Who Shares, Makes Their Part

Radu Soviani: Mr. Stolojan, how does mass privatization look now compared to the initial intentions for this program?

Theodor Stolojan: To answer such a question, you should first define what the initial goals were when the privatization process began. In fact, we are talking about the reform of private ownership and the development of the private sector in Romania. Because Romania, unfortunately for us, was a socialist country in which private ownership in the economy was considered the worst possible thing. The last attempt made in socialism to entrust the management of restaurants and canteens to private individuals was through "mandatarii." In the "mandatariat" system in 1968-69, there were clean, small restaurants, and certain conditions for the operation by this private management - some violated these conditions and began hiring additional labor beyond what was allowed by the norms. Ceauşescu abolished this system after two years because he said that, in the end, the Leninist thesis that small commodity production gives birth to big capitalists from hour to hour was true. So, it was a dogma for us: private ownership had no place in the economic space. The second dogma in socialism was that every worker, engineer, doctor was a proprietor, producer, and beneficiary. The collective ownership of all means of production was emphasized, and they produced, and they were beneficiaries. We all know what kind of beneficiary they were and what kind of proprietor. So, we started from these dogmas, unlike Hungary, where the small commercial sector was private, there were small private workshops, not to mention Poland, where agriculture was not collectivized. We had entirely different starting points. Secondly, we are the only European country from the former socialist system where the transition occurred through a brutal, rapid overnight rupture, in which a system of political power and an economic balance disintegrated. The economic system, as imperfect as it was in the socialist regime, was a system of economic balance that functioned. It was a centralized system with many transfers between economic sectors, a kind of subsidies, and so on. Now, what happened immediately in the first few days? If you remember, the managements of the state enterprises were changed by representatives of the National Salvation Front who had formed in each enterprise in each county. What happened then? The entire system of economic equilibrium in the socialist economy disappeared overnight. We did not have the situation like in Hungary, Bulgaria, Czechoslovakia, or Poland, where the transition occurred in a controlled manner. For example, Hungary accepted the establishment of private ownership through case-by-case privatization. Poland, the Czech Republic, and Romania chose other methods, such as mass privatization, and so on. So, for Romania, what was the problem? The problem was to establish the foundations of the new economic system based on democracy and a market economy as quickly as possible. We had to move very fast. And, of course, there was a period when state-owned enterprises were decapitalized because everyone did as they pleased in the respective enterprises. Those who were directors and managers quickly realized that they could amass personal wealth by decapitalizing state-owned enterprises because there was practically no oversight of what was happening. In fact, the first measures taken in these enterprises in the early days after the revolution were changing labor, consumption, and material standards. Intermediaries appeared immediately.

Radu Soviani: Where did these intermediaries come from?

Theodor Stolojan: Well, they emerged from the homo-economicus, meaning the inherent human tendency to take advantage of opportunities. There were people who had the necessary knowledge, primarily former workers from foreign trade enterprises who knew about contracts, external suppliers, and Romanian companies. They were the ones involved in Romania's informal economy during socialism, people with initiative. Remember that we had such people in the black market economy. So, for those of us who were in various decision-making positions in the government at the time-I, for example, was appointed as the Deputy Minister of Finance responsible for preparing the reform on December 29, and Petre Roman appointed me with the specific task of starting to think about financial reform-it was challenging to implement financial reforms without having an overview of what was happening with forms of ownership, prices, circulation, and markets. After all, the ABCs of the market economy are not complicated: private ownership, free markets (which means free prices and competition). When the first government transition program was being considered, several directions were taken. First, if you recall, there were about 2.1 million rental apartments built by the state. The decision was made to transfer ownership to the tenants at historical prices. Of course, there were arguments; these apartments had been affected by an earthquake, they were generally built with cheap materials, not exceptional quality, and they were the apartments where we all lived, in neighborhoods like Drumul Taberei, Titan, and so on. So, 2.1 million-hence, Romania is now the first country in Europe in terms of the percentage of homeowners, which is a significant help.

The second thing was that in January-February, a decree-law was issued to promote free initiative. Those who wanted to establish small businesses were free to do so. Who were the first to establish these companies? It was those who worked in foreign trade or had connections with foreign countries, had worked in construction abroad, and quickly understood what it meant to have a small business. Things moved very quickly in the sense that there was an exploitation of the inconsistencies in the mechanisms that didn't yet exist.

