Oligarchy’s billions twice the amount syphoned off of CorpBank

Former PM Ivan Kostov created a parallel state during his term in office

Vassil Bozhkov (C) and Tzvetam Vassilev (R).

Some BGN 12bn, or twice the amount that was syphoned off of CorpBank – this astronomical sum is what the oligarchy wields in the form of assets, personal wealth and property, business turnover, private collections and, of course, money stolen from the state coffers and the Bulgarian citizens.

The oligarchy has BGN 12bn at its disposal and it uses it to oppose the government, to finance media battering rams and an army of internet trolls, to ensure it has institutional protection against getting prosecuted for its massive illegal schemes. To put things into perspective, the country recorded a GDP of BGN 118.669bn for 2019. In essence, the oligarchy has mountains of cash, amounting to a little over a tenth of the Bulgarian GDP.

The person responsible for this enrichment of the oligarchy is the former PM Ivan Kostov, aka the Commander of the country’s murky transition to democracy. A horrific plundering of state assets took place in the four years of his term in office (between 1997 and 2001) – assets to the tune of BGN 20bn were sold for a shade over BGN 2bn. The difference, as you can imagine, went to his people.

For Kostov, “his people” meant the handful of oligarchs he handpicked to hand lucrative public assets to. He needed this oligarchic clique to start building his own parallel state, similarly to Turkish preacher Fethullah Gülen. It encompasses networks of companies; banks; NGOs, mainly funded by his mentor George Soros; political projects and a powerful privatised court (See text boxes). Experts estimate that companies with assets for somewhere between BGN 6bn and BGN 8bn were brutally syphoned off, purposefully ran into the ground and sold for scrap. These enterprises became gravestones of the privatisation process under Kostov’s watch.

First on the list of Kostov’s people was Tsvetan Vassilev. A largely obscure figure prior to that, Vassilev suddenly had billions in his possession that he would later dream of parlaying into a prime-ministerial position. Overnight, he was crowned CorpBank senior banker, who would go on to capture the lender from within thanks to 10 offshore companies, each of which would end up holding 9.99% of the lender’s shares. The law prohibited offshore companies from owning more than 10% of financial institutions.

Hence, this arrogant scheme, which would have been impossible without the blessing of Emilia Milanova – head of Bank Supervision at the time and a person very close to Kostov. CorpBank was envisioned as the crown jewel of Kostov’s politically engineered project Democrats for a Strong Bulgaria (DSB). Tsvetan Vassilev became a prominent patron of Kostov’s Democracy Foundation, providing it with generous CorpBank funding and even a building to house its operations. Through one of his infamous companies, Aflik Bulgaria (which borrowed millions from CorpBank), the Bulgarian Madoff sponsored Mina Kostova, the Commander’s youngest daughter.

Her solely owned business Antorna received BGN 270,000 in payments for consulting services, which breaks down to BGN 30,000 a month. Kostov’s family had BGN 700,000 in CorpBank deposits at interest rates worthy of a financial pyramid. In the end, the financial fraudster Tsvetan Vassilev fled abroad after fleecing unsuspecting CorpBank depositors for BGN 5.6bn. His arrogance knew no bounds. Days before the lender was placed under special supervision on 20 June 2014, Vassilev stole another BGN 207m in cash from the bank’s vault. And so the fugitive banker perpetrated the biggest robbery in the country’s modern history by embezzling nearly BGN 6bn.

Meanwhile, Ivo Prokopiev rose to prominence with the infamous circle known as Lamb Heads. Today, he has control of the mainstream media in Bulgaria and is on trial for the sale of the state-owned minority stake in the utility company EVN. Two of the other defendants in the case are Traycho Traykov and Simeon Djankov, whom he installed as ministers in the first Borissov cabinet. The deal cost the state coffers BGN 20m, while Prokopiev pocketed BGN 1.2m through his company Bulbrokers, which served as intermediary. Despite expert testimonies incriminating the kaolin king, the court of first instance, under the influence of the oligarchy’s puppet judge Loan Panov, decided in his favour (See text box).

Exploiting the worker-management enterprises (a version of employee buy-outs) system of privatisation, Prokopiev put his hands on golden assets for virtually nothing – the winery Damianitza and the mining company Kaolin – which he then used to build his business empire. The two deals served as trampoline for him getting his first millions and taking over entire industries. At the height of the Capital circle, his personal net worth was estimated at over BGN 390m, according to the newspaper Pari (Money).

