ANALYSIS The stakes of the Otopeni Airport corruption case: how a tender scheduled since 2021 for the management of shops and restaurants was postponed for two years / Huge profits obtained by the two quasi-monopolies at the airport / What Grindeanu, Drulă and Chirițoiu have to say 

Prosecutors from the National Anti-Corruption Directorate (DNA) say in the corruption case at Henri Coandă Airport in Otopeni that the deal is to extend the contract that Millenium Pro Design has already had for over 12 years with the National Company of Bucharest Airports (CNAB, controlled by the Ministry of Transport) for the management of the airport shops. A business worth hundreds of millions of lei annually.

 

The DNA alleges that several CNAB employees asked Millenium’s representative, Cătălin Lăscuț, for a bribe of €22 million to extend the contract by at least five years.

 

• How did it come to this? In short: Millenium’s exclusive contract expired on 31 December 2022 and Lăscuț wanted a new contract for at least five years. Although preparations for a public tender started in 2021, they have not materialized today and the Millenium contract has already been extended by six months.

The financial stakes are enormous. Millenium Pro Design had a turnover of 358 million lei in 2021, at the height of the pandemic, with a declared profit of 11 million lei. In 2019, the year before the pandemic, it had a turnover of 434 million lei and a declared net profit of 21 million lei, according to specialist portal Confidas.

It should be noted that prices in Otopeni Airport shops are considered exaggerated by most Romanians: the price of the smallest bottle of water starts at 10 lei, for example.

The full story of the Otopeni shop business:

Preparations for launching a new tender started in 2021, when Cătălin Drulă (USR) was Minister of Transport, the majority shareholder of CNAB, in the Cîțu government. The preparation of the new tender came in parallel with an investigation by the Competition Council, which ended with a decision obliging the airport to complete the tender and announce the winner by 31 July 2022.

 

„The contracts for the commercial spaces at Otopeni Airport were signed at the end of 2010 with a duration of 12 years and will expire on 31 December 2022. The Competition Council launched an investigation into the commercial spaces in 2016, extended in 2019 and completed in 2021, on 6 October, one month after the end of my mandate. During my mandate, the new team at Otopeni Airport, led by General Manager Cosmin Peșteșan, proposed to the Competition Council to close the investigation, a series of formal commitments so that the non-competitive situation would not persist after the expiry of the contracts (after 31.12.2022). These commitments were accepted by the Competition Council by decision no. 69/06.10.2021 and became binding for CNAB and the other parties involved”, Cătălin Drulă, former Minister of Transport, told G4Media.

 

Drulă also said that immediately after his departure from the government, the Airport’s management was dismissed and he accused the current minister Sorin Grindeanu of not organizing the tender in time.

 

„In October 2021, a few days after the decision of the Competition Council to close the investigation, the general director Cosmin Peșteșan was forced to resign and the professional members of the Board of Directors were dismissed by the new management at the Ministry of Transport. Subsequently, the timetable to which CNAB had committed itself was no longer respected. Even today, the competitive tendering procedure for the commercial spaces has not been started, and recently, through the mandate given by Minister Sorin Grindeanu to the MTI representative in the CNAB AGM, the contracts were extended for a period of 6 months,” Drulă told G4Media.

 

Asked by G4Media why the tender at the airport was not organized and whether the Competition Council sanctioned in any way the breach of commitments, representatives of the institution headed by Bogdan Chirițoiu said that Otopeni Airport delayed the tender due to the lack of offers for consultancy services and, subsequently, due to the challenges filed by a competitor.

 

„During the monitoring of the implementation of the commitments, the competition authority was contacted by CNAB, which requested a modification of the commitment regarding the organization of the tender for the award of the commercial spaces in the AIHCB premises, on the grounds that it had not received any offers for the purchase of consultancy services, but a complaint was filed with the CNSC regarding the annulment of the procedure and then a complaint (from the same company) with the Bucharest Court of Appeal (CAB). The CAB partially admitted the complaint, partially annulled the award procedure. CNAB also submitted to the competition authority a new timetable for the award procedure,” the press office of the Competition Council told G4Media.

As for sanctions, the Competition Council announced in its response to G4Media that it has reopened the investigation into a possible restriction of competition in the market for commercial services at Henri Coandă International Airport (AIHCB) and will take a decision in the coming months. The investigation was reopened in February 2023.

 

According to G4Media information, the complaints referred to by the Competition Council that would have blocked the tender are from the firm Millenium Pro Design.

 

The current Minister of Transport, Sorin Grindeanu, defends himself against the accusations made by former minister Cătălin Drulă, and says that the blame for the postponement of the tender lies with the companies that contested the tender procedure. „Millenium Pro Design made a number of moves to delay the tendering process for the airport space as long as possible. The real motives behind these actions are to be determined by the state investigation bodies. This is also one of the reasons why we welcomed the investigation launched by the National Anti-Corruption Directorate at Henri Coandă International Airport”.