Then there was the idea of encouraging foreign investors to come and invest. Unfortunately, the mining incidents and all the problems in Romania made it so that in the first few years, you had to search hard to find a foreign investor-unlike Czechoslovakia, Poland, Hungary, where they were present. In the end, the question arose: what should be done with the rest of the state-owned economy, with state-owned enterprises? Here, the idea of rapid privatization was pursued because, unlike Hungary, the Czech Republic, or Poland, we couldn't have control over what was happening in state-owned enterprises. For example, foreign experts told us very clearly: don't privatize until you liberalize prices, finances, financial markets because it won't work.

Radu Soviani: And there was privatization with strategic investors; I remember Mercedes, Fiat, Landini, coming to Romania, and mass privatization through coupons and property certificates. Let's take them one by one...

Theodor Stolojan: The concept of privatization in Romania addressed exactly the topics you are mentioning, meaning a desire for rapid privatization. Okay, mass privatization... The population, as owners, beneficiaries, producers, was allocated 30% of the shares through these private property funds, which were supposed to be the property of the entire population, not just those working in enterprises. The remaining 70% constituted the state property fund, which was tasked with seeking and working with investors interested in buying and having majority control over the enterprise, restructuring it, and identifying the necessary investments to make it viable. That was the concept. The concept was not bad. Unfortunately, what came out in the end was entirely different.

Radu Soviani: What came out?

Theodor Stolojan: First of all, those involved with the private property funds had almost no control; they couldn't impose their views on shareholders (the entire population) and had no say in the management of the private funds, as initially determined. The fact that management within these private property funds remained in place for 15-20 years suddenly indicated that something was not working, something was not right in that area.

Radu Soviani: Moreover, many of the beneficiaries of the coupon and privatization certificates are still considered dormant or inactive.

Theodor Stolojan: Some probably don't even remember; I think some have forgotten that they even have shares, as they are referred to today, in the SIFs (Societăţi de Investiţii Financiare, or Financial Investment Companies). I see that they are now transforming into investment companies and changing their names. The State Ownership Fund, which was required by law to privatize one-sixth of its assets each year and take measures for privatization with strategic investors, ended up going the Management Employee Buyout (MEBO) route in many cases. In the end, it is certainly true that the State Ownership Fund (FPS) had a significant responsibility for not meeting its objectives.

Radu Soviani: And the haste to sell one-sixth every year...

Theodor Stolojan: Exactly. At the same time, not everything can be blamed on the FPS. What didn't they achieve? They didn't succeed in restructuring enterprises, privatizing them, so that as many state-owned enterprises in Romania as possible could become viable in the market economy, competitive, and global. Romania had some specific conditions much more pronounced than in other former socialist countries. Think about it: the Romanian economy produced almost everything, from trucks, buses, cars, ships, equipment for nuclear power plants, computers, and so on. So the question you often hear in Romania - "What industry did we have, and what remains of it?" is correct, but it's also a misunderstanding. Why? Because the industry we had only functioned in a centralized system. For example, I can tell you, I worked in the Ministry of Finance in the State Budget Directorate during socialism, and later in the Foreign Exchange Directorate. How did it work? For example, people say, "We exported tractors to Egypt, and so on." Yes, we did export them, but how did we export them? Through government agreements, with payment in barter and in foreign currency. In general, all Romanian exports of tractors, buses, and trucks were inefficient, and this inefficiency was compensated for by the surplus of currency generated by the export of textiles, footwear, food, and groceries. This was done centrally; it was a system. Moreover, we continuously financed these countries by providing governmental loans to developing countries that bought our products, and we ensured that these countries' debts to us were settled through the supply of raw materials that our economy relied on: oil, natural gas, phosphates from Morocco, and so on.

Radu Soviani: After the revolution, many of these debts were never collected...

Theodor Stolojan: Certainly, we still have over a billion transferable rubles with Cuba, which were equivalent to the dollar at the time: one ruble - one dollar. As for Iraq, we're talking about a debt of 2 billion, and we still have some claims from before 1990 with Egypt. I see that from time to time, the Ministry of Finance and the National Bank of Romania still report these outstanding claims.

