After Romania failed to close a privatization contract for the state – owned railway freight company CFR Marfa last year, the state authorities and the private investor who was interested in the company engaged into a public quarrel over the privatization guarantees. Raiffeisen Bank Austria, who allegedly refused to execute the guarantee letter, as well as prosecutors are also involved in the saga, while the Transport Ministry is currently investigating the whole matter.

Private investor Grup Feroviar Roman (GFR) says it has yet to receive the guarantee letter from the state after the privatization failed, and that the escrow account with EUR 20.2 million created for the privatization procedure was closed.

In response, the Ministry of Transport said it wanted to execute the EUR 10 million guarantee letter issued by Raiffeisen Bank Austria to GFR – and handed over to the ministry within the privatization – but that the bank refused to do so.

The Ministry had sent the matter over to prosecutors at the Organized Crime and Terrorism Investigation Unit DIICOT. Back in January this year, prosecutors asked the Ministry, back then run by Ramona Manescu, to communicate whether the guarantee for the CFR Marfa privatization was given back to GFR. In case the guarantee amount was still in the Ministry of Transport’s account, the DIICOT asked the ministry to send over the money into a treasury account.

The current Transport Minister Dan Sova however says the previous minister had failed to comply with DIICOT’s request, and then upon taking over the ministry’s helm, he mandated a state secretary to solve the matter. Later on, the state secretary resigned, without giving any explanation, according to the ministry. Later in March, the Ministry via state – owned EximBank asked Raiffeisen Bank Austria to execute the guarantee letter, but the foreign bank refused to do so.

The Ministry is currently investigating the situation, and gathering documents so as to create a criminal complaint and establish whether this was the Ministry’s fault, or Raiffeisen Bank’s refusal was illegal, according to the Ministry’s official statement.

GFR was the winner in the privatization of CFR Marfa back in June 2013, with a EUR 200 million offer, but later during the year, the privatization process went south.

The transaction couldn’t be completed by the October 14 deadline. According to GFR owner Gruia Sandu, some of the lenders of CFR Marfa did not agree to change the company’s shareholder structure and the Competition Council did not have enough time to green light the takeover.

Finance Minister Daniel Chitoiu said in November last year that the privatization process of CFR Marfa will be completed in the first half of 2015, after the company completes a restructuring program.

editor@romania-insider.com