Elena Ceaușescu sits around lagging at the Central Committee and throws rather thick gazes at the jar perched up on her husband’s desk. A ten-kilo pickle jar. Filled to the brim with diamonds.
It’s a fiesta outside. And so it should be, it’s Nicolae Ceaușescu’s b-day party, his 56th. The so-called “pioneers” are shouting hymns for him all over the country. Organized chaos, is what this is. Each factory is sending in presents or, more befittingly, offerings for the Centre. Thus, in the chieftain’s office arrive an ear of wheat made of solid gold from the CAP, a hunting rifle from the Securitate, and all sorts of lavish gifts. Alas, enter the jar. No one can make out its contents; Romania never had a diamond mine.
1970. The Ceaușescus travel to the Kremlin to see Brejnev. After they’ve all sipped from the customary vodka, the Russian takes his guests on a promenade to a top-secret location on the edge of Moscow. It’s a diamond factory. The comrade’s beloved Elena immediately falls in love with them, and the comrade himself sees the usefulness of the stones for the Romanian industry- petrol and gas drilling is being done with diamond-tipped machineries.
Ceaușescu wants to get himself one of those, but Romania doesn’t own the technological muscle, so he sends spies abroad to conduct some “research”. The agents return with a truckload of paraphernalia and tons of blueprints. They park the lorry on Timișoara Blvd., next to some dilapidated halls. It’s all top secret; everybody keeps it on the low.
Thus takes shape one of Romania’s most lucrative enterprises of them all, RAMI Dacia. They start cracking and wind up exporting all over the globe. Whenever a bulkier order comes in, the employees ferry diamonds from A to B with buckets and washbasins.
After the Revolution sweeps through the land, the factory, as it happened to most of the country’s assets, is privatized. Former workers buy it for 8.4 million euros. Some of them say the money came from Răzvan Petrovici, a controversial businessman. The halls start being vacated and among them begin to pop up either a flower shop, either a service joint, or a print shop. Diamonds are being carried in recipients as small as a pill receptacle.
Buildings start being torn down. The factory is sold for scrap. Răzvan Petrovici builds for himself on top of the desolated site the biggest amusement park in Bucharest.
I first heard of this story from the door keeper working at my apartment building in Piața Unirii. He told me everything in between two puffs of smoke. He used to be a mechanic at the diamond factory. In a factory swarming with chemists and physicists he was among the few who actually got their hands dirty.
“I know that the diamond factory was one of the biggest deals Romania ever pulled, that it was sold for scrap by some Securitate thugs who built an amusement park in its stead.” Ion Pană told me.
I went to Terra Park, on Timișoara blvd, to see if Pană is telling the truth. It was difficult to find. There were a sanitizing firm, a gas station and an auto dealership. Nobody knew anything of any diamonds. Some granny in a bath robe who fed the strays even laughed at me: “Diamonds? What diamonds? There used to be a military base here, now it’s just this park.”
I was beginning to feel embarrassed, ranting on and on about precious stones, until I stumbled upon one of the security guards from the park. Bored out of his mind, he couldn’t wait for the day to pass. “I’ve heard something, yeah, there used to be a diamond factory ‘round here. Now it’s just the amusement park.”
I spent the next few months investigating all angles of the diamond. It’s a narrative of spies, mobsters and an impotent government. The story of Romania’s industry.
Diamonds came about for the oil, not the engagement rings
After WWII, industrialists needed diamonds to forage for petrol and gas. Natural stones were getting ever more expensive and consumption was ever higher, so they started producing synthetic diamonds. Among the forerunners were Sweden, the United States and the Soviet Union.
To achieve this, one needed carbon at extremely low pressure and temperature. Scientists only had one issue- there was no machinery that could withstand the thousands of PSI of pressure. Several BBC documentaries show that the Swedes didn’t know about the Americans, the Americans about the Swedes, and neither did the Russians know of the first two.
But the Romanians knew what all the others were up to. To be precise, the Securitate general Ion Mihai Pacepa knew. He sent out teams of spies in each of the three countries manufacturing diamonds at the time. The quickest to debrief were the guys sent in Sweden- lt. Alexander and gen. Sârbu.
In 1974, they put together a synthetic diamond factory smack in the middle of Bucharest, on Timișoara blvd, nr 8A. It was by secret presidential decree that it was christened Special Military Unit 0920.