So, in the case of cars, Dacia's chance was that Renault came in. If this strategic investor hadn't come to Romania, Dacia would have disappeared, just like many others did. Why? Because it's a global industry. There's intense competition, and you need an incredible amount of power to keep coming up with new models, new engines, which means investments of billions and billions of dollars.

Radu Soviani: That was a chance for privatization with a strategic investor - Renault. Did the small shareholders who owned 30% of the economy through FPPs have any chance?

Theodor Stolojan: They only had a chance in the sense that they could enter those management buyout privatization schemes. In these cases, the management of the enterprise, along with the employees, combined their coupons, and they would also receive a loan - because the FPS could provide a loan to investors, a scriptural loan, which they would pay off over time to buy shares. I was talking last time when we met about ARTEGO, which is a brilliant example of MEBO. It is still operational, profitable, pays dividends, supports children in going to school, and provides scholarships for them to study. ARTEGO in Tg Jiu produces rubber bands, conveyor belts, and rubber products.

Radu Soviani: That seems to be the exception.

Theodor Stolojan: I don't know how many there are, but quite a few of these privatized enterprises existed.

Radu Soviani: Most of us put our coupons somewhere, as it was said back then...

Theodor Stolojan: Exactly. I'd like to tell you, for example, many people say - we used to produce trucks - why can't we produce trucks anymore? The answer is simple: there are many more car factories in the world. Because there is high demand for cars, the number is high. For trucks, there are usually a few major manufacturers in the world, and we know that the owner of Mercedes came to Romania at Petre Roman's request to do something with trucks and said very clearly: "Gentlemen, we don't produce trucks outside of Germany, but we'll make an exception for Romania - the equipment needs to be updated, but you have good engineers and workers." In the end, it didn't work out for one reason or another. Or take the example of Semănătoarea, where the third-largest producer of seed drills in the world came to establish a production center in Romania for all of Southeastern Europe. However, the trade unions opposed it, for some reason, and in the end, we have a neighborhood like many others. These large enterprises could have had a chance if they had become partners with major players in the field, as we have, for example, the company in Cugir that produces gearboxes for Mercedes.

Radu Soviani: An isolated case - Hungary has all the subassembly manufacturers.

Theodor Stolojan: Yes, but what was our concept? We wanted to produce the entire product ourselves. That's how even the Tractor Factory lost out because they wanted to make the tractor, and they asked us to provide the license to improve it, and they would continue manufacturing it. They didn't want that.

Theodor Stolojan: "Economia, în primii ani ai României, era terenul ideal pentru corupţie"

Radu Soviani: Mr. Stolojan, you have always been perceived as a technocrat. You served as the Minister of Finance, Prime Minister, and even ran for the Presidency at one point. I'd like to ask you, in the context where the state's property was intended to be distributed to the population through coupons, certificates, and FPPs, did politicians approach you or at least seek your advice on how to proceed with giving out coupons and shareholder certificates?

Theodor Stolojan: When we were drafting the privatization law, we certainly had very heated discussions. Think about it, at that time, the Chamber of Deputies was led by Marţian, and the Senate was led by Bîrlădeanu, with Iliescu as the president. So, it wasn't that simple to pass a law that laid the foundations of capitalism in Romania. Because that means private ownership, free markets - the economic model of capitalism. There were questions like that. Even a member of the PSD asked me when they came to power in 1993 to dissolve the concentration of ownership certificates, which were freely tradable at first, but then some people started buying them for next to nothing. They had a nominal value of 25,000 lei, and they were being sold for almost nothing. They were everywhere, and there was a flourishing trade in these certificates. Even I got involved. I was working at the World Bank at that time, and I remember asking someone, "Go buy some certificates, and maybe we can participate too." So, when the PSD came to power in 1993, they were thinking about how to eliminate this concentration. What did they do? They re-evaluated them due to inflation and issued coupons worth 975,000 lei. I was working at the World Bank at the time, and I remember a member of the PSD asking me, "Mr. Stolojan, can this work?" And I said, "Of course it can work as a mechanism, but the idea that you're thinking about now, that those who collected certificates with a nominal value of 25,000 lei will no longer have financial power - that's a different discussion."

Radu Soviani: What was missing in this process because I remember there were advertisements in newspapers and on television: "Be an owner, be a shareholder, use your coupons," songs appeared during that period - "Let's put our coupons in." What was missing for the population to truly benefit from 30% of the economy distributed among SIFs?

