NRA incriminates godfather of Bulgarian mafia, Kostov, in illegal BGN 500,000

Property deals expose his connections to the oligarchs Prokopiev, Donev and Donchev

The godfather of the Bulgarian mafia and behind-the-scenes clique Ivan Kostov, aka the Commander, has been busted much like Al Capone was after tax authorities reveled an illegal half a million of levs. The huge sum with unknown source was discovered during audits launched 2-3 years ago, while the news itself came from Kostov, who, in a highly-produced interview for bTV, tried to secure a media shield for himself against future actions of the Bulgarian investigators.

The illegal sum is significant – it is part of several real estate deals with combined value of BGN 1.1m, through which Kostov and his wife Elena bought over 50ha in the so-called Golden Dobrudzha shortly before shale gas drilling plans were announced for that area. The outrageous idea was nipped in the bud following protests and a referendum of the population of the “granary of Bulgaria” (see below). The actual deals are evidence of the behind-the-scenes ties between Kostov, the mastermind of the criminally conducted privatisation process in Bulgaria, and oligarchs Ivo Prokopiev, Sasho Donchev and Ognyan Donev, who amassed their fortune thanks to Kostov’s gifts of that period and who were also involved in the land deals, as it emerged. Despite the scrapping of the shale gas and fracking plans in Dobrudzha, the deals, and the suspiciously inflated prices involved in particular, apparently drew the attention of the tax authorities, which dug into the property of the Commander and ultimately found the illegal half a million levs.

At the heart of the audit are two large sums that Kostov and his wife Elena claim to have given to an investment fund sometime between 2007 and 2008, which in turn lent the money to a “local entity”. They appear from nowhere in the financial statements that the Commander filed with the Bulgarian National Audit Office in that period. Perhaps that was his attempt to start legalising the fortune he had amassed through illegal means.

So, in the period between 2007, when the Audit Office’s digital archive was created, and 2013, when the Commander left politics, his wealth started growing exponentially – Kostov and his wife modestly stated as sources of the money “salary and family savings”. At the beginning of said period, the Commander and Elena had a total of about BGN 282,000, with a large chunk (BGN 260,000) given as “loan to a local entity – investment fund” by Elena Kostova. The origin of the money was succinctly explained as savings. From what revenues – that was not made clear.

In the very next year, Kostov followed in the footsteps of his wife and became a major creditor by “lending” BGN 250,000 to a local entity through an investment fund. Even though the money did not appear in his financial statement for the previous year, the Commander did not hesitate to check “family savings” in the Origin category. Again, without clarifying where it actually came from. In other words, he magically doubled his personal wealth during a time when (at least on paper) he worked as a lawmaker. In 2008 MPs received salaries of about BGN 2,000 so for Kostov to be able to save a quarter of a million levs, he would have had to save every lev of his salary for a decade.

To this day, Kostov refuses to talk about the origin of these funds. In his bTV interview, the godfather of the Bulgarian oligarchy tried to pull wool over the eyes of the public by using phrases such as “the tax authorities claim that this money is not ours” and “we have proven that we have invested the money over the years”. However, he cleverly omitted the fact that the National Revenue Agency inspectors normally care about where the money comes from and not where it is invested. Kostov was never asked about the origin of the illegal BGN 500,000 during the bTV interview, neither was he asked by the host about his scandalous CorpBank deposits at preferential interest rates or the financial connections between the Commander’s family and the fugitive banker Tsvetan Vassilev, who is hiding from the Bulgarian judicial system in Serbia.

These questions are important because tracking Kostov’s financial flows clearly shows they mushroomed in the years that CorpBank was growing its business. And if they amounted to under BGN 300,000 in 2007, by the time the lender collapsed they already stood at BGN 740,000. The latter number is included in the report prepared by the bank’s bankruptcy administrators and it represents the combined deposits of Elena and Ivan Kostov. It is unclear whether it includes the over BGN 500,000 that the two claimed to have lent in 2008. It is also unclear how Kostov managed to increase the sum to the over BGN 1.1m that, according to a Blitz investigation, he invested in acquiring 50.37ha of land in the Dobrudzha villages of Chernookovo and Kardam. He bought the land from Albena AD – a company that privatised the Black Sea resort of the same name during Kostov’s term as prime minister – with the acquisition carried out in two stages: in December 2016 and October 2017, respectively. Both deals were done at suspiciously high prices for the land, which was valued at an average of BGN 22,000 per hectare when the market value was much lower at the time. One of the possible explanations is the fact that the purchases were made shortly before one of Ivan Kostov’s protégés – oligarch Sasho Donchev – announced his plans to drill for shale gas in that same area through his company Rusgeokom BG.

