Vesselin Georgiev, head of the state-owned National Road Infrastructure Fund (NRIF), has been alleged to be involved a serious conflict of interest.

On January 11, Bulgarian-language weekly Kapital published an article on the tenders organised by the NRIF for road construction and maintenance projects.

Quoting public information from several registers, Kapital reported that Vesselin 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.

Binder is registered in Sliven, central Bulgaria, and until two years ago Vesselin Georgiev ran it. After he took up his position at NRIF, his brother Emil Georgiev succeeded him.

The public procurement register showed that Binder was one of the preferred contractors for road construction and rehabilitation projects. The company deals with large-scale projects and with small public procurements for repairs of second and third-class roads, all assigned to it by the former Road Agency and its successor, the NRIF.

Binder has been doing well in recent years. One of the projects the company is involved in is the rehabilitation of The Pass of the Republic linking Stara Zagora and Veliko Turnovo on both sides of Stara Planina. Binder, in co-operation with other companies, has to repair 23km of roads at the value of 19.3 million euro, making it the most expensive NRIF project because it costs about 850 000 euro a kilometre of work. The rough terrain was given as the justification for the high price. According to Kapital, the average price a kilometre in all the other NRIF projects is three times lower.

Asked by Kapital for comment, Vesselin Georgiev said he saw no conflict of interest in the fact that his brother’s company was a major subcontractor of the NRIF. Georgiev said that NRIF contracts were signed not by him but by the fund’s regional units and he would not know what all 27 of them were doing at every moment.

Such a close family relation, however, is more than enough reason for the code of ethics for top positions in the executive branch of government to define it as a deep conflict of interest. But the code has no force in law. It was adopted by the Cabinet as part of a package of anti-corruption measures under the direct supervision of European Commission. In terms of the code of ethics, Vesselin Georgiev had a conflict of interest that he should have declared to his superiors, but he did not do so. The code’s section 2, article 5 says that executives of state bodies such as NRIF cannot have shares or any other kind of participation in commercial companies. According to Vesselin Georgiev, his family did not hold any shares in the Binder company and his younger brother Emil only managed the company.

“What do you want? Because of me, that my brother should be left without work? It is simply what he does for a living and I see no problem with that,” Georgiev told Kapital. He said that the law on public procurement was the ultimate guarantee that there was no conflict of interest.

The register also showed that Binder had been selected to clean the roads of two major regions, Stara Zagora and Sliven.

Kapital recalled what had happened two weeks earlier when sections of Trakiya Highway in the regions of Stara Zagora and Sliven were not properly cleared of snow. At the time, Dinko Georgiev, head of the NRIF unit in Stara Zagora, said that the companies responsible for the cleaning would be fined between 30 and 100 per cent of the value of their contracts with NRIF and if there was a further default, the contract would be cancelled. This would mean that Vesselin Georgiev’s brother Emil Georgiev would be fined. The same day that Dinko Georgiev made his statement he was penalised by Vesselin Georgiev, with a final warning, because Trakiya was not cleaned properly.

So Vesselin Georgiev was fining his subordinate who was fining Georgiev’s brother.

Again according to public documents, Vesselin Georgiev owned a share of less than one per cent in one of the Binder shareholder companies. His lawyer told Kapital that when he took the position as head of NRIF, Georgiev transferred this share, but did not specify to whom. However, there was no record of this transfer in the official Bulstat registers at the National Social Security Institute.

Furthermore, Vesselin Georgiev was a major shareholder, through the Balmat company, in the Inmat company, which was run by his other brother Boiko Georgiev. Inmat and a number of other connected companies were active in the extraction of inert materials used in road construction, Kapital said.

In 2005, Boiko Georgiev made the news after he filed his income tax declaration. In it, Georgiev said he had bought agricultural land in the area of Stara Zagora. Georgiev, then in his capacity as Binder’s executive, said he bought the land with the idea to use it as a quarry. However, if this land turned out to be near the route of Trakiya Highway now under construction, Georgiev could pocket several million leva.

By January 16, the only response on the issue from the four Government institutions responsible for supervising the work of the NRIF – the prime minister, Finance Ministry, Transport Ministry and the Ministry of Regional Development and Public Works, has come from the latter. On January 13, Regional Development Minister Assen Gagaouzov, a former mayor of Sliven, told Bulgarian National Radio he saw nothing worrying about the Georgevi brothers getting NRIF contracts.

“The NRIF has never worked better than it has in Georgiev’s term in office,” Gagaouzov said. “There is no conflict of interest and publications that say otherwise are inspired by economic interests,” he said.