Theodor Stolojan: Firstly, let's start from the basics. There was a lack of comprehensive financial education in Romania. A lack of financial education among the general population and a lack of specialists. We didn't have experts in global economics or sectoral economies. Romania was completely disconnected. Remember that in 1975, there was an agreement in Helsinki on detente between the East and the West. As a result, countries committed to liberalizing cultural exchanges. Ceauşescu was forced to sign it, or else he would have been isolated in the world. So, what did the Poles, Hungarians, and Czechoslovaks do? They sent their children to study in the United States, Germany, and the United Kingdom. Vaclav Klaus, who was the Prime Minister of Czechoslovakia in the early years of transition, got his doctorate in the United States. These were people who knew what a market economy meant. In Romania, we were completely cut off. Ceauşescu, after 1975, with the Charter of Human Rights, closed off. They didn't even subscribe to specialty magazines or participate in specialty conferences.

Radu Soviani: Completely cut off, except for the workers in foreign trade...

Theodor Stolojan: Except for the foreign trade workers who knew what a contract meant, discussed risks, and so on. So, this knowledge base was lacking. Secondly, there was rampant corruption, lethal corruption. The economy, in the early years of Romania, was an ideal ground for corruption. Think about it - there was no control over what was happening in state-owned enterprises. I want to give you an example: in the privatization law, the sale of assets was provided for. State-owned enterprises could sell assets. What did selling assets mean? Each enterprise had to identify what they didn't need, including machinery and land, and put them up for sale. However, after a few months, the directors of these enterprises understood very well that they could amass personal fortunes, and the whole process was distorted by corruption. I'm going to digress a bit. In no former socialist country were privatization processes clean. Scandals happened everywhere. Of course, the biggest scandal occurred in the former USSR, where a few individuals became owners of the natural resources of their respective countries. These are the big oligarchs in Russia.

Radu Soviani: But do you think that in Romania, there were groups or emerging interest groups that took advantage of Romanians' lack of financial education? This wasn't the Romanians' fault. We were completely disconnected from the world. And were these groups thinking about how to concentrate the 30% of the economy?

Theodor Stolojan: Yes, they emerged. People began to see that they could use the lack of financial education and the lack of control over the process to concentrate wealth in their own hands. In the early years of the transition, there were significant opportunities for corruption and abuse. People realized that there was a lack of oversight and that they could manipulate the system for their benefit. So, those who were more resourceful and had the knowledge to take advantage of this situation succeeded, while the general population, due to a lack of information and financial education, often lost out. It was a complex situation where multiple factors played a role.

Theodor Stolojan: Absolutely!

Radu Soviani: Did they exploit this?

Theodor Stolojan: Absolutely! Here, I can certainly give you an example that's slightly adjacent but illustrates what it means to profit not from an economic opportunity but to profit from the inconsistency of an economic system and to use those specific inconsistencies. Many workers from foreign trade enterprises were among the first to establish their own private import-export firms. They took their well-established foreign clientele and acted as intermediaries between Romanian producers and foreign customers. So what did they do? They delayed payments to domestic producers while inflation was surging month after month. This gave them effective economic power in the relationship between the Romanian producer and the foreign client.

Radu Soviani: We saw it at Sidex, we saw it at other companies...

Theodor Stolojan: What was Sidex? Sidex was incurring losses. Those who controlled the supply and distribution were making significant profits because they were in the private sector. Consider the problems we face today in achieving effective management in state-owned companies, even though we now have laws that clearly outline the process for selecting managers. Derogations, transitory periods - we appoint them for 4 or 5 months, extend their terms, just to avoid complying with the provisions of the law, which should state that we should have effective management.

Radu Soviani: Theodor Stolojan is also an investor in the Romanian capital market. Were you tempted by the FPPs that became SIFs as an investor?

Theodor Stolojan: Yes, at one point, I bought shares in SIF Banat-Crişana, for example. I held on there as an investor; I didn't have many shares. I remained there as long as Cuzman was in charge because I trusted his integrity. The moment he was replaced by someone from Romenergo, I think it was Bîlteanu, and I understood what they wanted to do, I exited because I thought something bad would happen there. And what did they want to do? They wanted to take assets out of the SIF, create a separate company to manage these assets, and entrust the management to an asset management company. I thought to myself, something fishy is going on here, something that will end badly, and from what I later understood, it did indeed end badly for those who are now in jail or facing legal proceedings.

