Weekly Roundup

April 21, 2023

Ilan Shor Sentenced to 15 Years in Prison

On April 13th, Olesya Stamate, head of the Parliamentary Legal Committee, announced that the Chisinau Court of Appeals had ruled and upheld Ilan Shor’s 2017 conviction of the crimes of fraud and money laundering in the case of the Theft of the Billion. The court sentenced Shor to 15 years in prison, an additional 5 year prohibition against holding any leadership position in banking and asset seizures of 5.3 billion lei (~ $294 million dollars).

Background: How we got here

Ilan Shor was convicted of orchestrating the theft of one billion dollars from 3 Moldovan banks in 2014. The investigation into his involvement began in 2015 and he was convicted of the crime in 2017. His lawyers appealed and the case was moved to multiple appeals courts before coming to the Chisinau Court of Appeals where it languished from 2019 until this week. Judges at the court regularly frustrated prosecutors by accepting various excuses from the defense team to punt hearings month to month for over 4 years.

While Shor’s cases wound through the courts he was left a free man. In that time he became mayor of Orhei and later a member of parliament in his newly created Shor Party. In 2019 Ilan Shor fled Moldova at the same time as Vladimir Plahotniuc. This followed parliamentary elections that brought a coalition of PAS and the Socialist Party to power. Shor has been residing in Israel where he is a dual citizen ever since.

A Strange Announcement

The news that the court finally ruled and that Shor would be convicted was not expected by the media or citizenry who have gotten used to the case simply being delayed monthly. The announcement of the ruling by Olesya Stamate, a member of parliament in the PAS faction and then subsequent commentary by the President’s office both came out before there was an official announcement from prosecutors or the court. When asked about why this happened, MP Olesya Stamate said that she had heard the news from colleagues, not court officials, and that she believes it was simply a case of who wrote a social media post faster. The President’s office noted that their statement at 6:25 pm followed public reporting published at 5:55 pm. This is correct but that reporting was quoting Stamate, not the court.

Whatever the odd process of announcement, the facts of the case were confirmed by the court and Ilan Shor, who has long evaded justice, now stands convicted in absentia for his crime.

Public Reactions

Following the breaking news, President Sandu posted a statement saying:

“Shor will be behind bars for 15 years for stealing a billion, and his property will be confiscated. The decision was made today by the Appeals Chamber. We demanded this so that justice would prevail. This was demanded by the citizens - that those who stole the money [return it], and justice was done. Only in this way can justice regain its status: through legal decisions, punishing thieves and restoring justice,”

Ilan Shor’s lawyers promised to appeal the case to the Supreme Court of Justice SCJ as well as the European Court of Human Rights. Given the current composition of the SCJ which only has 5 of 20 members appointed, and the recent reforms which changed the SCJ from a simple "top appeals court” into a precedent setting body similar to supreme courts in the EU and US, it is not guaranteed, and probably unlikely, that the court will even hear the case.

Ilan Shor commented on his conviction from Israel saying:

“The decision of the Appeals Chamber is illegal and was made under duress. The judges who accepted it will soon be behind bars. This decision does not bother me at all, I absolutely do not care, I am not going to obey, this decision will be canceled exactly on the second day after the change of the current regime, ”

From Ilan Shor’s facebook page. He regularly addresses the camera from an undisclosed location in Israel

The Superior Council of Magistracy responded by condemning Shor’s clear threats against the judges in the case and calling on relevant state security bodies to assure their safety and judicial independence.

Following the conviction, Israeli news outlet the Jewish Telegraphic Agency JTA wrote one of the first stories about the fugitive oligarch in the Israeli press. The story focused on how Shor is using his freedom in Israel to attempt the overthrow of the democratically elected government in Moldova. It quoted Moldovan Foreign Minister Nicu Popescu on the situation as saying:

“The reality is that Shor is trying to bring violence onto the streets,” ...

“He is operating from Israeli territory and that is problematic. This situation related to Shor is a factor that is problematic for our country, its stability, and for the stability of the region. The scale of the attempts to destabilize Moldova through violent means have risen recently and that is something that matters a lot.”

JTA reported on Shor’s connections to Russia noting that the FSB’s code name for Shor is “the young one.” So far Israel has not responded to comment or to Moldova on questions of extradition. JTA noted that this may change after the conviction and that Israel has been more willing to extradite citizens in recent years. The paper noted that US and UK sanctions, in addition to the conviction, as a strong pushing factor for the government.

Moldovan Anti-Corruption Prosecutor Veronica Dragolin called on Israel to process a swift extradition and noted that she and Moldovan authorities are concerned Shor may attempt to flee again… this time to Russia.

On April 19th the European Parliament passed resolutions supporting Moldova beginning EU ascension negotiations before the end of 2023. The resolution also called for member states to implement sanctions against Ilan Shor and Vladimir Plahotniuc, and to assist in their capture and extradition to Moldova.

