Romania has launched an investigation into suspected fraud involving €300 million worth of CO2 emission certificates, involving the country’s largest steel plant, Liberty Galați (owned by Liberty Steel). This was reported by the Organised Crime and Corruption Reporting Project (OCCRP).
The Bucharest Prosecutor’s Office said prosecutors and special police units conducted raids in several locations in Bucharest and the city of Galați, where the steel plant is located.
Investigators claim that members of Liberty Galați’s management embezzled company funds and created tax evasion schemes.
According to law enforcement officials, an analysis of CO2 certificate transactions between 2019 and 2022 showed that the company did not benefit from these deals and that the Romanian state budget suffered losses.
The Romanian prosecutor’s office claims that two company officials approved the sale of more than 5 million CO2 certificates worth $137.5 million to two companies, including Russia’s Gazprom. The money was sent to affiliated companies.
Subsequently, in March 2021, the steel producer recorded a deficit of approximately 3 million certificates. Therefore, it had to urgently purchase 1 million certificates from a Czech-based group company for €48 million. The company also purchased 2 million certificates from Gazprom for €107 million, €17 million of which was commission.
Both transactions were carried out at significantly higher prices. As a result, the company’s losses amounted to €154 million.
According to the prosecutor’s office, the CO2 certificate transactions were not aimed at achieving the company’s legitimate economic goals, but were used as a tool for embezzlement and illegal tax optimization, transferring financial resources to affiliated persons and shareholders, to the detriment of assets and financial stability.
Investigators also believe that management transferred more than €137 million to affiliated legal entities in Europe, although there was no operational need to do so.
In addition, prosecutors claim that another €57 million was withdrawn from the company through fictitious consulting and management contracts between 2020 and 2022.
For its part, Liberty Steel Group said late last week that it is cooperating with the authorities but denies any wrongdoing.
“Liberty and its management have always acted in full compliance with Romanian law and regulations, following local legal advice. The company is fully cooperating with the authorities in their investigation and is confident that it has conducted its business in an appropriate manner. Liberty strongly denies any allegations of wrongdoing,” a company spokesperson said.
According to Europa Liberă România, this is not the only investigation targeting the steel company. In September, it became known that a government regulatory body was investigating how Liberty Galați had been financed by the state-owned Exim Banca Românească over the past two years. The amount in question is €292 million.
The steel company received two loans to restore the operation of furnace No. 5, the only one that is currently in operation. The state-owned enterprise operated for only a few months in 2024 and only a few days this year, and is currently idle.
The Galati-based company is undergoing bankruptcy proceedings. According to Romanian media reports, it currently has 1,197 creditors, the largest of which is the Romanian state through Exim Banca Românească and ANAF.
As a reminder, a buyer for Liberty Galați will be sought at an international auction. The government has approved a proposal to amend the plan submitted by the bankruptcy administrators. It aims to sell the company’s core business. The liquidation price is €400 million, and the market price is €800 million.