BUCHAREST (Reuters) - Romanian anti-corruption prosecutors opened an investigation on Monday into the leader of the ruling Social Democrat Party, Liviu Dragnea, on suspicion of forming a “criminal group” to siphon off cash from state projects, some of them EU-funded.

Social Democratic Party (PSD) leader Liviu Dragnea exits the parliament's main hall after filing a no-confidence motion against Prime Minister Sorin Grindeanu, in Bucharest, Romania June 18, 2017. Inquam Photos/Octav Ganea/via REUTERS

Dragnea, currently on trial in a separate abuse-of-office case, told reporters he rejected the new charges. Opposition parties called on him to resign as parliament speaker pending the criminal inquiry.

Prosecutors said Dragnea was suspected of forming “an organized criminal group” that included public servants and businesspeople in 2001. They said there were suspicions the group was still active.

The investigation focused on road construction firm Tel Drum SA, formerly controlled by the county council of the southern Teleorman region, a body that Dragnea headed until 2012, prosecutors said.

Dragnea and eight other people conspired to privatize the company through intermediaries, so that it came under “the influence and control of the suspect Liviu Dragnea,” the prosecutors added.

The company won many public contracts, at times without tenders or benefiting from confidential information that helped it beat other bidders, the prosecutors’ statement said. Dragnea and people close to him received cash and other assets from it, the statement added.

Tel Drum director Petre Pitis, also under investigation, declined to comment as he left a closed-door hearing at the office of anti-corruption prosecuting agency DNA. A company representative told Reuters that an official reaction was not expected on Monday.

The group of nine people was suspected of seeking to “fraudulently obtain important sums from public works contracts funded with domestic and European funds, by committing abuse of office, EU funds fraud, tax evasion, money laundering and accessing confidential information,” the DNA statement read.

The case was based on a notice sent by the European Anti-Fraud Office (OLAF) in 2016 regarding suspicions that Dragnea and other regional officials had used forged papers to secure EU funds for road rehabilitations, prosecutors said.

“I categorically do not feel guilty, I never formed a criminal group,” Dragnea told reporters. The 55-year-old, who got a suspended prison sentence last year for illegally using his influence within the party to sway a 2012 referendum, has dismissed past investigations as politically motivated.

Opposition liberal Ioan Cupsa said Dragnea should resign. “Once more, he is making parliament and the image it has with public opinion vulnerable,” he was quoted saying by state news agency Agerpres. Dragnea said he had no intention of stepping aside.

Transparency International ranks Romania among the European Union’s most corrupt states. Brussels, which keeps Romania’s justice system under special monitoring, has praised magistrates for their efforts to curb graft.

The ruling Social Democrats are currently preparing a judicial overhaul the European Commission, foreign diplomats and Romania’s own president have all said could place the justice system under political control. Thousands of Romanians protested against the overhaul earlier this month.

At the start of 2017, attempts by the ruling coalition to weaken anti-corruption legislation triggered the country’s biggest protests in decades.