Radu Soviani: Some with suspended sentences, some in first-instance with prison terms...

Theodor Stolojan: It doesn't really matter. For me, it raised suspicions, and I realized that things were no longer right there. When you no longer trust that management, it's best to exit, not stay.

Radu Soviani: Why does a shareholder lose trust in management, starting from this case, is the first question. And the second question is, how did we go from 30% of the economy for the population to 2-3% with a shell company or an asset management company?

Theodor Stolojan: This time we got there because, in the first stage, there was a regulatory vacuum in Romania in terms of an economic system. There were laws that were simply absurd - they practically didn't function. So, we had a stage with a VACUUM, regulations regarding the functioning of an economic system that was no longer in place.

Theodor Stolojan: Well, later on, we began to create the laws and institutions of a market economy, but they operated entirely differently than they should have. And here, I'm coming back to what you said. Caritas operated in Romania because, when legislation promoting free enterprise emerged, it stated, "You're not allowed to establish businesses dealing with explosives or narcotics," but it didn't say anything about PONZI schemes. We didn't have a clue back then about what PONZI was, how it worked with PONZI, although I had read about it and knew about it from capitalist economics.

Radu Soviani: We learned about SAFI, Caritas, FNI, FNA...

Theodor Stolojan: Hold on; there's a difference. We created the institutions and laws of a market economy, but they weren't working. It takes years to educate people, prepare them, and get these institutions to function properly. Right? Caritas operated just fine because we switched from the principle of socialism, which stated, "Everything is prohibited if not provided for by law," to the principle of a market economy, which says, "Everything is allowed if not prohibited by law." It's allowed. So Caritas worked just fine because there was no prohibition. Then FNI appeared - sleep soundly. So, what did FNI say? Sleep soundly because your money is guaranteed by CEC. That was CEC's mistake, that it signed something like that. But at the time, we already had an institution in place for regulating such activities, the CNVM. However, what did it do? Instead of enforcing the law, it kept granting derogations to FNI. What happened with FNI? It had a lot of unlisted stocks in its portfolio, which it could evaluate however it pleased. Yet there were already regulations stating that this was not normal. So, we had the institution, but the institution kept granting derogations.

Radu Soviani: But with SIFs, the reason why you left happened in plain sight, much later than Caritas, FNI, SAFI, and so on. How was this possible?

Theodor Stolojan: I see that even today, there's an ongoing discussion, especially in BURSA. I noticed there's an investor (you had an interview with him) who said, "These people did exactly what happened with the SIFs - they created an investment fund where the SIF used resources for this investment fund to buy shares, creating a cross-ownership situation." I'm not aware of the details, but I saw what this gentleman said, and I believe it's clearly a conflict of interest. We have the ASF, which should express a position and take action. I can't say if it's right or wrong, but it seems dubious at first glance.

Radu Soviani: The way SIF1, SIF4, and SIF5 are currently concentrating...

Theodor Stolojan: Vaclav Klaus, whom I knew, the former Prime Minister of Czechoslovakia, used to say that within everyone lies a "homoeconomicus." In other words, people generally analyze.

Radu Soviani: Mr. Stolojan, after this privatization process, on the one hand, we had strategic investors; on the other hand, we had "homoeconomicus," some from foreign trade; and, on the other hand, there was a mass privatization concentrated in SIFs. Does Romania have live oligarchs?

Theodor Stolojan: Yes, it certainly does. Where do we see them? We see individuals who have accumulated significant wealth in Romania, and these fortunes were amassed during the transition period. During the transition, wealth wasn't necessarily built through hard work but by exploiting these opportunities, some of them economic and others stemming from the inconsistencies within the economic system.

Radu Soviani: Can this situation continue, and could we still witness it 20 years from now? Are there still FPPs, current SIFs, where a few individuals concentrate what remains? Perhaps 10-15% of the economy is still under their control?

Theodor Stolojan: Yes, especially because they were allowed to concentrate. Initially, there was a limit, 1% at first, later 5%, and now there is no limit. It's clear that this concentration will occur, if it hasn't already.

