Romania: Commission Investigating How Bechtel Won Contract

Publisher Name: 
Financial Times

The European Commission is investigating the award - without a tender
- of a $2.5bn (¤2bn, £1.4bn) Romanian motorway contract to the
politically well-connected US company Bechtel.

Gnther Verheugen, EU enlargement commissioner, is examining the
contract for a 450km road that would be Romania's key transport link
with central Europe. He is responding to complaints by
Bucharest-based EU diplomats who claim the process was not

A senior European Commission official in Bucharest said: "The whole
thing stinks - but it particularly stinks because none of the
international financial institutions will touch it with a barge pole
because there was no public procurement process."

EU diplomats are also angry that the Bechtel motorway would be built
before another Bucharest-Budapest motorway planned jointly by Romania
and the EU. They fear that either the EU-sponsored route will be
delayed or the cash-starved Romanian government will waste money
building two motorways to the west at the same time.

Brussels has warned that a lack of transparency and the corruption
that often follows is one of the biggest stumbling blocks to
Romania's proposed EU accession in 2007.

According to the transport ministry, Bechtel was awarded the contract
after the US and Romanian governments decided the road was a
priority. The ministry added that Romania remained committed to the
EU-sponsored motorway as well, saying the country would have enough
traffic in future for both routes.

A senior EU diplomat in Bucharest said the deal showed awarding
contracts in Romania was a political rather than a commercial
process. The diplomat warned that the case threatened Romania's
chances of being awarded a market economy status by the EU, a key
test before it is admitted to the union.

A spokesman for the US Embassy, which has loudly campaigned for
commercial transparency in Romania, said the US had recommended the
government issue a tender for the project. But it said negotiated
sole source contracts were common commercial practice, were often
faster than tenders and were in keeping with Romanian law.

The planned project financing has alarmed EU officials. The US
Eximbank, the government-sponsored trade bank, is lending $800m for
the $2.5bn scheme.

The transport ministry said it was negotiating with the International
Monetary Fund and the European Investment Bank, the EU's
infrastructure bank, about raising other finance.

But the EIB said it did not finance contracts awarded without public
tenders and the IMF said it did not finance projects.

This means Romania would almost certainly have to raise the money
from government resources at a time when it is fighting hard to
balance its budget and to finance EU accession.

AMP Section Name:Money & Politics