ICT

FORMER ASF EMPLOYEE TO BE INVESTIGATED BY THE NATIONAL ANTI-CORRUPTION DEPARTMENTAnti-corruption prosecutors investigating the Electroargeş case

GEORGE MARINESCU (TRANSLATED BY COSMIN GHIDOVEANU)
English Section / 19 aprilie

Anti-corruption prosecutors investigating the Electroargeş case

Ciprian Copariu, former head of the Monitoring Department of the ASF is being accused of abuse in office in the criminal complaint Ciprian Copariu: "During my time as head of the Department, I have rigorously applied the legislation in effect"

Ciprian Copariu, former head of the Monitoring Department of the ASF is being accused of abuse in office in the criminal complaint Ciprian Copariu: "During my time as head of the Department, I have rigorously applied the legislation in effect"

The refusal of the ASF (Financial Oversight Authority) to approve the mandatory public takeover bid for the Electroargeş SA shares, submitted by Investments Constantin SRL, will be investigated by the prosecutors of the National Anti-Corruption Department. BURSA reported in its February 15, 2021 issue, in the article "Preluarea Electroargeş SA, blocată la iniţiativa unui fost membru al Consiliului de Administraţie al SAI Muntenia Invest" (The public takeover bid for Electroargeş SA, blocked at the initiative of a former member of the Board of Directors of SAI Muntenia Invest)

(https://www.bursa.ro/asf-institutia-clanului-dragoi-preluarea-electroarges-sa-blocata-la-initiativa-unui-fost-membru-al-consiliului-de-administratie-al-sai-muntenia-invest-09131240).

Dissatisfied with the justification provided by the ASF for rejecting the mandatory public takeover bid, Constantin Ştefan, Investments Constantin SRL, Benjamins United SRL and Electroargeş SA filed a criminal complaint wherein, among other things, they are accusing Ciprian Copariu (former Head of he Monitoring Division of the ASF, up until the end of last year, when he resigned) and several officials of the Authority - to be identified during the criminal investigation - of abuse in office - as stipulated in Article 13 Index 2 of Law no. 78/2000 pertaining to Art. 297 Paragraph 1 of the Criminal Code - and abuse in office extremely serious consequences, stipulated in article 297, pertaining to Article 309 of the Criminal Code.

The Authority's employees are accused of contributing to the issuing of Decision 1329 / November 12, 2020 which rejected the documentation for the Electroargeş SA mandatory public takeover bid, with a formal argumentation, although they had previously asked for many changes/additions to the documentation and went as far as requesting proof of availability of 100% of the amount in cash needed for the entire takeover procedure, which is not not part of the legal requirements.

The petitioners state that in 2020, the decision to reject the mandatory takeover bid for Electroargeş took into account the reasons put forward by Ala Procopenco and her representatives, including lawyer Daniel Stoicescu, who, in the meantime, allegedly became a shareholder of that company, holding about 2000 shares. The criminal complaint also shows that the 2015 shares in Electroargeş were sold to the companies controlled by Constantin Ştefan (Investments Constantin SRL and Benjamins United), which at the time led the ASF to find that he was acting in concert at Electroargeş, with the companies held by Ala Procopenco.

Indecisive stance of the ASF: it initially approved the mandatory public takeover bid, and then turned around and rejected it

Through its Decision 3501 / 25.11.2015, ASF required all the companies in question to carry out the public takeover bid of the entire block of shares of Electroargeş SA, decision the ASF no longer agrees with. Last year's ASF Decision to deny the requirement to perform a mandatory takeover bid of Electroargeş states that "the provisions of art. 6, par. (1) of Law 24/2017 have been infringed upon". The paragraph in question states "any person intending to make a public takeover bid shall submit to the ASF a request for the approval of the bid, accompanied by an announcement in the case of a public takeover bid". The obligation to perform a public takeover bid had been established in 2015 by the ASF, there were no comments on the price the takeover bid would be performed at, the money needed for the takeover bid was available, what is actually happening?

