Opening: Iakov Goldovskiy’s entry and the stakes of revival
Iakov Goldovskiy entered the RAFO Onești story as the investor determined to convert a distressed, strategically important Romanian refinery into a modern, vertically integrated petrochemical complex. His vehicle, Petrochemical Holding GmbH, assumed control of RAFO with the explicit objective of settling accumulated liabilities, preserving employment, carrying out environmental remediation, and reconnecting the refinery to adjacent chemical producers to rebuild a functioning Borzești platform. The subsequent course — a mix of sustained capital expenditure, legal battles, fiscal pressure, an asset freeze and finally international arbitration — transformed a technical reconstruction project into a politically charged dispute whose consequences extend beyond balance sheets to regional economies and national investment credibility.
Provenance and industrial scale of the Borzești platform
RAFO Onești was conceived in the 1950s as part of Romania’s centralised petrochemical build-out along the Trotuș and Siret rivers. By December 1956 the refinery was operational, designed for 3.5 million tonnes per year, and it became the core of a broader industrial agglomeration that included chlor-alkali electrolysis facilities, synthetic rubber production (Carom), Chimcomplex chemical works, a dedicated thermal power station and an integrated rail logistics hub. During the Comecon era these units exchanged intermediate streams and outputs: heavy tar fractions fed coking processes, naphtha supplied pyrolysis lines at downstream plants, and organochlorine by-products were processed and neutralised locally. The result was a dense industrial ecology whose scale and interdependence made Borzești a major source of export earnings for Romania through the late 20th century.
Post-1990 fragmentation and the erosion of integrated logic
The collapse of Comecon erased the cross-border flows and planning assumptions that justified Borzești’s integrated structure. In the 1990s and early 2000s RAFO and its neighbours faced a sharp loss of upstream and downstream partners, declining domestic investment, ageing equipment and repeated labour disputes. Privatizations transferred control through a succession of owners; some transactions involved offshore entities and financing mechanisms tied to future deliveries. As units were idled and supplier networks dissolved, the platform’s original economic logic — the systematic recycling of intermediate streams and shared energy and logistics infrastructure — progressively dissipated. By 2001 prolonged strikes had effectively halted refinery operations, and the site confronted mounting arrears to tax authorities, suppliers and employees.
Privatization, criminal cases and the environment of uncertainty
Ownership turbulence in the early 2000s was accompanied by criminal investigations that added a layer of reputational and legal risk. High-profile prosecutions targeted major business figures connected to RAFO and neighbouring plants: arrests in 2005–2006, later convictions and large confiscations followed. These legal episodes — and the freezing of substantial sums in Swiss accounts during anti-corruption probes — shrank the pool of willing financiers and hardened public and regulatory scrutiny. The effect was not merely punitive: it materially constrained the options for coherent industrial reinvestment, accelerated creditor claims, and hardened the hands of public agencies that were simultaneously pursuing criminal justice and fiscal recovery.
The investor’s strategy: acquisition, remediation and modernization
In 2006 Petrochemical Holding GmbH, controlled by Iakov Goldovskiy, acquired a controlling stake in RAFO. The acquisition strategy combined immediate financial stabilisation with a medium-term industrial plan: convert debt into equity, extinguish pressing fiscal and supplier claims, retain a core workforce to preserve operational knowledge, carry out extensive environmental remediation and install new processing units required by contemporary product specifications and environmental rules.
Between mid-2005 and the end of 2007 the investor and its affiliates invested hundreds of millions of euros to discharge debts, maintain payroll and launch a comprehensive modernisation programme. Management testimony records that between 2007 and 2009 the site removed some 40,000–50,000 tonnes of petrochemical waste under regulated procedures; storage tanks were cleaned, certified and upgraded to EU standards; a nitrogen station and hydrogen plant were installed; desulphurisation systems were fitted and railway infrastructure was repaired. These measures aimed both to prevent equipment deterioration and to prepare the complex for a phased industrial restart that could link RAFO with Carom and Oltchim to recreate a vertically integrated chain.