Lt. Alexander called the espionage operation “The Star”, as Elena Ceaușescu used to affectionately refer to diamonds- stars. He commuted back and forth to and from Sweden for two years until he persuaded someone to sell him the blueprints.
“It was there that I found Butthead– that’s how I nicknamed the Swede who gave me everything I nicked from ASEA (n. red.: the company from which the technology was stolen). I negotiated firsthand for a couple of presses that I brought back home dismantled and put them back together in Bucharest.” claims the lieutenant today.
He’s out of the business now, retired; he just wants peace of mind. He’s into bee keeping; it’s all he ever talks about. He’s patenting tools that squeeze the honey out of the comb.
No one dared to mention the name of the Swede. Alexander would bring him to Romania and escort him himself, then check him into a hotel in great secrecy.
“I can’t disclose any more details because, on the one hand, I gave my word to that man that no one will ever know of our encounter and, on the other hand, I swore an oath with the DIE (n.r.: Exterior Information Commission). I can’t overlook these aspects.” says Alexander today.
I learned the story, however, from six of the first employees. Not many people know of it, because every nook and cranny of the deal was top secret. Not even the top brass ever had a clue what was in there, and those who knew of it used to call it “Securitate’s child”.
Butthead would periodically check in to overview the setting up. In 1974, Romania had its first batch of diamonds. It was then that Pacepa invited Ceaușescu to reap what he’s sown. It all went down in a single building, with five employees.
„I like your brainchild, Pacepa”, Ceaușescu allegedly said after the inspection, asserts the spy in his book, “Red Horizons”. The dictator then set his mind to entering the international diamond market.
That year, engineers in the factory started multiplying the Swede’s installations like Jesus did with the bread and fish back in the day. Fast forward four years, they boasted twenty-one, 2000-tonne presses.
The factory made it to the number three spot worldwide for quality and number four for quantity, claim the former employees who attended the international fairs.
“Whenever we would go to these fairs, we couldn’t advertise ourselves like the others because we were under an embargo. We had unlabeled containers, which we handed out as freebies, so that potential buyers would see that our merchandise was top notch, and then come looking for us, and not the other way around”, explains one of the early staff members of the factory and former executive.
Pacepa makes a run for it, and the diamond business couldn’t be happier
In the summer of 1978, Pacepa left the Department of External Affairs, fled to the United States and joined the CIA. While in Germany to stage an assault against Radio Free Europe, he filed for political asylum stateside.
“Just walk right out of the hotel. You’ll see dozens of cabs going down the street. Hop in any of them, they’re all ours!” a CIA operative allegedly told Pacepa during the last phone call received in his hotel room.
In the 48 hours since that phone call, all of the Socialist Republic of Romania’s spies were called back due to a state of force majeure. No one knew what was going on.
Pacepa was about to hand over all the names of Romanian spies to the Americans, believes Giartu Istifie, former executive of the factory and retired SRI general.
Some of the operatives recalled back then ended up at RAMI Dacia– the retail name of the factory. All of them were highly skilled engineers who were infiltrated in powerful industrial companies from the West. The factory received an inpouring of crackerjacks.
Next up was large scale production and breaking out on the world market.
Who worked in the factory?
The diamond business was novel and no one had a guide book for it. The Securitate would go to universities around the country and approach those who graduated top of their class in physics, chemistry and mechanics, and offer them a job at the factory.
“It was an offer you couldn’t refuse, the technology was beyond state of the art, and the challenge was very tempting. And, furthermore, it was an interesting environment to work in, everything was hush-hush and no one would know what exactly it is you are doing”, explains Marcel Diaconu, one of the first draftees.
Diaconu gets a trembling voice upon speaking of the factory on Timișoara Blvd. “It was there that I made my apprenticeship, it was there that I spent my youth. It’s almost as if my child died along with their darn privatization”.
All of the former workers try to keep it on a note as mysterious as possible. Ion Marițescu, a Securitate officer, retired, and former executive of the factory during ‘91-‘94, confirms the technology thefts:
Rep: There was a lot of secrecy surrounding the factory.
Ion Marițescu: Well, there was. Because the fabrication and manufacturing technique requires special technology and you need a lot of reference material. Studies. Analyses. Experiments. There were no other motives.
Rep: How long did it operate under the radar?
I.M: Right until it disappeared.
Rep: Is it true that the technology was stolen from Sweden?
I.M: Not Sweden, but from wherever they could. From some, the technology, from others, the machinery. Oh, and from Germany as well.