Radu Soviani: In a situation where those who used to manage what represented 30% of the economy may own 15-20% of the shares, and the rest are dormant shares, forgotten, and we don't know about them, do you see a possibility of change at some point, based on Romanians' interest in shares, or considering the behavior of the past 30 years, probably not? Why?

Radu Soviani: We learned about SAFI, Caritas, FNI, FNA...

Radu Soviani: But with SIFs, the reason why you left happened in plain sight, much later than Caritas, FNI, SAFI, and so on. How was this possible?

Theodor Stolojan: I can see that even today, there is an ongoing discussion, especially in BURSA. I noticed there's an investor (you had an interview with him) who said, "These people did exactly what happened with the SIFs - they created an investment fund where the SIF used resources for this investment fund to buy shares, creating a cross-ownership situation." I'm not aware of the details, but I saw what this gentleman said, and I believe it's clearly a conflict of interest. We have the ASF, which should express a position and take action. I can't say if it's right or wrong, but it seems dubious at first glance.

Radu Soviani: The way SIF1, SIF4, and SIF5 are currently concentrating...

Theodor Stolojan: Vaclav Klaus, whom I knew, the former Prime Minister of Czechoslovakia, used to say that within everyone lies a "homoeconomicus." In other words, people generally analyze.

Theodor Stolojan: For those dormant shares you mentioned, I don't believe anything can change because, once again, there is a lack of financial education, even after 30 years. There are many. Just look at how few investors we have in terms of the number of individuals at the stock exchange. We're talking about individual investors, and we have less than 100,000 active ones. Even the SIFs are not taking action. First and foremost, it would be the duty of the SIFs to try and identify these dormant shareholders and tell them, "Hey, you have some shares here, if you want to sell them, sell them, we'll buy them from you" - to make a kind of public offer to purchase these shares.

Radu Soviani: They could face competition - someone might come to buy them and take them down.

Theodor Stolojan: Yes, that's possible.

Radu Soviani: Looking at the entire privatization process, what would you have done differently, or what should other prime ministers and finance ministers after you have done? You didn't carry out privatization during your time...

Theodor Stolojan: Actually, there was a privatization in which I personally participated. The law on privatization included provisions for 32 enterprises to be privatized with the participation of special investment companies, investment banks, and the payment for these investment banks came from various funds and grants we received from the U.S., the UK, etc. The idea was to demonstrate how a privatization process, a sale, should be conducted. This served as an education for those who would be part of the SIFs, FPS, and, secondly, to generate a sum of money for these entities to start functioning. I remember the first enterprise was Ursus Beer, and I even bought shares there. If you ask me now, looking back, it's clear that we should have followed Hungary's example. In other words, small businesses, hotels, should have been sold through public auctions - open and transparent auctions. This is how we started privatization when I was working for the World Bank in the Republic of Moldova. It was like a theater, people in the audience with cards, auction hammers, selling stores in Chişinău or other cities. Remember that the hotels on the Black Sea coast were only sold after the year 2000. They were in the management's control, some were managed properly, and others suffered complete decapitalization. Some of them are still in a state of neglect. So, this aspect was not respected - rapidly privatize through public auctions everything that can be done for these small entities, and for larger enterprises, try to find a strategic investor.

Radu Soviani: Could anyone at that time have been visionary enough to see that people who were buying properties inexpensively, whether they entered SIF ownership or when shares of enterprises were sold, would take, relocate, and increase real estate value, the value of the land?

Theodor Stolojan: It was evident that the value of land in central Bucharest would increase significantly, and at some point, it became a business to relocate the enterprise, move it to the outskirts of Bucharest, and sell that land for 2,000 euros per square meter or even more. In a way, this may have been a normal process. It doesn't make sense to keep a factory in the center of Bucharest.

Radu Soviani: But public property could have benefited, not just private individuals.

Theodor Stolojan: Yes, but such a process didn't happen anywhere. Look at Hungary, which conducted privatization on a case-by-case basis; there's much discussion about who bought what there.

Radu Soviani: Where are we now in terms of mass privatization and SIFs? You mentioned some convictions. You mentioned that we moved from rampant corruption in the 1990s. How does corruption function in Romania now, anti-corruption in Romania, and surveillance? Looking at the financial market...

