Bobokov brothers gain control of $ 3,375,000 plant for $ 590,000 in cash
Their recycling business is a (multi)million-dollar giftMonitor News Agency , Sofia
Can a person go from a sole-owner of a small business to one of Europe’s biggest producers of batteries with operations on three continents and assets that rank them near the top of the list of wealthiest Bulgarians? Before you say “no”, think really carefully. Because the answer is “yes”, as long as you are in Bulgaria, know the right people and schemes and get yourself a lion’s share of the criminally privatised state companies under Ivan Kostov’s government.
If this is hard for you to believe, just ask the Bobokov brothers from Rousse, who have been charged in connection with a hazardous waste scheme. They know how. As do all the beneficiaries of Kostov’s privatisation process, who became millionaires overnight thanks to acquiring plants for cents on the dollar. Among them is kaolin king and indicted oligarch Ivo Prokopiev, who in the months since Atanas Bobokov and Plamen Bobokov were brought up on charges filled his media outlets with articles trying to clean up the brothers’ image. “Why the Bobokov brothers?”, “Manager of Balance” and “Bulgarian reality: Innocent person arrested, legal business destroyed” are just a few of the headlines churned out by Prokopiev’s mainstream media machine – from Dnevnik and Capital, which he outright owns, to the satellite website Mediapool and the Bulgarian desk of Radio Free Europe, the latter of which the oligarch has captured. The pieces tell the story of how, despite starting their business “in the murky early years of the country’s transition to democracy”, the two brothers have “impeccable reputation”; how they started out with a small Rousse-based company called Bobokov & Sons, which sold clothing and accessories; and how thanks to their entrepreneurial skills they made themselves into two of the richest Bulgarians. The pieces conveniently omit the fact that prosecutors in three countries – Bulgaria, Romania and Italy – are investigating them and that the evidence that led to the unravelling of the scheme of the Lords of Junk first came from Italy as well as the fact that, just like Prokopiev and the rest of the privatisation darlings, the two brothers committed the “original sin” of benefiting from gifts from the Kostov cabinet. That preferential treatment by former PM Kostov is what laid the foundation for their Monbat empire. To be more specific – it was the 1998 deal to sell the state-owned storage battery company Akumikar. The deal was preceded by an inexplicable but extremely convenient for the future owners reduction of the plant’s capital by the state. The deal itself was done in the now familiar worker-management enterprise (or a WME – a version of employee buy-outs) model and finalised with a capital increase by the new owners.
Before turning into Monbat and playing the role of a foundation of the Bobokov brothers’ recycling business, currently at the centre of a scandal involving illegal disposal of lead waste, Akumikar was one of three Bulgarian enterprises making lead-zinc batteries. The other two were Start (also privatised in the 1990s, but acquired by the Bobokov brothers in 2007) and Elhim Iskra (sold during the mass privatisation, getting Stara Planina Holding as its majority owner). The privatisation procedure for Akumikar was launched in January 1998, but the stage for it was set up with a 1 December 1997 decision by the company’s principal, i.e. the Ministry of Industry, for a capital reduction.
Just several months later – on 2 November 1998 – the winner of the privatisation tender was announced: Prista Oil of Atanas Bobokov and Plamen Bobokov in partnership with WME Akumikar 98. Under the contract provisions, the investors acquired 72% of the plant for the sum of $3,376,000, with Prista Oil taking 26% ownership, while the WME – 46%. This is what the deal said on paper. But it is not what truly happened.
In reality, Prista Oil used the WME as a smokescreen to gain control of the majority stake through backdoor means, with the implicit consent of the cabinet at that, all the while taking advantage of breaks provided by the law on WMEs. Under the signed deal, the Bobokov brothers’ company was supposed to pay for its 26% share in the plant in three tranches – 30% of the price in cash on signing day, another 20% within the following 15 days, and the remaining 50% – in treasuries or investment notes and compensatory notes within a month. That translates to only $590,000 in cash. For its part, the WME was supposed to pay only 10% on signing day and the remaining 90% in installments over a 10-year plan. As you can imagine, Akumikar 98 took full advantage of that option.
However, just three months later, using the same scheme, the Bobokov brothers gained control of 90% of the plant. On 13 February 1999 a procedure was launched to increase the company’s shareholder equity seven times – from a little over BGN 100m to BGN 749.3m (before reform to lower banknote denominations) – with the only participant being Prista Oil. This way, the brothers became majority owners through unfair means and under the nose of the state. The government’s share dropped to 3.7 and yet the principal, the Ministry of Industry, did nothing to prevent the scheme and the latest highway robbery at the expense of taxpayers.
The WME Alumikar 98 stake dropped from 46% to 6.2%, but the company was still obligated to pay the already agreed price. That never materialised. In 2001 the WME filed for bankruptcy. In essence, the Bobokov brothers acquired the plant by paying a cash amount that was several times lower than what was publicly announced as the price in the deal.
Some 7,756 tonnes of hazardous waste uncovered during investigation
Some 16,756 tonnes of waste, of which 7,756 of the hazardous variety, have been uncovered so far during inspections being carried out as part of the pretrial proceedings opened by the Specialised Prosecutor’s Office against an organised crime group involving public officials. The defendants in the case are Atanas Bobokov; Plamen Bobokov; Krasimir Zhivkov, a former deputy minister of environment and water; company directors; and a head of a regional inspectorate for environment and water. The news came several days ago from the Prosecutor’s Office. The probe is being conducted in three countries. There is a European request for an investigation filed with the competent prosecutor’s office in Romania. With the assistance of Eurojust, a joint team of representatives of the Specialised Prosecutor’s Office in Bulgaria and prosecutors from the Italian town of Salerno, Milan and Florence has been formed. The initial evidence that led to the busting of the Bobokov brothers’ scheme for hazardous waste import came from Italy. From what the Bulgarian prosecutors have disclosed, companies from the Monbat concern controlled by Atanas Bobokov and Plamen Bobokov and registered in Romania, Italy and Serbia have imported into Bulgaria large quantities of hazardous waste that were then handed over to fictitious businesses for storage. That group of businesses was registered by one of the defendants in the case and some of the companies were financed by the Rousse brothers, according to the prosecutors. The scheme was exploited by Monbat Recycling, which was built on the foundation of the formerly state-owned Akumikar plant that the Bobokov brothers bought. A total of 11 individuals have been brought up on charges as part of the pretrial proceedings.
El Bat keeps up hide-and-seek game
While the Bobokov brothers are trying to cover up the toxic waste revelations by making themselves out to be victims of someone’s attempt to steal their business, aided in their damage control efforts by fellow oligarch Ivo Prokopiev, the owner of their competitor El Bat continues his own game of hide-and-seek with the media. Several days ago, Plamen Bobokov said in interviews for Dnevnik and Radio Free Europe that he and his brother Atanas were under attack because of their competitor El Bat and pinned the company on enemy №1 of the behind-the-scenes clique – Delyan Peevski. The claim is pure fabrication, as evidenced by Bulgaria’s public registers. According to the information there, El Bat has had only two owners for years – it is 99% owned by a businessman named Dimitar Popov and 1% owned by his partner Nikolay Bazhlekov. Our team has been trying to contact Popov since last Wednesday and ask him to comment Bobokov’s claims and answer the simple question of whether he even knows Delyan Peevski. But the owner of El Bat has been hiding from us. Probably because, similar to the Bobokov brothers’ Monbat Recycling, his El Bat is being investigated by regulators and law enforcement agencies in the country. We will continue our efforts to get answers out of him so we can get to the truth about the Lords of Junk in Bulgaria and the people polluting the environment and putting the health of Bulgarian citizens at risk.