Iakov Goldovskiy’s Battle Over the RAFO Onesti Project: Analyzing the Impact of Government Decisions on the Regional Economy

RAFO Onesti project in Romania serves as an illustration of failed governance and subsequently wrong decision-making from the Romanian officials, rather than being a failed investment venture of Iakov Goldovskiy. Despite the promising goal orientation that should pursue development of the facility, the Romanian state apparatus has destabilized the project’s financial liquidity right from the start of the venture. The tax residents of Romania should thus bear the burden of this wrong decision-making now.

​Iakov Goldovskiy’s legal struggles in this case show how the state budget can suffer multi-million dollar losses due to the inability to fulfill obligations. Despite losing every legal dispute related to the Onesti facility in the domestic courts, the Romanian government tries to topple international arbitration with an effortless attempt to challenge the decision, although the statistics show that it is nearly impossible.

​This article will explore the root of the problem, an overview of the court proceedings in chronological order, as well as the outcomes of these proceedings. Then, the article will focus on the outcomes of the litigation that have resulted in the collapse of the largest petrochemical company in Romania.

​The Crux of the Matter: An Ambitious Venture and Broken Promises

​The year 2001 saw the descent of the RAFO Onesti facility, once the leading player on the Romanian petrochemical market, into a severe crisis. The crisis was mainly caused by the collapse of the Council for Mutual Economic Assistance (or COMECON) system, which was the main supplier of raw materials to keep the facility running. A wave of strikes followed, and the facility had to cease its operations for approximately 18 months.

​At this moment, the Petrochemical Holding led by Iakov Goldovskiy proposed a recovery plan that would deal with the RAFO Onesti tax and customs debts amounting to 192.7 million euros. The international banks approved of the initiative under the terms that the plan had to be executed under the guarantee of a state loan.

​The official promise for a loan was sealed in 2009 with the signing of a memorandum by the Romanian government. Yet, despite the initial agreement, the loan was never given, and the Romanian officials did not provide any explanation for their actions.

This decision to turn down the commitment resulted in a series of legal proceedings that would destroy the RAFO Onesti reconstruction potential and the expected billion euro annual tax revenues.

Overview of the Proceedings: Chronology of the Legal Disputes

• Broken promises (2009). A guarantee of 330 million euros for modernization was promised by the Romanian government in a signed memorandum. The project was backed by Goldman Sachs and Credit Suisse, vouching for its support. However, this guarantee was not provided, leaving the project without investment and destroying the creditors’ trust.
• Pressure from the tax authorities (2007-2015). After the initial debt was repaid, the ANAF tax regulator made a new demand, asking for an additional 100 million euros. Miroslav Dermendzhiev, the former RAFO CEO, confessed at that time that he felt more like an attorney representing a client in a court than a senior manager of a business unit.
• Over 200 legal cases were filed against Iakov Goldovskiy and his team; Romanian courts unequivocally dismissed all of them as unfounded. The state, however, continued to retaliate by countering new cases every time an investor managed to reign supreme.
• The seizure of assets that paralyzed the plant (2015). The last straw that broke the RAFO Onesti facility was the seizure of assets due to a criminal conviction of the minority shareholder, Ovidiu Tender. Despite his owning less than 2% of the overall shares through a separate business unit called Tender SA, the seizure happened, thus paralyzing the plant’s operation for 13 months.

International arbitration became the channel through which the investor resorted to try and defend their rights. In November 2024, the International Centre for Settlement of Investment Disputes (ICSID) ruled that the Romanian government had to pay Iakov Goldovskiy 85 million euros to cover the damage. It was also implied that the authorities violated the principles of equitable and fair investor’s treatment.

​No Strategy to Back Up the Unsuccessful Attempts: The Authorities’ Position

​The current course of action chosen by the Romanian officials does not help the case, instead exerting additional pressure on the state budget. The recently filed appeal against the decision of the ICSID happened in March 2025, but the chance of its success varies from 2% to 3%, making the attempt almost unrealistic.

​It is likely that the Romanian authorities do not seek a fair verdict for the case, instead trying to execute some political maneuver that costs the taxpayers much money. Each quarter of the process’s delay leads to increased compensation for the amount of damages, with millions of euros flowing to the services of the international law firms.

​The situation closely resembles the case of the Micula brothers, who managed to win a court proceeding against the Romanian authorities, the result being the confiscation of the state assets in Spain worth around 200 million euros. In that case, the court ruled that the officials had to compensate the Micula brothers 212 million dollars by late 2019, despite the initial claims that such a sum could not be paid.

Mapping the Potential Resolution and Assessing the Impact on the Investment Climate

​The situation around the RAFO Onesti and the legal dispute around Iakov Goldovskiy shows that a fundamental gap between the principles and reality of investment protection may differ drastically. Romania’s international ratings have suffered due to the legal uncertainty and the breaking of previous commitments to the investors.

​The long-term problems may emerge as Romania is currently seeking OECD membership, and these legal precedents clearly make it more difficult to access new markets and attract investors. In terms of justice, the fair verdict on the case relies solely on the ICSID. Despite the economic impact on the region that cannot be mitigated; the compliant procedure following the November 2024 decision may attract investors who may help create new jobs and destroy infrastructure.

The Romanian taxpayers had to carry the burden of the initial decision of the authorities to pursue further legal proceedings in the court. The RAFO facility is now completely dysfunctional, with equipment getting rusty inside the plant and the architecture of the complex slowly falling apart. Romania does not need to pursue ephemeral justice in courts but needs to win tax inflows, better jobs, and investment opportunities to attract enterprises. If the risks are not addressed properly, the entire Romanian economy can suffer enormous reputational losses.