 

Repeatedly asked by G4Media whether he had ordered measures or sanctions against the National Airports Company of Bucharest for not organizing the tender on time and not respecting the commitments made to the Competition Council, Grindeanu said that „These activities are part of the CNAB’s activity. Therefore, it was not necessary for me to get involved and order measures that strictly concern the management of this company” and „these are matters that strictly concern the management of the Company. As far as I know CNAB management has discussed the situation with the Competition Council and explained the situation”.

 

At the same time, DNA prosecutors claim in their press release of 29 March that two CNAB employees detained in the corruption case allegedly prevented the tender from going ahead and favoured Millenium Pro Design to win a new contract.

 

Thus, the DNA alleges that Bogdan Șerban Lițoi, director of the Airport Facilities Management Department of the National Airports Company of Bucharest (CNAB), took a bribe from Millenium Pro Design shareholder Cătălin Lăscuț to delay by four months the approval of the specifications for the tender for consultancy services – an intermediate step before launching the actual tender for the management of the airport shops.

 

Prosecutors also allege that George-Alexandru Ivan, commercial director of the National Airports Company of Bucharest (CNAB), is alleged to have used his influence because he allowed a witness in the case access to secret information – i.e. the tender specifications for the procurement of consultancy services. In addition, prosecutors allege, Ivan also indicated to the same businessman how he could win the tender. The DNA alleges that on 15 February 2022, George-Alexandru Ivan actually handed over the specifications to the person concerned.

What is currently happening at Otopeni Airport?

 

The contract of Millenium and Dnata (shops and restaurants) expired on 31 December 2022, but the National Company of Bucharest Airports has decided to extend it by six months. So, in the midst of a corruption scandal centered on Millenium Pro Design, the company continues to have a monopoly on airport shops until at least the end of June 2023.

How does Sorin Grindeanu justify this contract extension? „As far as Millenium is concerned, it was considered appropriate to ensure the continuity of duty-free services for passengers until new contracts are awarded on the basis of public tenders. From an economic perspective, the AGA (general meeting of shareholders of the Airports Company) decided that it was more appropriate to ensure that these services, which bring revenue to the airport, were continued rather than discontinued until new contract winners were appointed.”

 

Photo source: Ilona Andrei / G4Media

Cătălin Drulă’s full answer to G4Media:

 

What stage were the contracts for shops and catering at when you took office as minister, what did you do during your time as minister and what do you know happened after you left office?

The contracts for the commercial premises at Otopeni Airport were signed at the end of 2010 for a period of 12 years and will expire on 31 December 2022.

The Competition Council launched an investigation into the commercial spaces in 2016, extended in 2019 and completed in 2021, on 6 October, one month after the end of my mandate.

During my mandate, the new team at Otopeni Airport, led by General Manager Cosmin Peșteșan, proposed to the Competition Council to close the investigation, a series of formal commitments so that the non-competitive situation would not persist after the expiry of the contracts (after 31.12.2022).

These commitments were accepted by the Competition Council by decision no. 69/06.10.2021 and became binding on CNAB and the other parties involved.

 

The CNAB undertakes to comply with the following timetable for the competitive and transparent award of commercial premises:

 

1. Identification and approval of the optimal model for commercial space development. DEADLINE: 30.11.2021
2. Procurement of support services for the procedure. DEADLINE 28.02.2022
3. Preparation of specifications and draft contract. DEADLINE 30.04.2022
4. Conduct the procedure and appoint the winner. DEADLINE 31.07.2022

 

It should be noted that in October 2021, a few days after the decision of the Competition Council to close the investigation, the Director General Cosmin Peșteșan was forced to resign and the professional members of the Board of Directors were dismissed by the new management at the Ministry of Transport.

 

Subsequently, the timetable to which CNAB had committed itself was no longer respected. Even today, the competitive tendering procedure for the commercial premises has not been launched, and recently the mandate given by Minister Sorin Grindeanu to the MTI representative on the CNAB General Meeting of Shareholders extended the contracts for a further 6 months.

The full response of the Competition Council to G4Media:

The Competition Council accepted (by Decision No 69/2021) the commitments offered by Dnata Catering S.R.L., Millenium Pro Design S.R.L. and Compania Națională „Aeroporturi București” S.A (CNAB) in the framework of the investigation into a possible restriction of competition in the market for commercial services at the „Henri Coandă” International Airport (AIHCB) through the conclusion of joint venture contracts (No 527/C/27.10.2010 and 528/C/27.10.2010) and the manner in which these contracts are implemented.

 

Among the commitments made by CNAB is the organisation by it of the next procedure for the award of commercial space at the premises of Henri Coandă International Airport, Dnata, Millenium and the firms belonging to their group were not involved in any way in the process of drawing up the tender documents and preparing the new procedures for the award of commercial space at AIHCB.

 

During the monitoring of the implementation of the commitments, the competition authority was contacted by CNAB, which requested a modification of the commitment concerning the organisation of the tender for the award of the commercial premises within the AIHCB, on the grounds that it had not received any offers for the purchase of consultancy services, but a complaint was lodged with the CNSC concerning the annulment of the procedure and then a complaint (from the same company) with the Bucharest Court of Appeal (CAB). The CAB upheld the complaint in part and annulled the award procedure in part.