Theodor Stolojan: Corruption, you can't escape it; it exists in all countries, but it's under control in terms of size and magnitude. What's more important is that when corruption is identified, there is no escape. That's the difference between Romania and the United States. I worked at the World Bank, and I remember, for example, a U.S. senator who had to resign because he used senatorial office supplies for personal correspondence, which in Romania would be laughed off. There are differences... here, with the Turks, with the Phanariots... The Jews, at one point, had certain restrictions in Romania, and to become full-fledged citizens in Romania, they had to go to Parliament to obtain Parliament's approval. They went with their plea in hand and a goose under their arm because that's how things worked in Wallachia. So, the difference is that here, as you can see, a corruption case takes 15 years or more to be tried. Corruption continues, as you can see, now it's concentrated in the area of acquisitions, large public contracts, appointments to boards. I remember when I was in the Republic of Moldova, Voronin, who was the President, appointed a relative to a position. The TV stations asked people on the street, "What do you think about the fact that the President of the Republic has appointed a relative as an advisor?" An old lady replied, "Well, here in our Republic, we're all relatives with each other. That's how it is for us."

Radu Soviani: But it seems like the oligarchs are more related to each other, as if they get away with it... How do you explain that even primitive operations of decapitalization of companies, including nowadays - we were talking about SIFs - an investment vehicle that withdraws money to buy voting rights with the funds of dormant shareholders, they escape the supervision radar, they escape the prosecutor's radar, or if they don't, the same thing happens again, just as you mentioned?

Theodor Stolojan: First of all, it's incompetence. To conduct supervision, you need to be highly competent. Remember the problems the banking supervision in Romania faced until an individual who understood what it was about arrived - Nicolae Cinteză.

Radu Soviani: There were issues under Cinteză as well. Bankcoop, Banca Albina, Banca Internaţională a Religiilor all fell under his watch, along with Cosmescu.

Theodor Stolojan: He was the one who ultimately managed to establish competent banking supervision. Well, there's also Florin Georgescu, who's responsible for banking supervision. On the other side, at the ASF, the appointments have been very political. Look at who is currently leading the ASF, who led it before, vice-presidents, what kinds of people, directors are there. So, it takes time for professionalism to show. It's not achieved in one or two months; time has to pass.

Radu Soviani: Is that why they escape the radar?

Theodor Stolojan: That's one cause. Another cause is a sort of way of letting things be - "Well, that's how the Romanian system is; let it be, we'll see, he's a good guy." Look at the insurance bankruptcy, City Insurance; it was known for a long time that things were not right, and it was left as it was. Why? I suspect there are a series of relationships that come into play.

Radu Soviani: Do the funds with which these homoeconomicus individuals started - many of whom held positions using Ceauşescu's money - have any connection to Romania's funds, which might have also been controlled by homoeconomicus?

Theodor Stolojan: Ceauşescu did not have funds abroad. This was a deliberate smokescreen launched in Romania to divert attention. He had no reason to have such funds. He held the office for 24 years, and he didn't have such resources. There were, however, funds in various places that no one knew about because the security relationship was strictly confidential. No one knew how money was circulated, where it was; only a few people knew. Think about many state claims that were not followed up and were resolved underground. Privatizations happened without anyone knowing the enterprise had outstanding claims, like the claim against Libya, Petromidia. There were many such issues from which some people made money, and these funds actually belonged to the Romanian state.

Radu Soviani: They simply stole them?

Theodor Stolojan: When you see that the owner is no longer interested in his money, no longer tracks it, people certainly appear who think about using those funds for their own benefit. This was a widespread practice in Romania. I tell you this because I had an interesting experience while working with the World Bank in Uzbekistan, where the directors were all Russians during the Soviet Union era. When these countries broke away from the Soviet Union, these Russian directors knew that they wouldn't be directors of these Uzbekistan factories for much longer, yet they continued to deliver products to Russia and instructed the others not to pay. And then, they left for the money. So, I've given you an example to see how the system's incoherence is used. They were directors for another month, two, three, four, until a local Uzbek director was appointed instead of the Russian director, but they continued to deliver and told the others not to pay.

We need to be optimistic about Romania, especially from an economic perspective. Why? Because my experience over these 32 years has taught me the following: Romania ultimately does what it needs to do, albeit later than others and at higher costs, but it ultimately does what it needs to do.

Radu Soviani: Thank you very much, Mr. Stolojan, for this interview!