What is even more curious is that Albena AD, whose portfolio features a huge amount of farm land, rarely sells such property. The question why the company decided to sell to Kostov in particular was also not asked of the Commander, but there are plenty of answers and the privatisation of the eponymous Black Sea resort is only one of them. Another one can be found in the manner and timing of the company’s acquisition of those same lands. A visit to the Land Register shows that the lands were bought by Albena AD in 2006 and 2008. The timing suspiciously coincides with the appearance in Kostov’s financial statements of the so-called loans given to a shareholder company via an investment fund.

The whole story surrounding the purchase of the lands involves not only Sasho Donchev but the other two favourite protégés of the Commander – Ognyan Donev and Ivo Prokopiev. In April 2016, shortly before the Commander and his wife bought the land, Telekomplekt Invest AD, which is affiliated with the pharmaceutical boss Ognyan Donev, acquired 6.36% of Albena Invest Holding. Albena AD was the seller. A pension fund that has been tied to the interests of Ivo Prokopiev for years, is also among the major shareholders of Albena AD, Blitz has revealed. The news agency reminds that the chairperson of Albena AD’s Board of Directors is Radosvet Radev – the owner of Darik Radio, which has been covering the gas extraction topic in the General Toshevo region extensively over the past 2-3 years.

Exploiting the media as an instrument for lobbying and intimidation is among the methods employed by this whole group of media owners and publishers. As we have warned numerous times over the years, under the masterful conduction of Kostov, Prokopiev, Donev and Donchev use their publications and the media outlets they have some influence over (often times behind the scenes) as a shield to cover up for their crimes and the shady deals of their cronies and mentors. Kostov’s interview was a manifestation of that ugly phenomenon, through which the oligarchy in Bulgaria is trying to reduce journalism to the role of an instrument in carrying out someone’s malicious orders.

What he admitted on air

The highly produced interview for bTV that Ivan Kostov attempted to use as a shield against the Bulgarian investigators still revealed some very important facts. One of the most significant ones is that the Commander finally betrayed the truth about his role as a mentor of the political motley crew called Democratic Bulgaria. Albeit half-heartedly, Kostov admitted that he was behind the oligarchic project.

The godfather of the Bulgarian mafia tried to tap-dance around the truth several times, but the moment he started talking about his money, the facts poured out of him. “The Prosecutor’s Office wants to hit the person behind Democratic Bulgaria and the protests against Ivan Geshev – in other words, me,” Kostov said. Then he tried to spin out of the situation by saying that he did not have the “power and means” for such things. Minutes later, however, the Commander slipped again by saying that he gave documents with expert opinions to the current figurehead leader of Democrats for a Strong Bulgaria – Gen. Atanas Atanasov.

Kostov’s family owns ‘golden’ real estates at the Golden Sands resort

The Commanders’ wealth has always been an enigma. The reason is that after he ‘received a box on the ear’ from the Bulgarian community and lost the helm of state Ivan Kostov actually found himself off the power board and eventually announced that he retired at the end of 2013. Meanwhile a series of probes, including by the Telegraph Media outlets, disclosed that when he posed as a ‘pensioner living in a small way’ his family purchased expensive realty at the Golden Sands resort with the money of unclear origin. This resort, by the way, was privatised during Kostov’s rule by his pet restorauteur Slavcho Hristov.

His daughter every month signed BGN 30,000 paycheck for consulting services from CorpBank – the bank that was gifted to Tsvetan Vassilev by Kostov himself, while the Commander and his spouse Elena had a deposit in the bank to the amount of BGN 700,000 and were high-status VIP depositors. This fact transpired after the CorpBank’s collapse, when the patron of mafia-style privatisation in Bulgaria blatantly tried to garble the facts and said that his wife drew her pension from the bank and her card was blocked when she was buying “bread and milk”.

Mafia-style privatisation translated into figures

- Kremikovtsi steel mill was sold for $1.

- Balkan Air Company along with 18 aircraft was gifted to Gad Zeevi for BGN 150,000.

- Neftochim oil refinery was sold out for $ 101m (having in mind that its real cost was over $2bn). In addition, Kostov personally wrote off its $172m debt to the state on 21 October, 1999.

- Damianitsa winery and Kaolin mining company sank in the pockets of Ivo Prokopiev and Capital circle for small change and were purchased for compensation vouchers.

- During Kostov’s rule CorpBank was sold to Tsvetan Vassilev and now the gaping hole in the coffer is estimated at BGN 5bn which all citizens of Bulgaria are paying off. Kostov also had a deposit account in the bank while his daughter received BGN 30,000 from Vassilev every month for “consultations”.

- The list of enterprises “privatised” by Kostov is long: a total of 3,000 plants and state-owned companies. Most of them were sold under the so-called “worker-management” scheme, i.e. to the “insiders”.

- In experts’ estimation the cost of the privatised assets (to be read stolen) runs at BGN 30bn of which only BGN 2bn went to the state treasury.

Filchev: Kostov is Bulgaria’s terminator

„I saw a thief caught red-handed who mumbled, licked the boots of the authorities, offered excuses to finance institutions and prosecution saying that he didn’t steal but only tried to save money and manage his millions well.”

