One of the most frequent questions we are asked is regarding corruption and influence peddling in Romania and how this is dealt with under Romanian law. Unfortunately, Romania does figure in a number of corruption indices and in a high position.
The question that is being asked is why, and how does it affect business. One thing that should also be borne in mind is that in all countries, not only in Central and Eastern Europe, you hear the businesses talk about corruption. In this context Romania is no different from many other countries.
I have been working in Romania for over twenty years and in all that time I have never been asked for or paid any money to a Government official or given a bribe. Why is that I wonder? Where is all the bribery that everyone talks about? In my view there is little or no bribery in the private sector, so we have to look at the public sector.
One of the first items to consider is what is bribery and corruption? UK companies and US companies doing business in Romania have to be very careful regarding acts that can be construed as bribery and corruption . There is in place the Bribery Act (UK) and the Foreign Corrupt Practice Act (USA). Similar legislation is not yet in place throughout Europe but is being considered.
In Romania if you go to the offices of any authority you will often see people (clients) walking about with bunches of flowers or chocolates. You also see a number of officials working in these bodies going home with large bags and bunches of flowers. These “gifts” are often given to staff during and after they have performed the operation that you were asking them to do. Is this corruption? It is forbidden in our firm to do this type of minor payment and it does not seem to dampen the speed in which business is done. Persuasive argument, perhaps a smile, and an explanation as to why something needs to be done quicker can produce the same result.
During a recent discussion with a client when I asked them for their experience they said that there was no corruption in their field as they only worked in the private sector. This meant that no-one was interested in a bribe, as there was no need. They refused to become involved with the Government or local authorities, as this was where there is the highest incidence of possible corruption. They felt that there was sufficient business in the private sector and therefore they need not to be involved in these areas with the Government and the Local authorities.
There have recently been a number of court cases in Romania instigated by the Anti-Corruption Agency. Some of the defendants have been notable public figures as well as lower level officials. They have all been accused of corrupt acts or influence peddling dealing with the Government or local authorities. Convictions have been obtained which has in some cases resulted in prison sentences. By these acts the Romanian State has suffered damages, although sometimes the amount of damages is in my view exaggerated. Unfortunately a number of these cases appear to have been politically motivated, but not all. The problem is further compounded as in Romania many people do not understand the real meaning of value. Romanians often do not understand that value fixes the price and not the price fixes the value. Unfortunately, the original draftsmen of the law did not understand this, and it can therefore produce some surprising results. Because an asset stands in a state company’s books at one price it does not mean you can sell it at that price. If you are a state Company and you sell at a lower value then theoretically you have caused the state a loss and must be guilty of fraud or corruption.
What can we as a Romanian Law firm advise in relation to corruption? We can only advise clients not to get involved. If a bribe or favour is asked for do not pay or give it. Even if the bribe is suggested by a governmental official or an employee in a private company. You usually find that you can obtain what you want without paying. What about your competitors. They pay and get an advantage, but do they. They will have built the cost in somewhere in their price. This can give you a cost advantage. You also have the added benefit that you can sue for any breach of contract and they cannot use allegations of corruption against you. Good business is possible in Romania as in most countries in the world without paying bribes or becoming involved in illegal acts. Earn your money this way and you can sleep easy at night. Follow good business practice and you will in our view benefit.