The media in Bulgaria took its first “victim” for the year when, on February 4, the Government accepted the resignation of National Road Infrastructure Fund (NRIF) head Vesselin Georgiev.
Georgiev’s resignation letter said only that he was resigning because of “the situation that occurred in the country after January 3 this year”.
In the first days of 2008, hundreds of people were trapped for hours in their vehicles because roads were not cleaned after heavy snowfalls.
But even though Georgiev used only the vague term “the situation”, Prime Minister Sergei Stanishev made it clear that the Government’s decision to “accept the resignation” was linked to a story published in Bulgarian-language weekly Kapital on January 11.
Stanishev said Georgiev’s decision was the correct one and it was more of a moral issue than a legal one.
The story quoted official records that Georgiev’s younger brother Emil Georgiev and the company run by Emil Georgiev, Binder, had been given work worth 120 million leva by the NRIF. This was the equivalent of more than half the work given to all other companies, taken together. Vesselin Georgiev was involved with Binder before becoming NRIF executive director two years ago.
After Vesselin Georgiev took up the post, Binder became a favourite choice when the NRIF needed roads repaired.
As the story gained momentum, Vesselin Georgiev said that he saw no conflict of interest in his brother being among NRIF’s most preferred contractors. Regional Development Minister Assen Gagaouzov, one of the NRIF’s principals, defended Vesselin Georgiev as “the man who got the NRIF up and running in the past two years”.
On January 24, the NRIF and Georgiev received another serious blow.
Two high-profile HRIF officials were arrested in possession of 25 000 leva in marked notes. The two allegedly solicited the bribe from an architect to get approval and fast-track treatment for a construction project involving changing the land use zoning of agricultural land near Hemus Highway. The fact that the two men taken into custody, Lyubomir Lilov and Ivan Vladimirov, were responsible for the allocation EU funds absorbed by the NRIF added to the impression that the NRIF had gone off the rails.
On January 28, the crisis deepened. The European Commission sent a letter to Bulgaria asking for serious action to be taken in the case. The EC asked Bulgaria to suspend all EU funding to the NRIF pending the outcome of an investigation, which meant that the use of hundreds of millions of EU money went on hold. This development, the growing media and public pressure, and the fact that the EC interim report on progress in Bulgaria under the co-operation and verification mechanism was expected within a few days, resulted in the Finance Ministry formally investigating the NRIF on the basis of Kapital’s story.
On February 4, the ministry found that “based on the results of the investigation, one can conclude that Vesselin Georgiev could have found himself in a situation in which a conflict of interest would arise or manifest itself”. The ministry said that it had ordered a second probe to determine whether Georgiev broke public procurement laws in assigning public procurement contracts to Binder. The ministry’s inspectorate has one month for the investigation, given the long period of time, 17 months, covered by the probe.
On February 5, Georgiev told commercial bTV that his only mistake was that at the time he took the job at NRIF, he did not know he had to report the fact his brother was in the management of Binder.
“It is a mistake by the NRIF lawyers, because how am I suppose to know all the regulations in Bulgaria?” he said.
According to the code of ethics for top positions in the executive branch of government, business relations involving such a close relative is defined as a deep conflict of interest.
With Georgiev out, NRIF general secretary Milosh Potskov has been promoted to run the agency. Potskov twice served as interim chief of the State Agency Roads, NRIF’s institutional predecessor.
