Thursday, May 23th 2002: "Timis' Associates, Involved in the Failure of Oltchim Company's rivatization"

Paul Cristian Radu, Dan Badea, Stefan Candea, Sorin Ozon

Evenimentul Zilei published Vasile Frank Timis' biography in yesterday's issue. The latter is the Romanian-Australian citizen who, although he has been sentenced twice, being charged with possession of heroin, has managed to lease the most important gold deposits in Europe, located at Rosia Montana, Alba County. We also published the complicated structure of the offshore companies through which Timis and his associates managed to obtain exclusive rights for operations at the great gold deposits in Transylvania. Besides the two companies, Rosia Montana Gold Corporation SA and Deva Gold SA, set up through the association with the National Society for Gold and Copper - Minvest Deva, Timis and his associates are also involved in other deals with the Romanian State or its officials. One of these deals ended with a sonorous bankruptcy. The other is an example of how Timis tried to use politicians to start his businesses in Romania.

The Privatization of Oltchim Company

Last spring, the privatization of the chemical unit Oltchim was announced with much ado. Exall Resources Ltd. of Canada was the foreign company that was to take over Oltchim; it took over 53.26 percent from the latter. Exall Resources Ltd. committed itself to pay $9 million by 21 July 2001. After that, it was supposed to invest $150 million to develop the Oltchim unit. The deadline passed and Exall failed to keep its promise. Then the money was to be paid by 23 August 2001. However, the Canadian company failed to make that payment too. It invoked the fact that a fire had taken place at Oltchim. Consequently, in accordance with the existing stipulations, the contract concluded between the state and Exall was cancelled. Exall filed charges against the Romanian State. The lawsuit is still ongoing, being a hindrance in the unit's privatization process. Three persons, who have very close ties with Timis are behind Exall Company. They also have ties with the company that leased the gold mine at Rosia Montana. The chairman of Exall, Stephen G. Roman, is also a director pf Gabriel Resources Ltd., which carries out operations at the Rosia Montana gold diggings. Similarly, Exall vice-president Edward J. Badida has also worked for Gabriel Resources. Michael Van Rens, the Canadian company's third director, is one of Timis' associates in the Australian Company Pneumatic Systems International Pty Ltd. Timis is the president of Gabriel Resources Company.

To be able to understand much better how Exall could win the tender for Oltchim, we publish an excerpt from [Toronto] The Globe and Mail. "Mr. Roman (referring to Stephen G. Roman, Exall Company's president and a director of Gabriel Resources Company - Evenimentul Zilei editor's note) said he was in Romania seeking new projects to work on gold mines. He said he was lucky to meet with the general director of a petrochemical unit, who made him change his strategy. The director told Roman that the Romanian Government takes into consideration the sale of the unit, as part of the privatization strategy. He suggested having a look at it, too. The result of this meeting was that in April, Exall Resources Ltd. from Toronto, a small company working in gold mines, took over 53.26 percent of Oltchim."

Dubious Association

Through one of his companies, Timis involved himself in a direct association with the son of an important politician, who was in office over the interval when the Rosia Montana deal was finalized, through the endorsement of the new law on mines. It is about the association in the
Global Mineral Resources Company, which was set up in 1998. The associates' list includes Alin Daniel Hauca, the son of PD [Democratic Party] Senator Teodor Hauca, who was secretary of the Economic Commission in the Romanian Senate. Timis is associated with Senator Hauca's son through another offshore company, which was licensed in the British
Virgin Islands, namely Regal Group Services Inc. This offshore firm, which was 100 percent owned by Timis, involved itself several times in carrying out dubious transactions with Gabriel Resources Ltd. shares. One particular transaction occurred in October 1998, when Regal Group purchased 702,500 shares of Gabriel Resources.

The presence of the son of the Senate Economic Commission's secretary in this association raises big question marks about Timis' ties with the Romanian political class. If those who pave some businessmen's way usually keep a low profile, here it is, in this case, the Romanian-Australian citizen takes a possible protection "umbrella" as an associate. Former PD Senator Teodor Hauca told us he does not know anything about any connection between Timis and his son. "From what I know, my son has not signed any kind of deed for the company in which he is a shareholder. He was included in the company because I was among
Viorel Stoica's friends. The latter is a businessman among Timis' friends. This is all," Hauca told us.

IFC Treats the Project Carefully

Industry Minister Dan Ioan Popescu said, "At a certain moment I had some doubts" about the Rosia Montana project. However, they vanished when the IFC's [International Finance Corporation] investment director, from the World Bank, came to Bucharest. This department specializes in granting loans to private companies. "I believe the fact that the IFC came and said it could invest approximately $60 million in environment-related projects and in the creation of other economic units together with this company, is a confirmation of the fact that the project is viable and there are no suspicions present about its partners." However, while the industry minister presented the involvement of the World Bank's arm for investments in the private sector as something certain, a letter sent by the head [Ziad Alahdad] of the WB's mission in Bucharest showed that this institution's stance was more cautious. Ziad Alahdad sent an answer to a foundation closely monitoring this project, Alburnus Major. The WB official wrote that the World Bank is not involved in financing the Rosia Montana project. "The IFC held talks with the government and with the project's financing bodies, about its possible participation. The IFC is currently assessing this possibility. However, it is too soon to tell whether they would take part in it and in what form." Kurt Luhrberger, the head of the IFC's mining department, made equally cautious statements during a visit he paid to Bucharest last month. "The IFC will make a decision after conducting a careful analysis of all aspects: economic, social, and environmental. If the results are not satisfactory, then we shall not be able to do anything for this project," the IFC official said, before stating that the data presented by Gabriel Resources Company show that the Rosia Montana project is feasible.