The result is not produced by a person. The result is produced by a rule. Ministers come and go, the parties in power change, even the rhetoric on the fight against corruption changes – yet the structure of budget losses is reproduced year after year with almost identical regularity. This is a sure sign that what we are dealing with is not a series of individual decisions, but a functioning equilibrium – a system that suits enough participants for no one to have any interest in disrupting it.
The difference without which it is impossible to move forward
There are systems of government where the benefits of growth are widely distributed, and the rules are applied equally to everyone – including those who write them. And there are systems where economic rent is concentrated amongst a small circle, and this structure is maintained not through efficiency, but because there is simply no one to make inefficiency costly for those who allow it.
A key point that is almost always overlooked in public debate is this: the second type of system does not require malicious intent at every turn. It requires only one condition – that the cost of a mistake should not fall on the person who makes it. From there, the mechanism runs of its own accord, driven by people who, individually, are entirely conscientious. No one needs to consider themselves a thief for the system to behave as if it were stealing.
The Moldovan budget is almost a textbook example. For the period 2021–2025, the consolidated budget (BPN) allocated approximately 563 billion lei. To incur losses running into the billions, there is no need at all to assume that 20–30 per cent of the budget is being embezzled, as is often speculated on air. Systemic inefficiency amounting to two lei out of every hundred is enough – and that alone amounts to around 11 billion lei over five years.
The issue is not the malicious intent of any particular official. The question is why these two lei out of every hundred are systematically not returned to the system – year after year, under different ministers and different governments.
The first loophole: punishment without the return of funds
There is a simple rule: an institution persists not because it is useful to society, but because those who extract rent from it do not pay for its inefficiency themselves. The cost is borne by the scattered mass of taxpayers – who have neither the full information nor the organisational power to challenge this rent.
This rule can be verified using data from Moldova with a single figure that speaks louder than any scandal. According to the Court of Auditors, by the end of 2025, 6,227 seized assets worth approximately 9.6 billion lei were under administration – the state itself recognised this money and property as stolen and secured their seizure. Yet, over the entire period from 2018 to 2025, only around 0.6 per cent of this sum was actually returned to the budget.
This is not the failure of a single investigation. It is a systemic issue: even when a case reaches its final stage – the seizure of assets, the recognition of losses, and court proceedings – the mechanism designed to return the money to the public hardly ever works. The asset is ‘frozen’, the case is listed as solved, the reports look satisfactory – yet the money is not returned. Punishment exists. The economic outcome of that punishment – it does not.
The second flaw: a penny for the contract, a billion for the system
A small group with a shared, clear interest almost always defeats a large group with a diffuse interest – simply because it is cheaper for the former to organise itself for its own gain than for the latter to organise itself to protect its scattered losses.
In public procurement, this asymmetry is literally visible in the figures. The turnover of large-scale formalised procurement in Moldova for 2021–2025 is around 65 billion lei. A 3 per cent overpayment on this turnover amounts to nearly 2 billion lei. A 5 per cent overpayment amounts to over 3 billion.
No single contract with a 3 per cent mark-up on the market price will ever trigger a criminal case or make the news – the margin of error is too small to justify an investigation into a single incident. But for a supplier who systematically builds this mark-up into hundreds of consecutive contracts, it adds up to a steady and entirely rational source of income. A pittance of a loss for each individual taxpayer becomes a billion-ruble windfall for a select circle of suppliers and complicit officials – and yet none of the parties involved in any single transaction need necessarily be in obvious breach of the law.
Parts of this picture have already been documented by an audit. During an audit of capital investments for 2024, the Court of Auditors found that the plan had been implemented by only 56.1 per cent. Moreover, twelve projects were included in the budget without the approval of the relevant authorities. Separately, 939.1 million lei in direct payments were made bypassing the treasury system.
