Not so happy

It has become normal practice that, every time an investor takes an interest in public property, NGOs want to have their say, and "The First Alley" project is no exception.

A month after Holding Varna got the green light from Kontrov, 12 NGOs and Zelenite party issued a declaration against the way the deal was set up, and protested against the sale of the land to the TIM-dominated Holding Varna. According to the NGOs, the sale was against the law, without a public tender and there was a serious conflict-of-interest issue involved.

The NGOs said that a company which is also part of the TIM sphere of influence had been involved in developing the new general urban development plan of Varna which sets out the criteria regarding what and where can be built, including First Alley. In other words, a TIM-controlled company is officially working on setting building criteria in the city, while another one is planning to build big.


NGOs said that the deal was done a few weeks before the July 2009 national elections that brought a new government to power.

According to Kontrov, elections had nothing to do with the deal. In an interview with Bulgarian-language Dnevnik daily, he said that he had to approve the deal as he had received a letter from Stoyan Stalev, head of the state InvestBulgaria Agency. Stalev sent a letter in April 2009 backing the deal, on the basis of Holding Varna’s Class A investment certificate, granted by the agency in 2007 when the First Alley project was first announced. According to the law, holders of Class A certificates can apply to acquire land (part of its investment plans) without a tender, as Holding Varna did.

The company has one more year until the term of its Class A certificate runs out, but again, according to the law, it could apply for an extension if it needed more time for its project.  Holding Varna has also pledged to re-enforce the landslide zones in the area at its own expense, which also helped them with the deal, Kontrov said.  

In an August 27 interview with Dnevnik, Holding Varna executive director Milcho Bliznakov responded to the allegations. According to him, the reasons why it took Holding Varna two and a half years to go ahead with the project were purely administrative and bureaucratic. To the accusation of conflict of interest in developing the city’s general urban development plan, Bliznakov said that this was not the case. The city hall had chosen the company to do the plan in 2005, while Holding Varna bought the company in 2007.  He said that the First Alley project had met all legal requirements, and there was no conflict of interest in this. As for the deal having happened without a tender, and at a price considerably low than other properties in the area, Bliznakov said that the law allowed the deal to go ahead without a tender.

"We also think that it is not correct to take the price of the land out of the deal’s context. The contract obliges us to invest 73.1 million leva – to re-enforce the area, to build infrastructure and not to sell the land in the next five years after the project is being finished. When you bear in mind that 50 per cent of the land is not usable, the actual price of the deal becomes a lot higher," he said.

To demonstrate its willingness to hear Varna’s public opinion, Holding Varna launched a petition in support of its own project, which, according to Holding Varna, was supported by 42 000 people. It was a response to a similar petition organised by the NGO sector against the project.