Vlad Filat-ed: The Ongoing Fallout from the Moldovan Banking Scandal Reviewed by Momizat on . [caption id="attachment_5537" align="alignnone" width="614"] Following a vote in the Moldovan parliament which saw the lifting of his immunity, Vlad Filat, a fo [caption id="attachment_5537" align="alignnone" width="614"] Following a vote in the Moldovan parliament which saw the lifting of his immunity, Vlad Filat, a fo Rating: 0

Vlad Filat-ed: The Ongoing Fallout from the Moldovan Banking Scandal

Following a vote in the Moldovan parliament which saw the lifting of his immunity, Vlad Filat, a former premier of the country from 2009 to 2013 and indeed, at one time, its interim president, was led away Oct. 15, 2015 in handcuffs by anticorruption agents.

Following a vote in the Moldovan parliament which saw the lifting of his immunity, Vlad Filat, a former premier of the country from 2009 to 2013 and indeed, at one time, its interim president, was led away Oct. 15, 2015 in handcuffs by anticorruption agents.

Following a vote in the Moldovan parliament which saw the lifting of his immunity, Vlad Filat, a former premier of the country from 2009 to 2013 and indeed, at one time, its interim president, was led away Oct. 15, 2015 in handcuffs by anticorruption agents.

His arrest is the latest in the ongoing fallout from the Moldovan Banking Scandal (see previous article) which saw USD 1 bln, or close to 15 percent of that country`s GDP, disappear in November 2014 in a massive fraud involving offshore entities belonging allegedly to Ilan Shor, one of the country`s richest men.

Filat, who is the Leader of the Liberal Democrat Party—and part of the ruling coalition that governed the country at the time of the scandal—is alleged by the country`s General Prosecutor to have taken bribes of USD 260 mln from Shor to enable Shor to take control over one of the banks involved.

Previously, three of the country`s leading banks, including BEM, or Banca de Economii, Banca Sociala and Unibank saw USD 1 bln transferred from them to a series of UK- and Hong Kong-registered companies.

As a result of their collapse in November 2014, the state was forced to step in to bailout the banks, thus protecting depositors but creating a hole in the public finances equivalent to an eighth of Moldova`s GDP.

The IMF advised country leaders of the grave risks posed by the private banks but had failed to take preventative measures. The arrest of Filat suggests that this failure had less to do with inertia and perhaps more to do with politicians lending support to wealthy business friends by blocking efforts to investigate and prevent an ongoing fraud.

The governor of the country`s central bank at the time of the scandal, Dorin Dragutanu, announced his resignation last month, but has denied responsibility for the fraud.

It remains unclear for the time being whether Filat will be the last to be arrested or whether others may yet follow him. The country`s President, Nicolae Timofti, who has been in office since 2012, has so far resisted calls for his resignation. We shall see.

Filat has been charged with corruption, including bribery, and influence peddling, which carry a maximum penalty of 15 years. He is currently being detained for 72 hours and has denied all charges, saying the investigation is politically motivated.

Moldova is one of Europe`s poorest countries with its  average annual GDP per capita just USD 3,800. The country hosted an International Monetary Fund (IMF) mission during 22 September to Oct. 6, 2015, which viewed its talks as constructive. That said, the IMF noted that there would still be ongoing discussions on the country`s measures and reforms to support the fiscal policy package for 2016 as well as addressing the problems with Moldova`s banking sector.

Neither the EU or the World Bank are unlikely to provide the much needed budgetary support to the country until those ongoing discussions are completed.

Photo courtesy of: Wikimedia Commons/European People’s Party.

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