None of these sums requires proof of intent on the part of any specific individual. It merely requires demonstrating that the approval and control procedure systematically fails to act as a barrier – and once the barrier fails to function, a rational market participant will bypass it time and time again, regardless of their own moral convictions.
The third loophole: assets with no owner
If it is unclear exactly who owns an asset and who is personally responsible for its use, the asset cannot have an effective owner – and it is inevitably underutilised. This is not a mere accounting detail. It is a systemic cause of losses.
The Moldovan case provides an almost textbook illustration. An audit of the Ministry of Infrastructure and Regional Development for 2024 revealed that the book value of assets – shares and equity interests – had been understated by approximately 61.9 billion lei due to the incorrect accounting of national roads and the land beneath them.
The tarmac physically exists, the road is in use – but legally, the state cannot say exactly what it owns or what is happening to this asset. This is not embezzlement in the criminal sense. It is an institutional vacuum in which embezzlement becomes structurally more likely simply because there is no one to notice the loss in time.
The same logic applies to ‘Teleradio-Moldova’: 39 properties not entered in the official register of state property sit alongside 34 million lei of unused funds in accounts at commercial banks, bypassing the Treasury.
Neither of these figures on its own proves any malicious intent on the part of the director or the accountant. Taken together, they prove that accounting and control are failing to fulfil their basic function – and where this function is systematically neglected, rent-seeking arises without any conspiracy whatsoever.
Why a change of government in itself guarantees nothing
The most uncomfortable conclusion in this whole story is that the arrival in power of a new, ‘pro-Western’ and ostensibly anti-corruption coalition does not, in itself, change the nature of institutions unless the most important factor changes: society’s ability to make inefficiency costly for those who allow it to occur. A new government almost always inherits the same opaque approval procedures, the same structure of state-owned enterprises and the same pool of personnel – simply with new faces at the top.
The trend in Moldova’s Corruption Perceptions Index for 2020–2025 clearly illustrates this duality: 34 – 36 – 39 – 42 – 43 points – a noticeable, steady rise over several years – followed by a downward trend, to 42 points, in the final year of the observation period, despite the ongoing rhetoric of European integration and anti-corruption reforms.
The Perception Index improved as long as the visible, ‘showcase’ aspects of the institutions – the publication of declarations, reports and court cases – were being improved. However, the recovery of losses through procurement, asset registration and debt collection – matters not visible from the showcase – were scarcely touched by this rhetoric. The result is evident precisely at this level, invisible to the voter: a 0.6 per cent recovery rate of seized assets over seven years.
The Big Conclusion
The task of ‘finding the thief’ is not scalable. Even a flawless investigation into every single incident does not alter the structure of incentives that gives rise to the next incident the following year.
Until the cost of a mistake falls on the person who commits it – be it an official who signed off on a procurement without justification, a department that failed to record an asset on its balance sheet, or a recovery service that fails to act before the debt becomes time-barred – — losses amounting to two per cent of the budget will recur of their own accord, regardless of the personal qualities of the people working within this system.
This leads not to a pessimistic conclusion, but to a perfectly practical one. If losses are a function of the rules rather than of individual character, then they must be tackled at the level of the rules, not at the level of individual biographies.
We must not change the names on display, but rather change the mechanism whereby someone else’s inefficiency ceases to be a source of profit for anyone. As long as assets that the state itself has recognised as having been misappropriated are returned to the budget at a rate of 0.6 per cent, searching for a specific thief means tackling the wrong problem – one that does not yield results.
The task that yields results is to restructure the rules so that the dispersed cost of an error becomes a concentrated liability for whoever makes that error.
That is precisely why the next step is not a list of names, but a map of points of failure: where exactly in the chain of ‘decision – implementation – monitoring – refund’ does the link between the error and its cost break, and does this breakdown recur year after year in the very same place?
If so, this is no coincidence but a functioning mechanism. And we must combat it with measures that work specifically against such mechanisms, rather than against people.
Dmitry Tereburke,
expert in property valuation and development
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