EXCLUSIVE: Sector 3 City Hall awards €6 million media contract without tender; subordinate company distributes funds to various media outlets – uncovering the beneficiaries of Robert Negoiță’s expenditures

One year before the four rounds of elections in 2024, the City Hall of Sector 3 awarded this summer, without a tender, a 6 million euro framework contract for „institutional promotion services”. The contract went to a company subordinate to the City Hall, Algorithm Construcții S3 SRL, founded in 2017 by Mayor Robert Negoiță to manage an industrial hall. Managed by a person trusted by the mayor, Algorithm directly distributes the money to media channels chosen to popularize the achievements of the City Hall and Negoiță.

A G4Media.ro source revealed that Algorithm has so far asked for bids for seven contracts worth almost 4 million lei, valid for this year. The beneficiaries: TV stations Antena 3, Realitatea and Romania TV, radio station Gold FM, newspapers Puterea and Adevărul and the trust to which the publication Gândul belongs. Despite several days of official addresses, phone calls and messages, Mayor Robert Negoiță, the City Hall of Sector 3 and the company Algorithm Construcții S3 SRL have not responded to questions about the award of this contract. If we receive them, we will insert them in this article.

In the Local Council meeting of the City Hall of Sector 3 in Bucharest on July 6, 2023, a project was voted by which the institution led by Mayor Robert Negoiță received approval to conclude with the company Algorithm Construcții S3 SRL, without a tender, a framework agreement worth almost 30 million lei, including VAT, for „institutional promotion services”. Duration of the contract: until 31 December 2027.

The direct award took place on the basis of a provision of the Public Procurement Law which allows this if the beneficiary company is owned by the contracting authority. Algorithm Construcții S3 SRL has Algorithm Residential S3 and SD3 – Service de Salubritate et Deszepezire (both owned by Sector 3 through the City Council) as partners. Algorithm Construcții S3 SRL was set up in 2017 to manage the Laminor Hall, which Sector 3 City Hall claims is the largest industrial hall in the country.

Two weeks before the first documents related to this procedure were drafted, Algorithm Construcții S3 SRL had included „activities of advertising agencies” among its secondary objects. It should be noted that this award also excluded the publication of the procedure in SICAP – the portal for public procurement.

The Chairman of the Board of Directors of Algorithm Construcții S3 SRL is Radu Alin Panait, an old PSD colleague of Negoiță who is also Vice-Chairman of the Bucharest 2020 Party, a party led by the current mayor.

In his resume, Panait mentioned that he studied National Security Information Management at the National Intelligence Academy, an institution subordinated to the Romanian Intelligence Service.

The company’s income and expenditure budget is approved annually by the Local Council of Sector 3, with more than 80% of its work being carried out in order to fulfil the tasks entrusted to it by the Municipality of this sector. Recently, the City Council approved an increase in Algorithm’s share capital of 70 million lei, money needed for investments in the Laminor hall.

Ministry of Finance data indicate that last year the company had a turnover of almost 20 million lei (more than 75% for salaries), a net profit of about 2 million lei and an average of 172 employees. In the last two years, in SICAP(public tendering platform), Algorithm appears only with a few contracts whereby it rented „machinery” and „driverless cars” to the Municipality of Sector 3, the total value being around 2 million lei.

Mayor Robert Negoiță and the City Hall Press Office have not answered the question why they preferred to award this contract directly, when organising a tender could have brought, at least theoretically, savings due to competition between bidders. In addition, the City Hall of Sector 3 has a structure that is blatantly similar to the subject of the framework agreement: Institutional Promotion Service.

In the motivation for organising this procedure, the specialists of this service explained that, in the past, the City Hall had already used contracts with the media, with tangible results. „(…) as a result of the effective promotion of the Clean up in Sector 3 campaign (2019 n.r.) the data provided by the General Directorate of Local Police of Sector 3 show unequivocally that many citizens came into contact with the campaign messages and acted accordingly, the number of fines being approximately 36% lower than in the same period last year, given that the number of local police officers on patrol for this purpose was approximately the same.”

Adrian Moraru, a procurement expert at the Institute for Public Policy (IPP), who does not know the parties to the contract, said that in his opinion there should be no companies subordinated to the municipalities, as there are already companies on the market providing similar services.

„Or at least the procedure should be divided into lots and, between the City Hall company and the private one, we should see who performs better,” Moraru added. He said that the mayoral companies cause „market distortions” by being awarded contracts without a tender and explained that the mayoralty uses these companies to hide the procedures.

„In addition, it is easier to hire informers in these firms, salaries can be higher than in City Hall, and transparency is lower,” Moraru said. When he found out that the subject of the contract is promotional services, the IPP expert also noted that it is concluded just before the 2024 election year.

According to the contract between the City Hall of Sector 3 and Algorithm Constructions S3, out of the total amount, 29.6 million lei will be spent by the company for „various promotion and advertising services” (concepts and video and audio spots, their broadcasting, online media advertising, printing posters, flyers, banners, institutional promotion on social media), and 356,405 lei for „studies on the impact of information and awareness campaigns.”

A few days after the vote in the local council, Algorithm Constructions requested offers valid for this year for promotion and advertising services from seven media channels: television channels Antena 3, Realitatea, Romania TV, radio station Gold FM, newspapers Puterea and Adevărul and the trust to which the publication Gândul belongs.

These offers show that the TV channels had to fit into a budget of 1 million lei each, excluding VAT, the Gândul Trust – 600,000 lei each, excluding VAT, Puterea (Saray Paper SRL) and Adevărul (Graffiti Red SRL) – 100,000 lei each, plus VAT, and Gold FM (Angus Resources SRL, the offer also includes the news website solidnews.ro) – 33,350 lei each, excluding VAT. A G4Media.ro source said that all these bids were reproduced in contracts with Algorithm Constructions S3.

G4Media.ro checks indicate that some of the media channels in the above list have started to honur their obligations, one of the actions of the Sector 3 City Hall and Mayor Robert Negoiță, which has been intensely popularized, being the announcement earlier this month in which the mayor boasted that several schools in the sector would be modernized with European funds.

The City Hall of Sector 3 has been run since 2012 by Robert Negoiță (51 years old), at that time a PSD member. He was re-elected for the current term in 2020 on behalf of the Bucharest 2020 party, of which he is president and which also has five local councillors. In the City Council, however, he still has a majority in the PSD.

Over the years, several controversies have surrounded his name, related to his decisions as mayor and his management of public money.

In February 2022, the National Anti-Corruption Directorate (DNA) announced his prosecution for abuse of office with obtaining undue advantage with particularly serious consequences and for instigating the crime of abuse of office with obtaining undue advantage with particularly serious consequences. The charges stemmed from a case relating to the conclusion of 54 additional acts to a sanitation contract with Rosal Grup SA, which either extended the contract or increased its value, thus creating a total damage of 578,446,818 lei to the detriment of Sector 3. In this case, the mayor was indicted six months later.

In February 2023, DNA also reported that Negoiță is being prosecuted for abuse of office if the public official obtained for himself or for another an undue benefit because he allegedly approved the allegedly illegal issuance of documents necessary for the construction and registration of a building (block) located in the central area of Bucharest.

Earlier, in 2020, DNA ordered the closure of a case in which Negoiță, as a real estate developer, was accused of tax evasion. A year earlier, the Public Prosecutor’s Office of the High Court of Cassation and Justice had closed a file in which the current mayor was accused of copyright infringement for plagiarizing his PhD thesis.