not all brokers are thieves.
Reporter: You know that the headline was a quote.
Dan Paul: Yes. But there are three stages to human memory. The first stage is just like when using a stick to write on sand, the second is when one puts pen to paper, and the third is when one sees something written in the newspaper. The quote signs get lost along the way.
The information will remain in the collective memory for a long time, because it is written in the paper.
This case - Harinvest - is just like the Madoff case, in America, in keeping proportions. One of the shareholders of Harinvest - Valentin Cismaru- even holds a position on the Bucharest Clearing House, just like Madoff had a position on the Nasdaq.
When Madoff messed up, no one said that the American stock market is a den of thieves. This is my small gripe. Because the Romanian market is still in its early stages, it is hard for us to regain trust when we get yet another millstone hung around our necks.
If one client was the victim of theft, the newspapers from the US did not publish that kind of headlines.
Reporter: We used that headline to show how angry the investors were. Everybody understood their anger in that manner. What do you think about the fact that BCR has fired one of its employees after the Harinvest case?
Dan Paul: They are admitting their deeds. Good for them!
I congratulate them for saying that they would cooperate with the authorities. The BSE, and the Central Depository should do the same thing, until the last investor will have recouped all their money.
Reporter: You said that you have looked at the businesses of the shareholders of Harinvest. What did you notice?
Dan Paul: That some of the shareholders have significant business interests in the county of Vâlcea, and some of those of those interests have developed lately. From my point of view, if I was working for one of the Romanian authorities, I would ask a question: How come one of their businesses - Harinvest - imploded, and the others expanded?
I did not like the press release of Harinvest, which says that the shareholders and the directors of the company were not aware of what was happening. According to all the rules of the market and of common sense, that is not possible. The authorities need to check whether the money went to the shareholders of Harinvest or not, and that should have been done in less than a few hours. I haven't seen that happen.
Is the police on leave? Is the ASF on Christmas holiday? Are the prosecutors busy reading the briefs of cases that happened ten years ago?
Reporter: The Harinvest press release says that BCR and SSIF Broker earned a lot of money from the trades with Harinvest.
Dan Paul: Just like they can say that, I can ask myself whether that money was used to develop a new medical clinic in Vâlcea. I am naively putting this out there: What if some stores in the county of Vâlcea, and other businesses in the IT sector were financed using that money?
That's about it. They don't have much to look for.
In the financial world is it simple: you just have to follow the money. The investigation bodies need to do their job, and quickly. I don't want you to construe what I am saying to mean that everyone should go to jail. I want the investors to get their money back, and when that happens, from my point of view, I would consider the crime half forgiven. The money must be recouped from the ones who currently have it.
Reporter: There was a lot of talk about the fact that the shareholders of Harinvest are politically connected.
Dan Paul: I can't give an opinion on that. I've heard that as well. I think that the political factors needs to be removed and it should stop getting involved in the stock market, because the results of that involvement are obvious.
Reporter: What are you referring to?
Dan Paul: We need to have people who are good at what they do on the stock market, who are professionals and not just political appointments. I am fully confident that Mr. Dan Radu Ruşanu, who led the Financial Fraud Squad, Mr. Mircea Ursache, who worked at Bancorex, Mr. Daniel Dăianu, who worked at the NBR and is a member of the Romanian Academy, will deal with this problem in a manner that is fair to the financial sector, instead of serving the political one.
Reporter: What do you think the opinion of Mr. Ludwik Sobolewski is on this subject?
Dan Paul: According to the logic of Aristotle, there is no such thing as a perfect world and we need to find the essence of things in everyday life. For example, you can feed an athlete lots of food because he can burn it all quickly. You can't treat a man who doesn't exercise in the same manner. We need to find a balance. There must be a balance between the scale of what has happened and the people's reaction to that. In order to do so, the money must be taken from where it ended up and put back where it belongs.
Reporter: When the Central Depository used the Guarantee Fund for settling a trade by Harinvest, the president of the Central Depository, Cristian Agalopol said we should not put fuel on the fire in relation to this topic.
Dan Paul: That was a cheeky answer. It needs to be verified whether he and CEO Adriana Tănăsoiu have complied with all the procedures. It is one thing to resort to the Guarantee Fund, which, like Mr. Agalopol said happens all over the world, to cover up a settlement that the brokerage firm will do on the next day, because it has clients that didn't pay on time, and another to cover up a theft.
One question to ask would be whether the Central Depository saw transfers of the same blocks of shares from the 1st tier to the 2nd tier and back. If such cases existed, and they noticed that the name of the owner would change upon the transfer, did the Central Depository understand what was happening? Or did it consider it was applying the procedures. Also, I wonder whether the name of the client that traded in structured products - Voinea - has any connection to the broker that was executing the trades - Maria Voinea? Is it mentioned in the report whether or not they are relatives? Do they have any connection? Perhaps it would be important to the authorities.
Reporter: What is your opinion on the reaction of the institutions of the stock market to the crisis created through the Harinvest case?
Dan Paul: Unsatisfactory.
Euro
Dolar SUA
Franc elveţian
Liră sterlină
Gram de aur
