Monday, April 23, 2018
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Steel from Romanian Railway Freight Company Sold Undervalued Scrap at Double the Price

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Remat Calarasi, the purchaser of the scrap sold by the Romanian railway freight operator CFR Marfa at an undervalued scrap sale, was reselling the steel at double the price, according to a report of the prosecutors from the Directorate for Combating Organized Crime and Terrorism (DIICOT), quoted by

Remat bought the steel at EUR 120 per ton and later sold it to Zalau-based Silcotub at EUR 260 per ton, the prosecutors say in a report proposing the preventive arrest of 19 former employees of CFR Marfa in the undervalued scrap sale case.

"The main category of metallic waste targeted by the crime group was steel. This has an average sale price of EUR 218.90 per ton. Through a fraudulent tactic of hiding the quantities of steel resulting from scrapping, the members of the group planned to acquire the price difference between the sum paid by Remat Calarasi to CFR Marfa (EUR 120 per ton of scrap) and the price with which Remat Calarasi resold the steel,” the prosecutors say in the report.

The freight cars were sold on the Bucharest Commodities Exchange at a scrap price, although the metallic residue resulting from the scrapping of the rolling stock would have fit the price of "obsolete heavy ferrous scrap” or "special ferrous scrap (steel),” which sell at higher prices. As such, 49,000 tons of rolling stock were sold at a price of EUR 120 per ton, while the average price for obsolete heavy ferrous scrap was of EUR 175.88 per ton, and that of special ferrous scrap (steel) of EUR 218.90 per ton, the prosecutors say.

The prosecutors found that Tawil Abbas, the representative of Remat Calarasi, had talks with Alex Tesoi, the representative of Silcotub, which showed that the results of the commodities exchange auction could be influenced by not participating in it, which would have resulted in a price drop.

The same report shows that the CFR Management recommended in a 2014 note taking 2,450 cars out of use, without mentioning how they were to be made use of. Mihut Craciun, the general manager of CFR Marfa, knew of the interest Remat Calarasi had in purchasing the cars, the prosecutors also found.

To implement the contract with Remat, five scrapping commissions were established at the CFR Marfa area center in Timisoara, according to DIICOT. They were in charge with dismantling 411 cars that this branch of the railway freight company was owning. The five commissions scrapped the cars, but did not mention in the associated reports the quantities of steel and heavy iron resulting from the scrapping. The prosecutors also found that some CFR Marfa employees were pressured with the possibility of getting fired if they did not follow through with filling the falsified paperwork.

According to the DIICOT prosecutors, although CFR Marfa made an offer on the commodities exchange to sell a generic quantity of 49,000 tons of scrap, in the sale contract it closed with Remat it mentioned the sale of scrap resulting from dismantling 2,450 cars.

Mihut Craciun, the former general manager of CFR Marfa, is currently under preventive arrest, alongside three other directors in the company, reported. Craciun was dismissed from his position of general manager of CFR Marfa in December 2016, six months after taking over the job.

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