Oligarch Prokopiev accused of money laundering as well

Prosecutors have also indicted two directors of Alfa Finance

The oligarch Ivo Prokopiev, who amassed a fortune exploiting the mass privatisation under former PM Ivan Kostov, has found himself charged with yet another crime - money laundering. It turns out he defrauded the state via concession fees owed for Kaolin and declared smaller output, profit and taxes than the actual numbers were.

The indictment announced by the press service of the Prosecutor's Office is the second one against Prokopiev and sheds light on his shady machinations in partnership with people in office, and reveals the illegal mechanisms that helped him get rich. Prokopiev was already brought before court for the EVN affair, alongside former ministers Simeon Djankov and Traycho Traykov. The new case against the oligarch is linked to individuals who held prominent government positions. According to the prosecution's press release, the investigation was launched because of suspected “official misconduct committed by employees of the Ministry of Economy, Energy and Tourism in connection with observing the fulfilment of the concession agreements signed with Kaolin AD”. The press release does not specify the timeframe covered by the probe but it is fact that the sectors of economy, energy and tourism were merged under the umbrella of one ministry for the period between 2009 and 2013, and that the agency was headed, for the bulk of that period, by Prokopiev's fellow defendant Traycho Traykov.

Prosecutors say that the case morphed into money laundering investigation “concerning the sale of Kaolin AD shares owned by Alfa Finance Holding AD, which represented 100% of the capital of the worker-management enterprise Kaolin 98 AD, to Quarzwerke GmbH, an enterprise first registered on 20 December 2012 in Cologne, Germany”. In addition to Prokopiev, who will stand before court in his capacity as chairperson of the Board of Directors of Alfa Finance Holding AD, the list of defendants on the case also includes two Board of Directors members - Konstantin Nenov and Ivan Nenkov. All three have been released from custody under the condition of reporting regularly to the police, the prosecutors said.

The initial report for potential wrongdoing came from the Anti-Corruption Commission for Illegal Assets Forfeiture (ACCIAF), which almost a year ago requested for nearly BGN 200 million in assets owned by Prokopiev and his family to be distrained. After the court granted the request, another one was filed for the illegally acquired assets' forfeiture. It was the ACCIAF motion to the District Court of Burgas that contained documents indicating tax evasion and that the amount of concession fees owed on the output of kaolin and other raw materials was purposefully understated.

“On 23 April 2018 a report was submitted by the ACCIAF chairperson together with materials resulting from a probe conducted by the Commission. The report and its accompanying documents enlist numerous facts and circumstances that served as basis for the launch of an investigation into possible wrongdoing under Article 253 of the Penal Code (money laundering),” the prosecutors note. The ACCIAF request shows that the alleged money laundering was actually preceded by two predicate offences.

The first is the illegal sale of the company during the cabinet of Ivan Kostov, Prokopiev's mentor, to Alexander Prokopiev's worker-management enterprise. The compiled documents reveal that Ivo Prokopiev's brother had no right to participate in the workers group, as he did not meet the legal requirements of being an employee of the enterprise and having a two-year experience with it. Moreover, the company was acquired at a price that was significantly lowered by the Ministry's management team of Kostov's puppets, a price that was not even fully paid.

The second offence, concealed with the sale of Kaolin, was the cooking of the company's raw materials output numbers. According to the commissioned expert reports, between 2005 and 2009 alone, over BGN 93 million in output remained unreported. This means that the state was defrauded of concession fees for nearly BGN 5 million and at least BGN 8 million in taxes. Over the ensuing years, the practice of hiding output continued. The expert reports on the case have ascertained violations in four areas. The first one is the documenting of final selling prices of raw materials that were below the real ones. Even though the going rate for a tonne was $150-$200, the numbers declared before the state were $65 per tonne. In addition, the real volume of output was understated. The third violation was mining from an area that was larger than the one specified in Kaolin's concession agreement. The final one is linked to the mining technology - the number of explosions used far exceeded what was allowed under contract.

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