Romanian PM Ponta faces trial in corruption case

BUCHAREST (Reuters) - Romanian Prime Minister Victor Ponta was indicted on Thursday on charges of forgery, money-laundering and being an accessory to tax evasion, in the biggest case yet in a sweeping crackdown on corruption in the country.

Ponta, who was charged in August, has repeatedly denied the accusations against him and said prosecutors were "manipulating public opinion" and disclosing incomplete information.

The indictment means prosecutors have closed their investigation and sent the case to Romania's top court for trial.

Already wounded by a shock presidential election defeat last November and facing a general election next year, Ponta has resisted calls to resign and so far has the backing of his leftist party and its allies to stay in power.

The indictment comes at a delicate time for his government, which has just pushed through a controversial tax-cutting programme and may soon start talks for a new aid agreement with the International Monetary Fund.

Romania has been dogged by political instability since shedding Communist rule in 1989, but markets appear to have shrugged off the corruption case so far.

Prosecutors said Ponta would remain free while on trial, for which a date has not been set. Although Ponta has some right to immunity from prosecution as a lawmaker, the charges against him relate to when he was not in office, meaning he cannot claim that immunity.

The ruling Social Democrat party may let him stay in his post for now, although the party will convene for a special congress on Oct. 11 when his position may come under scrutiny.

"Markets are unlikely to react to the news as long as there is no big change in public policies," said Dan Bucsa, an economist at UniCredit Research in London. "With a new Fiscal Code in place, investors will focus on Romania's negotiations with the IMF for a precautionary loan agreement."

By 1030 GMT, the leu was down 0.1 percent against the euro.

"There is a wide political consensus, so if Ponta were replaced it would probably not be seen as disastrous," one trader said. "Perhaps we would see a little volatility, depreciation pressure, but not in the long term and not very strongly."

Prosecutors said in a statement on Thursday that they had also indicted four other people along with Ponta in the case.

President Klaus Iohannis, who had called on Ponta to resign when the case first began, said Romania's image would suffer because of it.

"In my view, the situation is more and more problematic for the prime minister, for the government and for the Social Democrat Party," Iohannis told reporters after a meeting of the country's supreme defence council.

"But we must admit that Romania's image has the most to suffer from this issue."

A spokesman for the prime minister said Ponta's government would make a comment later.

CLINGING ON

The inquiry into Ponta mainly concerns his time as a lawyer and accuses him of colluding with Dan Sova, a former transport minister in his cabinet who is also being investigated for corruption.

Thanks to a comfortable majority in parliament, Ponta has survived three opposition censure motions, most recently in June. But he did resign as head of the Social Democrat party.

"In a normal country, the impact from such a move (the indictment) would be radical and the prime minister immediately would quit his job," said political analyst Cristian Patrasconiu.

"Today's indictment is not surprising and it is a new element that dramatically narrows any space of political manoeuvring by Ponta. He has no future but he will cling to power."

Ponta's indictment is the latest in a string of cases in one of Europe's most graft-riddled countries, where corruption remains a deterrent to investors.

Prosecutors, whose work has won praise from Brussels, have investigated some of the most powerful people in the country who at one point looked almost untouchable.

Among others, they have investigated a sitting finance minister, senior politicians, a top judge, and Romania's richest man according to Forbes magazine.

(Writing by Matthias Williams; Editing by Kevin Liffey and Hugh Lawson)