Moldovan International Affairs

This week the head of Tatarstan Rustam Minnikhanov was denied entry to Moldova and put on a plane back to Russia. The Russian regional leader was traveling to Gagauzia at the invitation of the Socialist candidate for Bashkhan. He claims that he was refused entry as an “undesirable person.”

Border police commented saying:

“Support for a candidate in the regional elections in our country is not a sufficient reason [for entry to Moldova], and the authorities have previously asked Russian officials to refrain from interfering in the internal affairs of the country,”

The police noted that in the 24 hours proceeding his arrival 46 persons had been denied entry to Moldova, either for failing to explain the purpose of their visit, or for confusing their statements under questioning.

Following this incident, a diplomat of the Russian Embassy in Moldova was expelled. The Ministry of Foreign Affairs stated simply:

“For actions incompatible with the diplomatic status, the representative of the Russian Embassy in Chisinau was declared persona non grata. He is obliged to leave the territory of Moldova,”

The Kremlin called both these incidents “unfriendly steps” and implied in their statement that the expulsion of the diplomat was related to the refusal of entry - though Moldovan authorities have not explicitly made this connection in public statements.

In other international news, Moldova has aligned with EU sanctions on corruption and human rights abuses. The sanctions, which are effectively an EU Magnitsky Law, resulted in a list of sanctioned individuals by Moldova. Most individuals are military or police officers of the Russian Federation involved in war crimes in Bucha and other locations in Ukraine. The head of prisons who is responsible for the detaining of Alexei Navalny, and investigators responsible for repressing Russian protestors of the war are also sanctioned.

Moldovan Security and Defense

Here is a rapid fire roundup of the top news in Moldovan security and defense.

• Moldova continues high number of military exercises - The Moldovan Army and security services have continued holding readiness exercises including one where Moldova’s 22nd “Blue Helmets” peacekeeping brigade transited Chisinau on their new Piranha Armored vehicles. Additionally, on April 21st Fulgar (SWAT) units are expected to hold exercises in Chisinau involving the use of Humvees and armored vehicles. Authorities ask citizens not to be worried and not to photograph the exercises.

• Ministry of Defense announces construction of a modern military base - Defense Minister Anatolie Nosatii announced the building of a new base with modern training facilities and high quality accommodations for troops near Chisinau. Construction of the base is expected to take 3-5 years and it will be paid for by money authorized in the country’s military budget. The Minister noted that the Army’s priority is the recruitment, training and housing on the base of a professional contract NCO corps (non commissioned officers / sergeants).

• 250 million euros needed to modernize the Moldovan military - Defense Minister Anatolie Nosatii said that lack of past spending and the need to prioritize air defenses necessitates major new expenditures on the armed forces.

• Trilateral Meeting of Ukrainian, Romanian and Moldovan Defense Ministries - Defense Minister Anatolie Nosatii attended a trilateral meeting in Bucharest to discuss regional defense. He spoke about Moldova’s challenges saying:

“Now Moldova is also exposed to military threats. For example, the international community notes the violation of our airspace by Russian missiles. Of course, we are analyzing and monitoring the situation in the Transnistrian region in the security zone and in close proximity to the Moldovan border. So far, the situation is calm, but rather unpredictable. Meanwhile, we want to emphasize that elements of a hybrid war are being used in our country. The current situation puts enormous pressure on the national defense,”

• Renovations at Military Bases ongoing - This week the Army announced completion of renovations to the ammunition storage facilities at the Cahul training base of the “Dacia” motorized infantry brigade. The renovations were funded in partnership with the US government.

Note: There is a developing story at the time of writing where the Moldovan government has complained to Transnistrian and Russian authorities about the unauthorized movement of troops and armored vehicles in the security zone. It appears that these unauthorized movements have caused a diplomatic issue primarily due to lack of notification not due to any coordinated repositioning. We’ll address this as more news unfolds in a Quick Hit article that explains a bit more about the security zone in the coming days.

Political Updates

Here is a rapid fire roundup of the top political stories of the past week.

• Socialists face heated questions in parliament about their recent trip to Russia - PAS MPs repeatedly questioned Socialist MPs about their reason for taking a recent trip to Russia and their meetings with the “aggressor state.” After multiple attempts to dodge the question from the Socialists PAS MP Adrian Cheptanaru stated:

“If it’s difficult for them to answer these questions, then I advise you to just tell it like it is. They went to kiss Russian boots, to assure Russia that they were at her disposal and could be used. Complain about the fact that the deputies from the PCRM-PSRM bloc are being sold to the Shor party, and ask them to leave their deputies in their faction, because they can still be useful, ”

This resulted in an exasperated reply from the Socialist MP Grigore Novak:

“We were at a very important economic forum. You don't understand what economics is because you're not interested in it. And we can report to the citizens of Moldova, and not to foreign agents embedded in the Moldovan parliament,”

• Igor Dodon returns to the Socialists as Executive Secretary - In an attempt to stop the escalating fracturing of the Socialist Party Igor Dodon once again took the leadership role of the party after stepping down as party president (and abolishing the position) in October 2021. The inability of the Politburo-style committee set up after his exit to provide strong party leadership has been blamed by defectors as their reason for leaving the party. We’ll see if Igor Dodon can mend the party’s fractures and keep the Socialists a coherent political block.