So the ex-Prosecutor General Nikola Filchev commented on the interview of Ivan Kostov to BTV. “As far as I understood, Kostov purchased a plot of land in Dobrudja worth of several million because there could be natural gas deposits there. So far, so good, one day his children could make use of it. But the bad guys from the “non-European” prosecution and tax office (which he himself founded) dared to ask him about the origin of this money. They meant some “small money”, just BGN half a million. Kostov did not explain how he managed to evade a nervous breakdown after warping lives of millions in Bulgaria owing to his greed,” Filchev said further. In his opinion, with this interview Kostov rushed way ahead of the evidence.

“If the prosecution brought in an indictment against him it would have been a political provocation against his party on the eve of election, an encroachment on democracy and Euro-Atlantic values. He hasn’t invented anything new. He has been using this same trick for over 25 years now. They catch him stealing but he jumps out of his skin in hot haste: “These are not European manners. The prosecution must be reformed. Constitution must be amended. At least, the bad Prosecutor General must be replaced.”

Kostov’s discontent with all chief prosecutors, with the exception of Boris Velchev, Filchev comments as follows: “He used to fling dirt at all of the chief prosecutors who don’t do his bidding but hold him accountable for his thefts, and he is still slandering them. So he turned the tables on Tatarchev, Filchev and now attacks Geshev. The only man he makes up with is Boris Velchev because the first thing Velchev did after assuming the office of Prosecutor General was to pay a courtesy call on Kostov’s protégé, billionaire Prokopiev and bowed to him. If Kostov commends a prosecutor this does more harm than good to this prosecutor. I feel guilty before the Bulgarians for failing to put him behind bars where he belongs,” Filchev added.

Regardless of vehement resistance of local citizens Sasho Donchev insists on drilling for natural gas in the breadbasket region of Bulgaria

Natural gas tycoon Sasho Donchev didn’t give up on his plans to extract natural gas in Dobrudja, which will ruin the breadbasket region of Bulgaria. The oligarch who made billions at the expense of taxpayers, who got access to the gas tap thanks to his personal mentor Ivan Kostov, brought a lawsuit before the Administrative Court of Varna for shale gas prospecting in General Toshevo.

It appeared that Kostov himself wanted to be Donchev’s partner in shale gas extracting. There is a reason why Ivan Kostov and his wife purchased land in Dobrudja, right at the place where the energy tycoon plans to drill for shale gas.

Through his Rusgeocom Company, established for the purpose, Donchev submitted a bidding for 41 boreholes at a depth of 2,000-5,600m for gas prospecting in Dobrudja coal basin. The company, whose name evokes associations with Russian investments, is property of the gas tycoon and his sons. Reference in the Commercial Register shows that Rusgeocom BG is registered at the address of Overgas in Sofia as one of Donchev’s sons sits on its board of directors. Following a series of protests in 2017, it turned out that the development of deposits in Dobrudja runs counter to the Underground Natural Resources Act and the established practice of oil prospecting in Bulgaria. There were also grounded suspicions that fracking was used during prospecting activities, the technology strictly banned in Bulgaria since 2012. Ultimately, at the beginning of 2018 the Regional Inspectorate for Environment Protection in Varna issued a ban on prospecting activities which nipped in the bud Donchev’s ambitions for extracting shale gas from Bulgaria’s breadbasket area. The main reasoning quoted by the expert council is related to the risk of water-bearing stratum pollution because the Water Supply & Sewerage Company of Dobrich made three boreholes in the region which supply potable water for its citizens. Experts were concerned over the fact that in case of an emergency situation during gas extraction drinking water in the area will be polluted and no one knows how to purify it.

Nevertheless, the oligarch did not give up on his plans and currently the Administrative Court in Varna examines the case which Donchev launched against the decision of the Regional Inspectorate for Environment Protection (RIOSV), Varna.

The case hearing is scheduled for 8 October 2019 when expert evaluation will be presented made with the participation of a chemist, geologist and ecologists. At the sitting held on 14 May, the court gave a hearing to expert chemist who confirmed that during earth layers drilling there may be leakages of radioactive water which local water treatment plant cannot purify. At the court hearing it also became clear that there is no information from the investor as to what kind of technology will be used for gas extraction and whether it is not fracking banned in Bulgaria. The expert ecologist, in his turn, underscored that in the bid of Rusgeocom for gas extraction the assessment of environmental impact is based on the documents of RIOSV dated 2015, while there is a more recent edition of 2017 which changes the situation and the investor had to take this into account. Under these circumstances the environmental impact assessment cannot be accurate. The RIOSV emphasised that the company did not request updated information from the institution.

In 2017, the citizens of Dobrudja staged mass rallies against the investment intent for natural gas extraction in the region which resulted in a local referendum; 97% of the eligible voters stood firmly against using their land for the extraction of underground natural resources.

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