The Belgian company Sibelco had interest in buying Kaolin, which holds a monopoly in Bulgaria and is the only kaolin and quartz sand company on the Balkans. A global leader on the market, Sibelco intended to invest more than $20m in Kaolin. What followed is all too familiar – the procedure fell through, Sibelco was suddenly out of the running. Ultimately, the evaluation of Kaolin was lowered so that the business could be gobbled up by Prokopiev’s worker-management enterprise in exchange for the paltry BGN 6.4m, only 10% of which was paid with actual money, the other 90% with compensatory notes, which at the time went for 11 stotinki for BGN1. Prior to Kaolin, Prokopiev was gifted the largest wine-making business in the country – Damianitza – for the preposterous $3m, only 10% of which was paid in cash, the rest in compensatory notes. The investors wired only $60,000 even though the products Damianitza had on inventory alone were worth BGN 4m, a total of 2.4m bottles.

The Capital group started expanding, adding to its portfolio finance and brokerage firms, real estate and tens of megawatts of solar parks, Solarpro, whose green energy pushed up electricity bills. Eventually, Prokopiev got himself what amounts to a personal bank – the Doverie Pension Assurance Company, which holds over BGN 2bn of Bulgarians’ retirement savings. Companies owned by Prokopiev would issue securities that the fund then bought. The oligarch made over BGN 55m that way in a time when he had borrowed BGN 600m from banks, going so far as to pledge the editorial policy of his publications as collateral on a loan extended to Economedia. The oligarch was recently slapped with yet another charge related to the privatisation of Kaolin and money laundering in the company’s sale to the German Quarzwerke. The development followed a report by the Anti-Corruption Commission for Illegal Asset Forfeiture (ACCIAF), which got the court to distrain BGN 200m in assets owned by Prokopiev and his wife.

 

The Kaolin parallel

Ognyan Donev, who has been charged with BGN 62m worth of tax evasion, made his first steps towards accumulating millions of levs in the summer of 1998, when he bought the state-owned Unifarm. His march towards gaining control of Sopharma started with the privatisation of Unifarm. Two other investors – from France and Slovakia – placed a bid for Unifarm, but Ognyan Donev’s worker-management enterprise won the tender with a $5m offer. This eerily resembles the Kaolin deal – a serious Western investor is chased away so that a Prokopiev-controlled worker-management enterprise can gain control of a company for sale. The bulk of the money for the acquisition of Unifarm came from Libya, where hundreds of Bulgarian doctors and nurses used to work. A portion of the money sourced this way, which amounted to $17m, was syphoned off to personal bank accounts of two former heads of Ekspomed. A 2007 investigation carried out by prosecutors shows that, the sum was used to pay for the purchase of Unifarm. Donev dug deeper into his pockets for Sopharma. The deal went through a tender procedure, no worker-management enterprises this time, and the price was $24m. However, the company was in perfect financial state with BGN 23m in profits, $10m in cash in bank accounts and $26m in pending client payments, no long-term liabilities.

Today, Sopharma is the biggest Bulgarian drug maker, while the parent company’s market capitalisation is over BGN 600m. The pharmaceutical industry in the country accounts for BGN 2.7bn and BGN 3bn a year. Donev’s pharmaceutical empire holds a third of the market. Now he has set his sights on new investments, he bought a large chain of pharmacies and has new conquests in Serbia, where local media reports say he is being aided by none other than the Bulgarian Madoff. The scale of these Donev enterprises can be explained not only with the vast amount of money flowing through his business, but with the fact that years ago market analyses showed that drugs cost more in Bulgaria than their counterparts sold on other Balkan markets.

Trustee of Russia

The oligarch Sasho Donchev was inserted as a mediator of the gas tap by the former PM Ivan Kostov's cabinet. There are two reasons - Donchev is a former leftist director in the USSR and he is a fellow-student to Yuri Vyakhirev - the son of the deceased Russian gas emperor Rem Vyakhirev. In his role as a mediator of the blue fuel pipeline, he received about BGN 200-300m per year. "For a period of 20 years, this amount makes several billion leva," stated the Prime Minister Boyko Borissov in 2015, removing the gas mediators between Bulgaria and Russia. The biggest private gas company in Bulgaria - Overgas Inc. reported revenues of over BGN 1bn, and a year after the change took place, it declared ten times lower turnovers amounting to just over BGN 185m.