Concerning the fact that in 2015, the ASF ruled that Constantin Ştefan's companies were acting in concert with the companies led by Ala Procopenco, the author of the criminal complaint on submitted to the DNA, he states that the decision of the Authority is erroneous, without merit, given that the companies in question had opposing positions, which could not even support the appearance of a presumption of acting in concert.

"Even though I had made numerous requests to the ASF to revise their claims of the companies in question acting in concert (...), the ASF ignored them, and upheld its claims of the companies acting in concert, even though the legal requirements for that were not met. Moreover, the ASF upheld the acting in concert even though Investments Constantin SRL and Benjamins United deliberately did not acquire more than 33% of the issuer's shares, as they held less than 33% on the date of the trades. More specifically, the passing of the 33% stake occurred unintentionally after the share capital increase of 2012 was invalidated by the courts, after the trades of 2015. In that case as well, even though the legal arguments of which it follows that the intention was to acquire a block of shares of less than 33% and it was requested for the verdicts of acting in concert to be waived, the ASF, through Ciprian Copariu - head of the Issuers, Trade Monitoring and Market Abuse Division - and others, refused to declare that exceeding the 33% holding was unintentional, claiming in a completely surprising manner that the companies which bought those shares should have anticipated the evolution of the lawsuit whereby the share capital increase was canceled", the criminal complaint filed with the anti-corruption prosecutors states.

ASF - no response on a potential market manipulation allegation in the case of Electroargeş SA

The authors of the complaint also claim that several companies represented by lawyer Daniel Stoicescu acted in concert with shareholder Tudor Dumitru, between 2015 and 2020, through the same ASF executive, Ciprian Copariu, as well as through other people with decision-making or executive positions within the ASF, against Electroargeş and against investor Constantin Ştefan.

"These actions represent an abusive conduct that engenders more than just administrative liability. Some of these actions could probably be explained through a criminal connivance due to the previous friendly relation with lawyer Daniel Stoicescu, former head of the investigation department, a former executive of the CNVM Monitoring-Investigation Directorate of the CNVM - the precursor institution of the ASF, and former DIICOT specialist and the one who actually controls the shares of the companies in which Ala Procopenco is a shareholder", the criminal complaint further states.

The complaint also accuses other shareholders of the company of manipulating the market in order to increase / keep the price of Electroargeş shares up.

Given that situation, on April 14, 2017, Electroargeş (ELGS) filed a request with the ASF that the latter carry out the checks specific to cases of suspected market manipulation, which remained unanswered.

"Given the unnatural passivity of the ASF, on August 7, 2018, issuer ELGS reiterated the request that the ASF declare a stock market manipulation in its case, request denied by the same executive - Ciprian Copariu - through address 8991 / September 07, 2018", which stated that, "If public authority measures are required, the issuer will be able to find out the resolution to his petition that way", the criminal complaint further states.

The petitioners argue that through its behavior in this case, the ASF has allowed minority shareholders who have acted in a coordinated manner, conducting reversible transactions, to have the price set a much higher level than the one it would have reached via the stock market supply and demand of the BSE, in the event of a public takeover bid.

Following the price increase through the manipulation in question, the companies managed by Constantin Ştefan have been forced to invest considerably higher financial resources to conduct the public takeover bid for the remaining 60% of the ELGS shares (approximately 42 million shares), the quoted document further states.

As such, the authors of the complaint allege that the employees of the ASF, Ciprian Copariu in particular, must answer for tolerating the manipulation of the stock market through a market abuse committed by the minority shareholders of Electroargeş. The authors of the criminal complaint state that, due to the abuse in office committed by the employees of the ASF, they have suffered a loss of over 1 million Euros.

Contacted by BURSA, Ciprian COPARIU, the former head of the ASF Monitoring Division, told us about the allegations made against him: "I have not received any information about that criminal complaint. I won't make any comment on the abuse in office allegation. Regarding the allegation of me having favored the actions of lawyer Daniel Stoicescu, former head of the monitoring division of the CNVM (ed. note: predecessor to the ASF) in the Electroargeş case, none of it is true. I won't comment further, but I will state that as long as I was head of the Division, I have dutifully followed the legislation in effect".

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