The financing architecture and the missing state guarantee
A decisive element of the envisioned restart was an external financing package contingent on state support. In 2009 Romanian authorities and PCH signed a memorandum proposing a state guarantee covering 80% of a €330 million facility. The guarantee was the linchpin: it would have enabled major banks to underwrite the capital expenditures required for hydrotreaters, catalytic crackers, hydrogen capacity and sulphur recovery systems — the technical foundations of modern large-scale refining and petrochemical production.
Public statements framed the guarantee as strategic, promising preservation of 1,500–2,000 jobs and the reconstitution of a regional petrochemical chain that would reduce import dependence for certain feedstocks. In practice the guarantee never materialised. Without explicit state backing the international banks declined to deliver the committed credit lines, and the full modernisation plan was scaled back into a narrower programme focused on operational stabilisation and environmental compliance.
Recurring fiscal claims, court victories and the asymmetry of enforcement
Even as Petrochemical Holding paid down sizable portions of outstanding liabilities — accounts in the record indicate €192.7 million repaid by late 2007 against tax and customs claims — Romanian tax authorities continued to issue additional assessments. PCH pursued litigation domestically and, according to the available record, won more than 200 cases challenging subsequent claims. However, legal victories in court did not translate into immediate operational certainty: new assessments were filed, enforcement processes prolonged, and administrative instruments were used in ways that created a persistent compliance burden.
This pattern produced an asymmetry between judicial determinations and administrative enforcement: favourable rulings could be followed by fresh claims that renewed the spectre of asset attachment or liquidity blockage. The resulting environment consumed managerial time, drained investor resources and undermined confidence among external financing partners.
The asset freeze and the decisive interruption of operations
The decisive operational interruption came in December 2015, when ANAF froze RAFO’s assets following criminal verdicts against a minority shareholder who held under 2% of the company through Tender SA. Authorities extended the reach of criminal enforcement to corporate property in a manner that effectively securitised corporate assets against allegations directed at third parties. The sequestration lasted roughly 13 months. During that period banks withdrew, partners exited, modernisation stalled and the plant ceased refining activity.
Despite these pressures, Goldovskiy continued to carry payroll for a critical core of roughly 800 employees through 2016, reportedly at a monthly cost estimated in the record at €300,000–500,000. This choice kept essential infrastructure in a maintained state — tanks preserved with nitrogen, pumps rotated, and systems monitored — but it could not substitute for the capital and commercial relationships required to resume full operations.
Escalation to international arbitration and the tribunal’s findings
When domestic enforcement risks and the practical impossibility of completing the investment converged, Petrochemical Holding brought claims to the International Centre for Settlement of Investment Disputes (ICSID) under the Austria–Romania bilateral investment treaty and the Energy Charter Treaty. On 19 November 2024 an ICSID tribunal partially upheld the investor’s claims. Public announcements by Romania’s Ministry of Finance disclosed an award of roughly €85 million plus arbitration costs and interest, and the tribunal reportedly found that the investor had been denied fair and equitable treatment.
Romania filed a petition to annul the award in March 2025; historical ICSID statistics show that full annulments are rare and generally require narrow procedural defects, which narrows the practical prospects of avoiding enforcement absent exceptional grounds.
Institutional reversals, legal advisers and the politics of memory
A striking feature of the case is the inversion of legal positions by institutions and advisers across different political cycles. Counsel that supported or advised the structuring of state-level responses in 2009 reportedly represented Romania in the arbitration and the annulment phase a decade later. That reversal highlights the problem of institutional memory and the political repositioning of advice in government decision-making. For investors relying on multi-year commitments, such reversals erode predictability: a policy position supported under one administration can be actively opposed by a successor, notwithstanding the technical merits or the original rationale.
