Prosecutors from the Directorate for Combating Organized Crime and Terrorism (DIICOT) are performing over 60 searches in Bucharest and nine other counties in a DIICOT file concerning Romania’s railway freight company CFR Marfa, which looks at the scrap sale of freight cars at an undervalued price, News.ro reported.

The management of CFR Marfa, including former general manager Mihut Craciun, was involved in an organized crime group which sold at an undervalued price 2,450 freight cars meant for scrap, the DIICOT prosecutors say. The difference between the real price and the sale price of the goods was trafficked for the benefit of Remat Calarasi, a processor of scrap and the buyer of the goods. According to the Romanian Police, the damages in the case exceed EUR 6 million.

The freight cars were sold on the Bucharest Commodities Exchange at a scrap price, although the metallic residue resulting from the scrapping of the rolling stock would have fit the price of “obsolete heavy ferrous scrap” or “special ferrous scrap (steel),” which sell at higher prices. As such, 49,000 tons of rolling stock were sold at a price of EUR 120 per ton, while the average price for obsolete heavy ferrous scrap was of EUR 175.88 per ton, and that of special ferrous scrap (steel) of EUR 218.90 per ton, the prosecutors say.

The organized crime group worked on three levels: the executive management of CFR Marfa; employees of CFR Marfa in Timisoara, Brasov, Iasi, Galati, Craiova, Cluj and Constanta; and representatives of Remat Calarasi, according to DIICOT.

Prosecutors are performing searches in Bucharest and Timis, Caras-Severin, Hunedoara, Prahova, Mehedinti, Calarasi, Arad, Teleorman, and Dambovita counties, and 40 suspects are expected to be brought in for hearings.

Mihut Craciun was dismissed from his position of general manager of CFR Marfa in December 2016, six months after taking over this position.

The administration board of CFR Marfa said it would adopt a decision to appoint interim management for the company, Agerpres reported. The board also said that the 2,450 freight cars in the DIICOT investigation met the scrapping conditions and had no longer a functional use.

In its turn, the Romanian Commodities Exchange said it organized the auction “according to current regulations and following instructions from CFR Marfa.”

Remat Calarasi is controlled by Tawil Group, which became its majority shareholder when the company was privatized in 1998. Tawil Group is owned by Lebanese businessman Tawil Abbas. The company issued a statement saying it followed all the legal norms concerning the auction and the purchase contract, News.ro reported.

CFR Marfa had 45.7% of the Romanian freight transport market in the first semester of 2016.

editor@romania-insider.com