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The DIICOT prosecutors have begun prosecution in rem of the actions, in the "Romcab" (MCAB) case, according to a response sent by the prosecutors to Valentin Stănescu, a shareholder in the company. Last summer, he brought a criminal complaint against the administrators of the company - Zoltan Prosszer, Sebastian Vlădescu and other directors, on charges of having committed several offenses, such as presenting inaccurate data about the situation of the company in the reports presented to the public, the presentation in bad faith of an inaccurate financial situation, in order to conceal the real situation of the company, manipulation of the stock market, fraud and the creation of an organized crime faction.
Cable maker Romcab (MCAB) filed for insolvency in the beginning of last year, amid a massive depreciation of its inventory, from 629.62 million lei, on September 30, 2016, to 498.9 million lei, on December 31st 2016 (according to the audited data).
On February 20 2017, the County Court of Mureş approved the cable maker's request to enter insolvency, as it had reported a loss of 39 million Euros in 2016, even though it had posted a profit of 9 million Euros in the first nine months of 2016.
It is precisely these reports of the company to the BSE that have been the object of a complaint filed with the DIICOT by Valentin Stănescu, who claims he holds 1% in the company.
The DIICOT answered him, in January and told him that it had begun prosecution, and that investigations concerned the offense stipulated in the article of the stock market law concerning "the deliberate presentation by the administrator, director or executive of the company of inaccurate financial statements or false information about the company's situation to shareholders", which is punishable by 6 months to 5 years in jail and the restriction of certain rights.
Valentin Stănescu told us: "Romcab has sent to the Bucharest Stock Exchange false information and has misled investors. The criminal investigation bodies must act before it is too late. Because the company has entered insolvency, we, the shareholders can only hope to recoup our losses from those responsible. If prosecution isn't brought against individuals, neither can the assets of those guilty for the current situation of the company, which has seen approximately 200 million lei vanish in three months, be seized. So far, the authorities of the state - prosecutors and the Financial Oversight Authority (ASF) - have done nothing to protect the interests of investors on the capital market".
Sebastian Vlădescu, former president of Romcab, thinks that it was to be expected that a criminal investigation would begin in the case of the company, as this is the only solution to find out where the money went.
"I can't say that I am too thrilled with a criminal investigation, but there is a need for clarification on what happened there - what mistakes have been made and what illegal things have happened. It is the only solution for the truth to be found, where the money went, if anything has been stolen, and if yes, by whom. Aside from the unpleasantness of being involved in a criminal investigation, I have no worries. Everyone will answer for what they've done, and I know I've done my job. When I was on the Board, I did my job based on the information I received, and when I stopped receiving information, I reacted".
In the criminal complaint, the investor states that he invested in MCAB shares, based on the company's financial reports published between December 2012 - September 2016, which reflected a sustained and significant turnover and profit growth, as well as an excellent profitability compared to its own equity.
Valentin Stănescu notes that he bought 99,546 shares (1.1% of the company), as follows: 39,546 shares, at prices between 8.76 and 9.4/share, between September 9th 2016 and November 18th, 2016, and 60,000 shares at a price of 3.92 lei/share, on January 19th 2017, for a total of 599,435 lei.
This clarifies that, following the acquisitions made, negative news about the company appeared on the BSE website: - the delayed reporting of default incidents, the request to enter insolvency, the preliminary reports for December 2016, which showed significant differences compared to the previous reports.
The shareholder says that he did not acquire any more shares after the appearance of those pieces of news.
Valentin Stănescu reminds, in his criminal complaint, that on February 23rd, 2017, Romcab issued a communique signed by Zoltan Prosszer as CEO, by which he notifies investors for the first time about the many payment defaults that occurred between December 23rd 2016 - January 16th 2017 and tries to reassure investors and the mass-media, showing that those payment incidents are part of the "specific circumstances of the industry that we operate in [...] most of our customers closed down between December 15th - January 15th". The shareholder further says: "Moreover, Mr. Prosszer continues: «We expect that in the very near future our activity will return to its normal course...» and concludes as follows: «We want to point out the fact that in our opinion, the current situation of the company is a temporary one, and the measures that we have identified have the necessary degree of feasibility to resolve all the matters raised in the press»".
Mr. Stănescu says, in his criminal complaint, that these clarifications have been issued by the company only after the BSE asked Romcab to address the press reports about the payment incident.
Despite that communique, on February 10th, 2017, the company filed for insolvency, and on February 16th 2017, on the BSE website, were published the preliminary financial statements for December 2016, the shareholder writes, and he added: "In contrast with the profit of approximately 39.5 million lei at the end of September 2016, the financial statement for December 2016 shows a loss of 178 million lei. (...)
It is extremely unlikely that such a loss would appear over just one quarter, as a result of normal business. Thus, it is likely that those losses accrued over the previous periods and hidden knowingly or at the behest of the company's management.
Also on February 17th, 2017, a notification is posted on the BSE website that trading in the stock is suspended, because the ASF has asked the company to publicly clarify the differences between the financial statements at the end of September 2016 and December 2016".
