Several new scandals about alleged corruption at state and municipal level have made the news in Bulgaria in recent days.
First were the latest developments in the case of Valentin Dimitrov, the former head of Toplofikatsia Sofia, the city’s heating utility. Currently, Dimitrov is in custody, under investigation for money laundering. On August 8, Angel Alexandrov said in an interview with Darik Radio that Dimitrov has been taken out of jail three times in the past two months. Dimitrov was accompanied by officers from the Court Police and prison guards and had meetings with a representative of off-shore registered companies which had allegedly drained Toplofikatsia. As a result of these meetings, bank accounts were closed. Closing them meant that the investigation into Dimitrov was obstructed, Alexandrov said.
The next day, the Interior Ministry denied Alexandrov’s statement, but what happened next suggested that there might have been something to Alexandrov’s statement. At least this conclusion may be drawn from the actions of Prosecutor-General Boris Velchev.
On August 11, Velchev said in a media statement that two prosecutors, Bozhidar Dzhambazov and Mariana Stankova, had been appointed to replace their colleague Vladimir Yordanov in charge of Dimitrov’s case. Yordanov was removed as supervising prosecutor in the case because of Alexandrov’s statement. In addition, Yordanov was to be held responsible for not taking steps to close Dimitrov’s accounts abroad, most of them in offshore banks. A number of Dimitrov’s bank accounts had been found, and checks were being done in Liechtenstein, Cyprus, Panama and Hungary. By August 16, only real estate owned by Dimitrov had been placed under court restriction, leaving free for operation all the bank accounts in his name and that of his mother. All irregular contacts involving Dimitrov while in custody would be investigated, the statement said, indirectly confirming what Alexandrov had said.
A day earlier, the Prosecutor-General’s office received the audit report on Toplofikatsia confirming large-scale financial violations and unreasonable spending by the company in the past two years. According to the report, Toplofikatsia’s management had caused losses of nearly 17 million euro to its subscribers as a result of overcharging. The report revealed shocking spending by Toplofikatsia on concert tickets, promotional materials, nuts, drinks, sweets, French mineral water, among other things. The same day, Konstantin Shushulov, chairman of the State Commission for Energy and Water Regulation, told a special news conference that the price Sofia residents had paid for heating had nothing to do with the money overspent by former managers of Toplofikatsia. According to Shushulov, any expenses made beyond the licensing agreement with the company were not part of the heating pricing, so compensating subscribers for overcharging was out of the question. Dimitrov and the board of directors might have sponsored their spending from company profits or unpaid debts, Shushulov suggested. The only consequences from the report would most likely be for Dimitrov, as after the audit was presented Dzhambazov said that new charges based on the report would be laid against Dimitrov. The new charges would be embezzlement and abuse of office.
According to Dzhambazov, Dimitrov probably had accomplices including Toplofikatsia employees and other people.
“Everyone will be interrogated,” Dzhambazov said.
As for Dimitrov, Dzhambazov did not see reason at this stage why he should be interrogated. “If Dimitrov decides to give explanation on in the case he would not be denied this right”. How the whole case would end is up to the investigating institutions but Dimitrov’s case would continue to be in the spot of public attention, at least if something else does not surface from police investigations.
The episode was followed by the arrest of six Traffic Police (KAT) officers and several citizens at the end of last week. On August 11, Chief Commissioner Vanyo Tanov, the head of the Directorate for Combating Organised Crime, told a news conference that at least six traffic police officers had been involved in a fraudulent car licensing and traffic penalty avoidance scheme. The group included Nestor Nestorov, son of KAT Sofia head Ilia Iliev, as well as the head of the licensing department at KAT Sofia, Toni Tomov. The fraud scheme involved imported cars before customs clearance. Passenger cars were “transformed” into trucks, and more seats were added in SUV’s . The purpose was the vehicles be registered as company vehicles, and not private ones, in order to recover VAT after the import. Through the scheme, the national budget lost at least 20 000 leva a car.
In a separate line of activity, the group helped drivers avoid penalties and fines, for a certain price. According to Tanov, the illegal activities were conducted through companies held by Nestorov and his stepsister. “Iliev had created conditions for corruption, and he knew what his son was doing,” Tanov said. The police and the Interior Ministry Inspectorate have uncovered more than 200 cases of fraud under this scheme.
Iliev and Tomov were suspended from office pending completion of the investigation into the criminal group. On August 14, Sofia City Court ordered that Nestorov remain in custody on charges of participation in organised crime group, tax fraud and document-related crime.
The same day, the court ruled on another investigation into alleged corruption. The court agreed to a request by Sofia City Prosecution Office to impose detention under guard on Vladimir Milev, liquidator and executive director of Consolid Commerce, a state-owned foreign trade company. Milev was arrested on August 10 after the police found alleged misuse of five million leva of company funds. He was charged with misappropriation of a large amount of money. Milev was appointed liquidator for the company in February 2005 by the then economy minister Lydia Shouleva, currently a National Movement Simeon II MP.
Police alleged that Milev had transferred the five million leva from a bank account of the state company to Forexco financial house to manage it. Milev was on the Forexco management for a few months in 2004.
Roumen Ovcharov, Minister of Economy and Energy, and ex officio owner of Consolid Commerce, gave Milev 24 hours on August 4 to recover the money, but Milev said that he could not get it because the chief executive of Forexco was on leave. Currently, the management of Forexco is on a nationwide wanted list. Ovcharov also fired six officials from his Ministry for accepting the 2005 financial statement of Consolid Commerce despite an obvious tenfold decrease in the company’s interest revenues. Consolid Commerce was established in 1993 through a merger of several state-owned foreign trade companies. A liquidation procedure was terminated in May 2006, and the company continued to operate. At a special news conference on August 14, Ovcharov said that Consolid Commerce should have been wound up long ago but obviously had been kept operational to enable fraud.
“No compromise will be made in anyone’s favour... the time of misappropriation of public funding is over,” Ovcharov said.
Checks were under way at the Toplofikatsia Plovdiv, natural gas distributor Bulgargaz and at cigarette distributing companies, Ovcharov said. New commissions would be appointed shortly to investigate all companies where the Economy and Energy Ministry represents the State as owner.
August 14 really proved to be one of the hottest days this summer because a few hours after Ovcharov made his statement, his fellow party members from Bulgarian Socialist Party told reporters that the Sofia Water Supply and Sewage company (VIK) had been drained of more than 500 000 leva in 2005. The former director of the company, Boris Stoichkov, is alleged to have concluded questionable contracts to the amount of 500 000 leva. Stoichkov was dismissed from his post in March this year, but continues to represent Sofia municipality on the company’s board of directors. Stoichkov rejected claims that he had exceeded his authority or that he had stakes in the contracted private companies.
