In the 21-page report, the Council of Europe's anti-torture committee urged the former Soviet republic to tackle the "informal power structures among prisoners," saying that some prison guards were in "tacit collaboration with informal leaders" and failed to provide a safe environment for prisoners.
It called the prison system a "profit-oriented criminal enterprise" and said managers hadn't addressed the "deep-rooted" issue, a legacy of the Soviet Union which collapsed in 1991. It said the system benefited managers because it "ensured the smooth running of the establishments."
Moldova has some 7,400 prisoners.
The report came after investigators visited two prisons - one in the capital Chisinau, another in the northeast city of Soroca - where prisoners claimed they were subjected to physical and verbal abuse and faced "threats of the use of force and racketeering by informal leaders or their close circle."
The report added some detainees were ostracized by fellow prisoners or made to clean the toilets and other areas.
Prison spokesman Oleg Pantea told The Associated Press that managers were aware of the issue and would work on improving conditions after studying the report.
The report said investigators hadn't received any allegations of recent physical ill-treatment of prisoners by staff in the three establishments it visited.
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