Renting out real estate owned by the company at half-price and 500 to 600 leva lunches were just some of the irregularities found at state-owned Information Systems PLC, Bulgarian-language daily Sega quoted a report by the Public Financial Inspection Agency (PFIA) as saying.

In the report, of which Sega said it had obtained a copy, it became clear that the person who was said to have been responsible for the financial chaos was former director Ivo Nikolov, Sega said.

Nikolov was criticised earlier this year by Prime Minister Boiko Borissov about his salary, which was said to have been about 100 000 leva a year.

The majority shareholder of Information Systems is the ministry under which the PFIA operates; Bulgaria's Finance Ministry.

According to the report quoted by Sega, representational expenses at Information Systems had grown in 2008 by 17 per cent to 170 000 and were budgeted to grow in 2009 to 251 000 leva.

Members of the management board were said to each have a limit of 1000 leva a month for entertainment expenses, with the exception of Nikolov, who allegedly had a monthly budget of 2000 leva.

Nikolov had allegedly spent most of his monthly entertainment budget on lunches, dinners and hotels in Bulgarian resorts. 

As examples of Nikolov's spending pattern, Sega said that on March 19, he spent 334.32 leva on a restaurant lunch. Four days later, Nikolov spent another 506.20 leva on lunch at a different restaurant, Sega said.

The PFIA report included several smaller accounts of alleged abuse of funds by Nikolov, Sega said. Also, the PFIA report showed that some of the expenses which former head of supervision of the company Stoyan Denchev had reported as expenses made by Azeri Melikov, who was said to have close ties to former prime minister Sergei Stanishev, had actually been made by Nikolov.

Over a period of 16 months, Information Services had rented out six of the real estate properties the company owns, mostly in the Sofia boroughs of Dianabad and Izgrev. Part of the rent, however, had been settled on without the legally required tender, Sega said.

Nikolov, along with former director Aleksandar Vitanov, had been held responsible for this and both had been fined for administrative violations. According to the PFIA report, rents for the real estate had been well below market value. One of the buildings owned by Information Systems had been rented out to telecommunication company BTK at 7 leva a sqm, while Odessosstroy had rented office space at only 8.02 leva a sqm.

According to PFIA, the rent for these office spaces could not be less than 10 leva a sqm under regulations, although Nikolov was said to have signed off contracts for as little as five leva a sq m, Sega said.

On December 22 2008, Information Services organised a christmas party for 350 to 400 guests, which was said to have cost 36 000 leva including VAT. The PFIA report said that Information Services had failed to get three quotes for the party, as required by law.