The arrest of Israeli billionaire Beny Steinmetz Monday on suspicions that include fraud and money laundering is connected to a case against him in Romania, police and other sources say.
Mr. Steinmetz, an Israeli diamonds, mining and real estate magnate, is already under scrutiny by law enforcement authorities in four other countries, including the United States. Federal prosecutors in the United States are investigating whether representatives of his firm bribed government officials in Guinea to secure a multibillion-dollar mining deal. In Switzerland and Guinea, prosecutors have conducted similar inquiries. He was previously detained and questioned in Israel in December.
During Steinmetz’s remand hearing at the Rishon Letzion Magistrate’s Court on Monday, senior investigating officer Avshalom Ahrak said that the allegations against him also concern alleged wrongdoings in Romania. In March 2016, Steinmetz was indicted by the Romanian National Anticorruption Directorate (DNA) for complicity in money laundering, peddling influence and forming an organized crime group with 13 other suspects, which included Silberstein. According to Attila Biro from the Romanian investigative Rise Project, the trial began in January this year, and there have been 20 hearings thus far. His sources, he said, have told him that some of the charges that led to Steinmetz’s arrest in Israel are related to the Romanian case.
The Rise Project report said that, according to the DNA, Steinmetz had financed a criminal group that sought to acquire a large property claimed by 67-year-old Paul Lambrino, the nephew of the last king of Romania. The group was coordinated in Romania by a local businessman, Remus Truica, the chief of staff to former Romanian Prime Minister Adrian Nastase. Nastase was eventually sentenced to prison for corruption.
Adrian Năstase, Romania’s prime minister between 2000 and 2004, became the country’s first head of government in the post-communist era to be convicted of corruption.
Mr Năstase was raised in the communist school of politics, and it showed. During his time in office state-run television and radio stations were obliged to follow a pro-governmental line. Newspapers that printed incriminating stories found their entire circulation had been bought up before they hit the news-stands. Mr Năstase took part in huge hunting sprees that rivalled any of Ceauşescu‘s, and his two wives were both from the communist nomenklatura.
Mr Năstase’s truculence in the face of opposition was legendary. When asked about the significant wealth that he accumulated during his time in office, he invited his detractors to count his balls instead.
Despite such outbursts, Mr Năstase, a much-published professor of international law, cultivated the image of a bourgeois intellectual. This helped pave the way for his rival, the current president Traian Băsescu, whose populist appeal and working-class idiom were a world away from the aloof Mr Năstase. The promise of clamping down on corruption helped Mr Băsescu to defeat Mr Năstase in 2004.
Romania once again came under scrutiny late last year after its lower house of parliament voted to increase the immunity of MPs against graft charges. The bill drew criticism from some western embassies and the president.
Nastase’s conviction will not be a game-changer in regard to Romania’s entry into the Schengen zone, said Cristian Patrasconiu, a Bucharest-based political analyst.
“But it is a very positive development towards achieving this goal, as the judiciary is now perceived as stepping up its efforts to rein in high-level corruption,” he said.
Nastase had been freed from prison in March 2013 after serving nine months of a two-year term for corruption. The court on Monday also gave his wife Dana a three-year suspended jail sentence for her complicity in taking bribes.
Nastase’s case dates back to 2006 when prosecutors indicted him and his wife in a landmark probe, charging Nastase with taking bribes worth 630,000 euros (£523,989.51).
Truica and Steinmetz have a long history together, having worked as partners 16 years ago in a Romanian real estate company.
According to the prosecutors, Prince Paul illegally claimed the restitution of 28.6 hectares of land in northern Bucharest and of other assets. He argued that the land plot, known as the Baneasa Royal Farm, and the other assets had belonged to his grandfather King Carol II before being nationalized by the communists. Prince Paul made his claim in 2002, but didn’t have much success in recovering the properties.
So, in 2006, he went to Remus Truica, an influential businessman, well-connected with political leaders, to help him with the restitution. He promised Truica and his group 50% to 80% of the recovered assets’ value in exchange, according to the DNA prosecutors.
In 2008, Remus Truica and his group helped Prince Paul get the Baneasa Royal Farm, a piece of prime real-estate in northern Bucharest. The farm belonged to and agriculture research institute, which was under the authority of the Romanian Agricultural Science Academy, a state-controlled institution. The institute’s director didn’t want to return the farm to Prince Paul, as the institute used it for its experimental cultures.
However, the academy’s secretary general at that time, Gheorghe Sin, approved the farm’s restitution to Prince Paul, despite the fact that the royal heritor hadn’t produced all the legal documents needed for the restitution. Apparently, Remus Truica bribed Gheorghe Sin and other of the institute’s management to sign the restitution papers.
The Romanian state was thus damaged some EUR 136 million.
According to the Rise Project report, prosecutors claimed that Steinmetz had transferred 4 million euros ($4.7 million) to be used in the allegedly illegal acquisition of the former royal property – now highly expensive land near the capital of Bucharest. That money was used to make a purchase for an offshore company in the British Virgin Islands set up by the Panamanian law firm Mossack Fonseca, a leader in creating shell companies that often serve to conceal ownership of assets. That company became the legal owner of two swaths of land for Steinmetz’s local partners. One was the former royal farm Baneasa in Bucharest, and the second was a nearby forest. Prosecutors said the two allegedly illegal land deals cost the state €145 million ($170 million) in damages.
Wiretaps that the prosecutors presented in court indicated that Steinmetz was orchestrating the land deals. An arrest warrant was issued on March 15 for Steinmetz, who was not in the country at the time, but the Romanian supreme court revoked it two weeks later. The court has not yet explained its reasons for doing so, but prosecutors say the charges remain.
Leaked documents from Mossack Fonseca, part of the “Panama Papers,” documents identified by the Rise Project indicate that Steinmetz set up another offshore company, which owns 20 hectares of land in Snagov, near Bucharest. The land was initially owned by a local company. In 2009, that company was acquired by the shell corporation that Mossack Fonseca had established, represented by Robert Rosu, a well-known lawyer in Romania who was also indicted in the criminal case against Steinmetz.