Four others don’t even want anybody to know they were ever interviewed. “Under no circumstances do I want my name popping up anywhere”, one of the former employees and retired officer said when our interview was adjourned.
All of them can, however, be traced. Those with top brass signed patents for inventions coming out of the factory.
Nowadays, most of the former workers are “elephants” – the term used by the Securitate guys for agents who have gone out of order. Very few are still in the business.
How profitable was the factory?
Its heyday was in the eighties, when “we would ferry the diamonds from here to there in large buckets whenever they were due to be sold or transported”, tells Giartu Istifie, former executive.
Early on in the eighties the factory was churning out ten million carats a year. One carat was roughly nine dollars. Halfway through the decade the peak was reached, with twenty million carats, twelve dollars for each one. They were raking in 240 million dollars a year.
Before the Revolution, Romania was a key player on the diamond market, but from a certain point forward, Ceaușescu seized all investments in the “Securitate’s child”. Competition, however, developed new technologies, lowered production costs and enhanced their overall efficiency.
Enter the nineties; the number one player on the synthetic diamond market was General Electric. The natural diamond market was in the grasp of the South-Africans at De Beers. They had a branch specifically for industrial diamonds.
The two made a deal that raised the market price of the stones exponentially:
“The Americans and De Beers upped the market price by a large margin, and we were happy with that because our technology was outdated and energy-consuming; by selling just a bit cheaper than them, we could still be in the profit”, explains a former CFO of the Romanian factory.
But the US Department of Justice learned of the pact between the two economic behemoths and brought them to court. After the inquiry, prosecutors established that during 1991 and 1992, prices were artificially inflated.
The same CFO, though, believes that the deal stretched over a longer period. “I’m sure it’s older than this. There’s no way a carat was almost ten dollars before 1990 and afterwards, in just a few years’ time, to drop to just a few cents. The market stabilized itself”.
From the moment prices started to fall, the Romanian factory swiftly followed suit.
The diamond factory was privatized for a real-estate deal
When AVAS announced the privatization, the factory was out of the profit margin for a few years now and the technology was obsolete. Merchandising ties were all but gone, but the land on which it sat was worth almost twenty million euros. Răzvan Petrovici, a controversial business man, tried to own it for free.
The privatization became official on the 28th of December 2006, with the RAMI Dacia Employees Association (ASRD) buying it for 8.4 million euros. The aim of the organization was “to provide the legal framework for the employees, board members and pensioners retired from SC RAMI Dacia SA to partake in the privatization process”, says their statute.
Doina Gângoe, chairman of the association and executive of RAMI Dacia, coordinated the privatization effort.
“She was in charge of everything”, says one of the senior employees of the factory and member of ASRD. He also claims that Gângoe received, prior to the contract being signed, 3.5 million euros from Răzvan Petrovici, who was the keenest in developing the land on which the factory sat. Petrovici is infamous for several businesses he bankrupted and is now involved in several lawsuits filed against him.
The privatization contract linked the Association to AVAS for a period of five years. During this time, the company’s purpose was not to be altered, investments of almost three million euros were to be made, the land on which the factory sat was to be purchased, the number of employees had to rise, and the factory’s assets were not to be estranged.
The plot of land on which the factory sat was not among those assets, but merely managed by the company. The contract stipulated that RAMI Dacia, under its new ownership, was due to buy the land in no more than one month from signing. That’s 37.352 sqm. They never bought it, but purchased a different, 2164 sqm parcel right next door.
No asset of the factory was to be destroyed, rented or sold throughout the duration of the contract.
After the privatization, more than ten companies began to set up shop in RAMI Dacia’s buildings, some of them right in the halls where the diamond presses rested.
On this Google Street View snapshot from 2009, several advertisements upon the entrance to the factory grounds are clearly visible.
Those same years, on a small classifieds site there was an ad announcing that SC RAMI Dacia SRL is selling industrial machinery. We called the number to check up on the offer, but it was no longer valid.
A couple of carats of scrap
All of the former employees know that the factory was sold for scrap. One of them was directly involved in the privatization process; a member of the Workers’ Association, he also gives away the names of the companies involved: Coremetaliat and REMAT Chitila.
“I was passing through Chitila one time and I saw mountains of scrap and I said to myself, holy crap, if only I had a camera to take a snapshot and witness it for years to come- just look at what’s become of the factory!”, tells one of the former workers.