 

CNAB also submitted to the competition authority a new timetable for the award procedure.

 

As a result, the Competition Council has reopened the investigation into a possible restriction of competition in the commercial services market at Henri Coandă International Airport (AIHCB) and is expected to take a decision in the coming months.

Photo source: Ilona Andrei / G4Media

Sorin Grindeanu’s full answer for G4Media:

 

1. Why didn’t CNAB start a competitive tendering procedure for the commercial spaces in time, so that by the time the contracts with Millenium and Dnata expire in December 2022, the new contracts will already be signed?

 

Answer:

The procedure for awarding the spaces by public tender has been started as early as January 2022.

In the first stage, a procedure was launched for the procurement of consultancy and support services to ensure the best possible selection, by public tender, of the firms to be awarded the commercial premises in question.

As such, the specifications for the procurement of consultancy and assistance services was drawn up in January 2022 and the tender for consultancy and assistance was launched in May 2022 in SEAP with a deadline for submission of bids 30 May 2022.

 

Following multiple requests for clarification from potential bidders, the deadline was changed to 7 June 2022.

 

At the time of the deadline (7 June 2022), no operator had submitted compliant bids and the tender was therefore cancelled.

 

A new procedure was launched with a deadline for submission of bids set for 30 August 2022.

 

Also following requests for clarification from potential bidders, the deadline was extended to 5 September 2022.

 

Again, the bids were not compliant which also led to the cancellation of this procedure.

 

The third procedure was launched on 22 November 2022.

And on 28 November 2022, Millenium Pro Design lodged an appeal with the CNSC, which caused the tender to be suspended.

After the appeal was resolved and the tendering procedure resumed (13 January 2023), a new deadline for the submission of bids was set for 1 February 2023.

 

However, Millenium Pro Design also appealed to the Bucharest Court of Appeal to annul the CNSC decision. And, after the court’s decision in this case, a new deadline for submitting bids was set for 27 February 2023.

 

After the submission of the bids, Millenium Pro Design filed a new appeal (on 15 February 2023), which led to the suspension of the evaluation of the bids and automatically to a new delay.

 

On 9 March 2023 the CNSC rejected Millenium Pro Design’s request as unfounded and the tender is now in the tender evaluation phase.

 

We have given you this history to understand that Millenium Pro Design has made a number of moves to delay the tender for the award of airport space as long as possible.

 

The real motives behind these actions are yet to be established by the state investigation bodies. This is also one of the reasons why we welcomed the investigation launched by the National Anti-Corruption Directorate at Henri Coandă International Airport.

 

2. What steps have you taken to start this award procedure?

 

Answer: These activities are part of the work of the CNAB. Therefore, it was not necessary for me to get involved and to arrange measures that strictly concern the management of this company.

 

3. Why has CNAB not complied with its commitments to the Competition Council, as set out in Decision No 69/06.10.2021?

 

Answer: These commitments assume precise deadlines for launching the competitive tendering procedure for commercial premises. This question can only be answered by the CNAB management.

 

4. What measures have you ordered CNAB to take for failure to comply with the commitments given to the Competition Council?

 

Answer: I repeat what I said before. These are strictly management issues. As far as I know CNAB management has discussed the situation with the Competition Council and explained the situation.

 

5. Why did you agree to the extension of the current contracts of Millenium and Dnata?

 

Answer: As far as I know the AGA (General Meeting of Shareholders – translator’s note) gave this extension because Dnata was at that time the only provider of catering services.

This extension was necessary in order to be able to provide these services to travellers until new contracts were awarded depending on the best offer that would be appointed following the tender.

As far as Millennium is concerned, it was considered appropriate to ensure the continuity of duty-free services for passengers until new contracts were awarded on the basis of public tenders.

From an economic perspective, the AGM decided that it was more appropriate to ensure that these revenue-generating services were continued rather than discontinued until new contract winners were appointed.

Tendering procedures for the consultancy on the preparation of the tender documents are ongoing. Once the winners have been selected, they will have 2 months to draw up the tender documents, which must meet international airport standards.

Subsequently, on the basis of these specifications, a tender will be launched to appoint operators capable of providing catering and duty-free services at Henri Coandă Airport.

I want the new contracts to represent the best options for travellers and the airport. We must no longer have situations where there is suspicion that these spaces are allocated to certain people on a patronage basis. The new contracts must take into account only the comfort of travellers and the legitimate interests of the airport, based on international standards in this field.

 

6. Have you or your Head of Cabinet met with representatives of Dnata or Millenium to discuss contract extensions? What did they explicitly ask for and what, if anything, did they explicitly promise?

 

Answer: I have not had meetings with representatives of either company, nor do I know the individuals charged in this case. I have always considered that the contract situation, as well as other specific issues, should be handled by the management of the companies under MTI’s coordination. Moreover, I do not see the point of meeting with the persons in question, given that I am not and

Translated