Romania Premier Under Pressure to Quit Over Corruption Probe

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Romanian Prime Minister Victor Ponta
Romanian Prime Minister and Presidential Candidate Victor Ponta. Ponta is poised to get 43 percent of the vote to Johannis’s 30 percent, an Oct. 23 survey of 1,124 people by the IRES polling company showed. Photographer: Daniel Mihailescu/AFP via Getty Images

Romanian Prime Minister Victor Ponta came under pressure to resign after he became the latest target in the country’s anti-corruption drive.

President Klaus Iohannis urged Ponta to quit after prosecutors on Friday said the premier is being investigated for forgery, money laundering and complicity in tax fraud. The premier said he would remain in office and fight the charges. The country’s currency fell the most in a month as stocks and government bonds also retreated.

The investigation “creates an impossible situation for Romania,” Iohannis told reporters. “A political crisis is the worst thing that could happen in Romania. Considering all of the above, I demand Premier Ponta’s resignation.”

Romania has stepped up efforts to curb its more than $40 billion shadow economy, the European Union’s second largest, with a crackdown that’s resulted in the arrest of top-level politicians including former Finance Minister Darius Valcov. Ponta, who weathered plagiarism accusations and a presidential election defeat, will also face a no-confidence vote in parliament, sought by the opposition to halt changes to an electoral law, according to lawmaker Ludovic Orban.

“Ponta already has a cloud over his image after losing the presidential elections last year,” Otilia Dhand, senior vice president at Teneo Intelligence in London said by phone. “I think Ponta will try to weather this storm too like he’s done in the past and the most likely scenario is that he survives the current no-confidence motion.”

Leu Drops

The escalating political tension was also reflected in Romanian assets. The leu weakened 0.6 percent to 4.4610 per euro as of 3:39 p.m. in Bucharest, its biggest drop among 24 emerging-market currencies tracked by Bloomberg. The yield on the government’s 2020 euro-denominated bonds rose to 1.757 percent from 1.749 percent, headed for the highest close since January.

“The political situation could have a stronger impact on the leu than on bonds,” Dan Bucsa, a London-based economist at UniCredit Bank AG, said by e-mail. “The leu could move temporarily above 4.50 per euro if political uncertainty persists for a longer time.”

The benchmark BET stock index fell 0.5 percent to 7,445.06, its third consecutive daily slide led by Transelectrica SA, which dropped 8.5 percent, and BRD-Group Societe Generale SA, which declined 1.5 percent.

Ponta’s Charges

Ponta is being accused of forging documents to justify income while he had a private legal practice, with the help of a law firm owned by former Transport Minister Dan Sova, the prosecutors said in a statement on their website on Friday.

“I was appointed by parliament and only parliament can remove me,” Ponta said on Facebook. “I believe respecting constitutional principles is essential for our society and I can’t accept that an anti-corruption prosecutor is above parliament, the government or the citizens. This would mean dictatorship.”

The premier can lean on his ruling coalition, which controls 315 of the 555 seats in parliament. Several members from both Ponta’s Social Democratic Party and its smaller allies affirmed their support.

“Ponta must continue his mandate,” Labor Minister Rovana Plumb, the ruling party’s deputy leader, said in an e-mailed statement.

Car, Cash

Prosecutors asked parliament to approve an investigation against Ponta for conflict of interest, as the premier has immunity from such probes as a lawmaker. Should they receive clearance, Iohannis can suspend Ponta, according to the Constitution.

Ponta allegedly received a total of about 181,000 lei ($46,000) between Oct. 2007 and Dec. 2008 and a Mitsubishi Lancer Evo 10 car, from Sova’s law firm, prosecutors said in the statement.

The premier will “follow every legal method to prove there is no evidence incriminating him in this case,” Corneliu Calota, a government spokesman, said in a statement.

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