The shareholder's attempts to get clarifications from the company were left unanswered.
On May 23rd, 2017, in the Ordinary General Shareholder Meeting having on its agenda the approval of the financial statements and of the report of the administrators pertaining to the year 2016, Zoltan Prosszer, as special administrator, said that "the loss of 180,000,000 lei (reported to the regulated market on February 16th, 2017) was an "accounting error", the shareholder further reminds.
He claims that the infractions committed by the members of the Board of Directors and the executives of Romcab were deliberate, given that the company is public, and thus is required to draw up both periodical reports, as well as the constant reports caused by events having a major impact on its economic situation: "Being the administrators and executives of a company listed on a regulated market, the perpetrators cannot claim not to know the consequences of the submission of incomplete reporting. (...) The administrators and executives of Romcab have not conducted the reporting concerning the essential conditions of the company not even after information appeared in the mass-media about the existence of massive payment defaults. Under these circumstances, no one can claim that the administrators and executives of Romcab did not accept the result of not reporting the correct information concerning the company's economic situation".
Speaking about the depreciation of the inventories, performed by the company, Valentin Stănescu states: "It can be noticed that at the end of 2016 the management of the company performed an adjustment of current assets by 180 million lei. The only explanation provided by special administrator Zoltan Prosszer, who is an indirect majority shareholder and CEO of Romcab, is that «the marking of the operating loss was specifically owe to the inclusion of the expenses pertaining to the depreciation of inventories available at the end of year, that amounted to 178.9 million lei».
Such an explanation indicates beyond a doubt that the previous financial statements were fake, because they mentioned a much higher value of the inventories, compared to the real one.
Furthermore, the investigation also seeks to find whether the company also omitted to draft current reports to disclose to investors, certain legal acts concluded with third parties which have affected the company's finances, to an extent where, had they been known, they would have had an impact on the price of Romcab shares.
The immediate result of this offense consists in the loss caused to all investors in Romcab stock, which have acquired that stock without knowing the true situation of the company, the investor aleges.
• Zoltan Prosszer fined by the ASF twice
In the beginning of the year, the Financial Oversight Authority (ASF) fined Zoltan Prosszer and Sebastian Vlădescu, the current and former CEO of "Romcab" Târgu Mureş (MCAB), respectively.
The ASF found that the two were responsible for failing to ensure the necessary framework for the auditing in due time of the financial statements for the year 2016 and that they have failed to report to the BSE the company's contracts with affiliates larger than 50,000 Euros, according to the law. Prosszer was fined 15,000 lei, and Vlădescu, 13,000 lei.
In an interview he gave in February 2017, former Romcab CEO, Sebastian Vlădescu, was saying that if the company still had its inventory, then there was no problem, as the price of copper was rising. At the time, he was saying that the issue of inventory would have to be resolved by SGS, the company hired to certify the existence of the inventories.
"Romcab" is controlled by "Sadalbari", which saw changes in its shareholder structure in 2017. Thus, "Sadalbari" is no longer controlled by Romcab president and special administrator Zoltan Prosszer.
"Sadalbari" SRL filed for insolvency, upon request, on March 31st, according to the ruling of the County Court of Mureş.
On January 27th 2017, Zoltan Prosszer assigned to Roxana Târcă (the representative of the investors relations department at Romcab) 35 of the 45 shares he held in "Sadalbari".
This increased Roxana Tarcă's stake in "Sadalbari" to 46.7%, while Zoltan Prosszer was only left with 9.35%. The "Sadalbari" shareholder structure also included at the time Rodica Dochiţoiu (with 37.38%) and Amberyce Limited (with 6.54%), according to data from the Official Gazette. The company subsequently reported to the BSE that "Motoplus Paneuro"- a company controlled by Florin Dorin Costea, who is allegedly the brother of Zoltan Prosszer - reached a 91.8% stake in "Sadalbari", while Prosszer was left with a minuscule stake.
Also , the controlling stake of 69.02% of "Romcab" (MCAB), owned by "Sadalbari", was pledged to "Stareal Limited" of Cyprus, on February 6th, 2017, four days before the Târgu Mureş cable maker filed for insolvency, according to the Romanian Electronic Archive for Secured Transactions.
Trading in "Romcab" shares was suspended on February 17th, upon the request of the Financial Oversight Authority (ASF), which has asked the company for a detailed report concerning the factors which have generated the amendment of the financial situation on September 30, 2016, on February 16th, 2017.
Back then, the ASF fined the CEO of "Romcab" 7,000 lei, for not answering to some requests by the ASF or being slow in doing so.
The creditors' chart of Romcab comprises debts of 1 billion lei. The biggest creditor is EximBank, with a receivable of 113.02 million lei, on its own behalf, and 98.4 million lei, in the name and on behalf of the Romanian state. Banca Transilvania has a claim of 111 million lei, whereas state owned CEC Bank has a receivable of 34.6 million lei.
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