The factory’s accountant dampened millions of euros worth of technology with laughable prices, in the range of a few hundred lei. A Quintus built, 2000 tonne-force press as the one pictured in the article’s inception can sell for as much as 300.000 dollars. The privatization file lists it for 139 lei.
Neither was the number of factory workers concurrent with the number listed in the contract.
Almost all of the men were laid off.
The contract also stipulates that the new owners invest 222.000 euros in environmental protection and another 2 million in development. The ASRD member we’ve quoted a few paragraphs before specifies that no investment of any sort was ever made.
In an official response, the Authority for Capitalization of the State’s Assets (AVAS), claims it has done its part:
The RAMI Dacia Worker’s Association “fully accomplished the investment plan it undertook purchasing shares validated by contract no. 81/2006 (n.a.: the RAMI Dacia’s privatization contract), this being confirmed by the Managing Authority for State Assets (former AVAS) on the basis of the certification documents supplied with the contract.” – AVAS
The institution also specifies that it can disclose nothing of the inspections it conducted at the factory, but is awaiting documentation from RAMI Dacia to confirm the other clauses.
By the time RAMI Dacia sent the final statements, the amusement park popped up in the factory’s stead. The company managing it is SC World Park SRL, with Răzvan Petrovici being its sole associate, and Doina Gângoe its executive manager.
Who actually claimed ownership of the factory and what became of the land?
“All of us here at the factory knew that the business became Răzvan Petrovici’s, because he provided the money for the whole operation, even though his name was nowhere to be found written in ink”, tells another former employee who returned after the privatization.
With RAMI Dacia now owning the land, senator Ionuț Elie Zisu, its chairman, and Doina Gângoe, administrator of the factory, put the land up for rent for a 25-year period to firms belonging to Răzvan Petrovici, but managed by third parties. The senator’s wife, Daniela Zisu, is a secretary with Petrovici’s “Foundation for our Hope”, while Petrovici’s ex-wife is the Romanian representative of the husband’s offshores from Cyprus.
Construction authorizations to build an amusement park were issued for the entirety of the land where the factory rested, prior to the AVAS contract expiring.
mută cursorul pentru a vedea detalii despre firme
We wanted to ask Doina Gângoe why she handed the land to Răzvan Petrovici on a silver platter. We called her cellphone for a week, but to no avail. So we went to her house.
Since 2011, Gângoe is a constant presence in the Capital and Forbes wealth charts, but lives in a small house in Rahova. She would only speak to us from behind her fence. All she mentioned is that she’s retired and that she knows no one by the name of Răzvan Petrovici.
Just a few days after this encounter, however, they were interacting on Facebook as if they were magically acquainted for ages, giving away likes to each other as if they were companies.
We went on the lookout for Răzvan Petrovici as well. We couldn’t reach him on his cell, but he replied to me on Facebook, directing me to his image advisor. I mailed him some questions about the 3.5 million euros he allegedly gave to Doina Gângoe, about the offshores in Cyprus and if he meant to own the factory land from the get-go of the privatization. This was his reply:
Mr. Petrovici agreed to my proposal not to answer to the enquiries you’ve sent. The reasons behind this are as follow:
1. I haven’t clearly identified the publishing body where this material will appear. Therefore, we have no clue regarding the number of readers, their profiles, and other details which, as you know, are useful upon conveying a message to the public.
2. Secondly, your questions aren’t helpful in reaching the general purpose of Terra Park’s PR strategy, which is to attract as big a number of visitors as possible.
3. Not least, the ostentatious framing of the proposed interview raises questions as to the solidity of the research you conducted beforehand, as well as to the general manner in which you elaborated and encased the article.
“A policy of mass destruction” is a study carried out by sociologists and economists from Harvard and Cambridge which states that Eastern Europe is worse off economically than the Western countries due, in part, to the faulty manner in which privatizations were enacted.
Lawrence King, David Stuckler and Patrick Hamm showed how the one-dollar-privatizations, “coupon-a-thons” and the breaking up of large, state-owned companies into tens of thousands of shares, have all led to economic crises.
The RAMI Dacia diamond factory tops the list of hasty privatizations which have widened the gap between Romania and the West.
This investigation was developed with the ‘Grants for Investigative Journalism’ program, organized by Fundația Freedom House România and financial support from the U.S. Department of State and the Embassy of France in Romania. The responsibility for the content of this story belongs to the reporter and it does not reflect the views or position of the U.S Department of State or the Embassy of France in Romania.