The messenger - fraudster Alon

Although he has no family ties with Ivan Kostov, Vasil Bozhkov, known as the Bulgarian El Chapo, is among the emblematic oligarchs of the transition to democracy. His personal fortune is estimated between BGN 1bn and 3bn, as his collection of artifacts, most of which illegal ones, amounts to BGN 360m. Vasil Bozhkov, who faces 18 charges and now is hiding in Dubai, owes the treasury BGN 700m in gambling taxes. Started his “carrier” from a currency exchange office, which was situated in front of Magura confectionery, he is defined in the shorthand records of American diplomats in Bulgaria as "the most infamous gangster", active in many fields like “money laundering, privatization frauds, threats, extortion, racketeering and the illicit trade in antiques”.

He became famous for his luxurious lifestyle, for his flights accompanied by mannequin-girls whom he used to take on his private Bombardier aircraft to the French resort of Courchevel, and the state-of-the-art yacht Maltese Falcon, which rent amounts to $610,000 per week. He took also the CEO of bTV Media Group Florian Skala to Courchevel. The private national television became known as bTV Bozhkov TV, due to the fact that it eagerly defends the gambling oligarch and it is conquered by Ivo Prokopiev's mainstream media machine. The international fraudster Barak Alon, namely got the oligarch Bozhkov in touch with the CEO of bTV Florian Skala. Alon is known for syphoning off two banks in the Czech Republic and Hungary, so his name is not accidental at all. He is first friend with the Bulgarian Madoff too. He was even his advisor and a frequent guest in his office on Tsar Boris III Sofia Boulevard. This fact became known from the leaked lists of guest of the fugitive banker.

Now the conspiracy of the oligarchs against our state is well under way and it's obvious that their goal is to demolish it. Bozhkov attracts like a magnet each of his "foster brothers", who have failed under the attacks of the Prosecutor's Office because of their shady affairs, as well as any politician who wants to gain rating, while promising a bright future. The oligarchy has no other way of existing but to drain state resources. Unfortunately, the generation, which have survived the transition to democracy period is still alive. It remembers well how the Union of Democratic Forces came along with the hope for a better future. And how the right-wing formation went down when it proved to be also privatised by Ivan Kostov.

Pinocchio remains on the yellow cobblestones

The failed Minister of Justice Hristo Ivanov, having the nickname Pinocchio for his countless lies, today displays himself as a co-chair of Ivan Kostov's new political formation, Democratic Bulgaria. The latter resulted from the merger of Yes, Bulgaria Party with the Democrats for a Strong Bulgaria. Pinocchio will most probably watch the next Parliament from the yellow cobblestones in front of it. The sociological agencies give a little over 2% to his neglected party. During his stay in the Council of Ministers being a Minister of Justice, Hristo Ivanov got into a lot of messes. It turned out that he is disbarred and something more - he signed four different documents with four different signatures. With his blessing, the new system for random distribution of cases was introduced, which turned out to be completely spoiled, and even an eighth-grader pupil with good computer skills could approach it and manipulate the selection of court panels. Throughout his term, Pinocchio tried to subordinate the Prosecutor General to the executive branch. Ivanov, who is a puppet of the oligarchy, has gained nearly BGN 1m from party donations and he has wasted almost the entire amount. This is shown by the report of Yes, Bulgaria before the Bulgarian National Audit Office. Last August, Ivan Kostov showed himself as an active political player, although he pretended to be a solitary laboratory assistant. Possibly, because of the hot weather, but he confessed on bTV air that he standed behind the Democratic Bulgaria formation. Immediately afterwards, he masterfully tried to cover up this confession explaining that he was just an ordinary voter of theirs.

 

Lozan Panov - The black swan of the judicial system

Ivan Kostov renders a key place to the private court in the parallel state. This court is led by the “judge’s gown” of the oligarchy and the chairperson of the Supreme Court of Cassation, what is Lozan Panov. The private court has spread its tentacles in all other courts, and Panov gained his nickname “the black swan of the judicial system”. This name came from the semi-conspiratorial meetings of behind-the-scenes ARGO-gate, as it was discussed there for the judge above to become a candidate for a president of the oligarchy. That time Hristo Ivanov said his famous remark that Lozan Panov's wife is a “black swan”. Subsequently, it became apparent that Elisaveta Panova had a criminal record. Sometime in the past, the future family couple was taken to Kostova, Ivan Kostov’s wife, by one of his daughters, who was close to Panova. At that time Elisaveta carried the name Ganeva - she was named after her deceased husband Ivan Ganev, who was the founder of the German-language economic newspaper Wirtschaftsblatt.

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