Economic valuations, technical requirements and unrealized potential
Independent studies and feasibility work included in the case record estimated the RAFO project’s value under various scenarios, with lower-bound valuations in the hundreds of millions and upside cases approaching or exceeding $1 billion depending on oil price assumptions. Restoration of integrated operations would have required capital-intensive equipment — hydrotreaters, catalytic cracking units, hydrogen production, sulphur recovery and flue-gas treatment — and even a half-capacity restart was estimated to need roughly €190–220 million of new investment. At full planned output the platform could have delivered meaningful fiscal receipts — excise duties, VAT and other levies — and a sustained contribution to local budgets and employment. The prolonged interruption therefore represents a substantial foregone economic opportunity for both the region and national tax revenues.
Insolvency, auction and the redefinition of the site’s use
Following insolvency proceedings declared in 2019 and administration by Casa de Insolvență Transilvania, the 295-hectare site was auctioned on 27 July 2020 and acquired by Roserv Oil, a subsidiary of the Grampet railway-logistics holding, for about $6 million plus VAT — a sum far below historical book valuations. The new owner signalled a pivot: convert the complex into a logistics and storage hub for containers and petroleum products, with longer-term aspirations for hydrogen and biofuel facilities. By autumn 2024 the buyer had restored rail access and staffed security, technical audit and dismantling teams numbering just over 100, but the CDU/VDU distillation units remained idle and no credible plan to reinstate full refining operations had been financed.
Socio-demographic and environmental consequences in Onești and Bacău County
The social imprint of RAFO’s decline is observable in demographic and employment statistics. Onești’s population fell from approximately 58,810 in 1992 to 32,671 in 2021, a contraction reflecting the loss of industrial employment and the outward migration of working-age cohorts. National petrochemical employment also shrank dramatically: from about 12,000 workers in 2007 to roughly 3,800 in 2016. Local public finances were affected as payroll tax revenues and excise duties receded; the municipal budget lost a significant revenue base and public services contracted accordingly. The contraction of supplier networks and ancillary contractors amplified the economic ripple effects: closures of kindergartens, adjustments in municipal transport routes and reduced demand for local services followed.
On environmental matters, the cessation of investor-funded wastewater and treatment operations left remediation obligations underfunded. Available accounts indicate that only a fraction of closed sites had been fully cleaned post-2016, and state monitoring and reclamation programmes lacked sufficient resources to address the backlog comprehensively.
Analytical assessment: governance gaps and market signals
The RAFO Onești episode exposes a cluster of governance weaknesses that can fatally undermine capital-intensive industrial recovery: unclear or non-executed public commitments; repeated administrative claims in the shadow of judicial rulings; the use of criminal enforcement instruments in ways that extend to corporate property; and rapid overturns in legal or advisory positions across administrations. Each of these dynamics transmits negative signals to private creditors and capital providers, who require contractual and regulatory predictability across investment horizons that span decades.
From a market perspective, the case illustrates how the interplay of technical feasibility and political risk can determine project outcomes: the technical path to restoration was well understood and capital-intensive but feasible; the political and institutional path proved unpredictable and costly. Arbitration provided partial remediation for investment losses, but it cannot reconstruct shattered supplier networks, restore a depleted labour force or undo the demographic decline triggered by long-term industrial contraction.
Prospects and concluding reflections
The RAFO site today functions in substantially different terms than during its industrial peak. Its conversion to logistics and storage may deliver some economic activity, but the integrated petrochemical hub it once was would require a renewed commitment from both private investors and public authorities, credible long-term financing and a stable regulatory regime. For Iakov Goldovskiy and Petrochemical Holding, the ICSID award offers a legal vindication of aspects of their claim and a financial remedy, yet the award does not reverse the structural losses experienced by Onești and Bacău County.
The lessons of RAFO extend beyond a single plant. They speak to the fragile architecture of post-privatisation transitions where institutional inconsistency, litigation risk and political recalibration can convert rehabilitation attempts into protracted disputes. Restoring investor confidence in such contexts requires not only adherence to legal obligations but also durable policy frameworks that align industrial strategy with transparent enforcement and a predictable rule of law. Only then can large, integrated platforms survive the twin tests of technical modernization and the political cycles that shape the tenor of public commitments.