• Socialist defector MP Alexander Nesterovsky outlines his new party agenda - The MP who defected to Shor’s “Movement of the People” reiterated that he intends to form a new party saying that his top priorities will be 1) the introduction of Russian as a state language alongside “Moldovan” 2) the re-recognition of “Moldovan” instead of Romanian as the state language and 3) the immediate joining of Russia’s Eurasian Union.

• Vladimir Voronin and the Communists are back - Voronin and his party previously announced a boycott of all parliamentary proceedings after the recognition of Romanian as the state language. He justified his ending the boycott with sensationalist statements about how no one who has run Moldova since 2009 (when he was ousted from power) has any right to do anything and his experienced voice is needed. The news of the boycott, as well as his return, barely made headlines emphasizing the increasing irrelevance of the Communists.

• Constitutional Court CC rules bans on St. George’s Ribbon, V and Z symbols constitutional …but it’s not as clear as that. The court ruled that banning the symbols is allowed in cases where they are used in order to support military aggression. PAS MP’s note that this language will require police to understand the intentions of people using the symbols and will likely lead to lower or zero enforcement. PAS plans to redraft the bill banning Russian symbols and bring it back to parliament taking into account the CC’s feedback.

• Scandal(?) with the national energy regulator ANRE - On April 12th parliament abruptly annulled the results of a competitive hiring process for a position on the 5 seat council of directors of the regulator. Parliament is responsible for filling the seat via a competitive hiring process organized by the relevant parliamentary committee. In this case, the committee on Economy Finance and Budget organized the hiring process led by an outside commission which verified applicants eligibility and rated candidates against a pre-established rubric. Vasile Plamadeala, who has worked for 10 years as a Trade Officer with the EU Delegation in Moldova won the competition. He formerly came in 2nd place for a similar opening in 2022. In both cases the commission verified his experience and eligibility according to the hiring criteria. This week, after he had won, the Parliamentary Legal Committee annulled the competition claiming that Vasile Plamadeala did not have the pre-requisite experience needed for the job. Mr. Plamadeala took to facebook decrying a non-transparent process and said that after a March 3rd meeting with PAS MPs he was unofficially told that the party had a different candidate and that he should quietly withdraw. Having not done so, the whole hiring process was annulled. PAS MPs deny this saying that the legal commission wanted to avoid potential litigation because of gaps in his professional background. Energy expert Sergei Tofilat summed up expert sentiment saying:

“Why wasn’t it initially possible to carefully check whether the candidate met the requirements? […] Either the rules of the competition were poorly thought out, or the parliamentary legal commission did not want this candidate to pass, and found a legal pretext."

Economic News

Here’s a rapid fire roundup of the top economic news stories of the week:

• “Activate your superpower” - Moldova’s Ministry of Labor and Social Protection has launched an aggressive ad campaign to recruit a new generation of labor inspectors. With taglines like "Your superpower may be combating illegal work" the campaign is seeking younger, honest, inspectors. Many ministries and agencies have struggled to attract talent over the last year, but the Ministry’s sleek add campaign with a dedicated website and ad videos shot in a modern open-plan office (though probably not the one people will work in) is a new and highly professional approach to recruiting. It is worth noting that many business owners consider the “superpower” of previous generations of labor inspectors to be “extortion.” The reform and restaffing of this office is a highly consequential process and many are be watching for the success or failure of the changes.

• Chaos at Air Moldova - The airline continues to cancel flights with dozens canceled since early March. This week multiple flights were canceled with as little as 2 hours warning as passengers were already in the airport waiting. Earlier cancelations were due to multiple planes being unavailable for flying or undergoing maintenance. This week the airline announced that cancelations were due to a lack of funds for maintenance or fuel.

• Parliament increases bank deposit insurance - Starting in 2025 Moldovan bank deposits will be insured up to 200,000 lei (~ $11,000) up from 50,000 lei ($2800) today. This law is part of reforms agreed with the EU to align with the blocks norms.

• Limited Liability Company (SRL) Reform - Moldovan Limited Liability Companies (called SRLs from the Romanian acronym) are set to see the biggest reform since independence with a packet of legislation announced by the Ministry of Economy this week. The reforms are designed to increase shareholder rights and to add flexibility to shareholder agreements within companies. This is an important reform to Moldova’s economic development and we will focus a separate Quick Hit article on its implications as the reform moves forward.

Note: I want to disclose that as the President of the Moldova Small Enterprise Alliance AIM, I represent an organization which participated in discussions on this reform and has been advocating for SRL reform for multiple years.

• MoldovaGaz has fully repaid its October 2022 loan to the government - The gas company risked losing its assets and transportation system if the loan was not paid on time. Now, with the loan paid the company’s assets are safe and the government made a hefty return on the loan given the national bank interest rates in October.