Prokopiev’s company got VIP contract for EVN sale

Bulbrokers was involved in conflict of interest being the investment intermediary and deal broker

Bulbrokers, the company of oligarch Ivo Prokopiev, had a VIP contract for the sale of the minority stake in EVN and thus was involved in a conflict of interest as an investment intermediary and deal broker. This transpired from the testimony of one witness in the case against Prokopiev, former ministers of finance and energy, Simeon Djankov and Traycho Traykov and three employees of Bulbrokers – company manager Radoslav Rachev, and shareholders Peter Vassilev and Lyubomir Evstatiev. 

The deal was concluded at the end of 2011, at that time the 33% residual stake was sold by EVN Bulgaria Power Distribution AD at a very unfavourable price which, according to the prosecution, has inflicted damages to the state treasury running at about BGN 21m. On Wednesday, the Specialised Court questioned Mitko Simeonov and Stefka Gramatikova, the deputy executive directors of the Privatisation and Post-Privatisation Control Agency (PPCA) who held offices at the time when the deal was concluded.

Both showed signs of acute amnesia and to all questions of the prosecution answered that they “do not remember”. To clarify the picture, the prosecutors requested the jury to read out the testimony by Simeonov and Gramatikova given during the pre-trial procedure. It turned out that then they mentioned concrete facts about the privatization of the residual stakes in the three power distribution companies, in particular in EVN, which is the subject of the lawsuit.

During interrogation on 10 July 2015, Gramatikova explained that she was in charge of the administration in PPCA. She did not sit on the interdepartmental commission for the sale of minority stakes in these power distribution companies, but she heard some phone conversations in the office of the incumbent head of PPCA Emil Karanikolov who was talking with finance minister Simeon Djankov.      

“The secretary of Karanikolov said that minister Djankov asked for her boss. I didn’t hear what the minister said but Karanikolov answered, Yes, Mr Djankov. Consider it done.”  It left an impression on me that Djankov exerted pressure over Karanikolov,” Gramatikova said. Karanikolov himself gave testimony on the case on Tuesday and admitted that Djankov was really pressurising the agency. 

It has also become clear from Gramatikova’s statement that shortly after she learnt that Bulbrokers managed to sign a contract with the agency, according to which the company simultaneously was a consultant, representative of the State and broker of EVN stake, while this should have been done by an independent external broker.  “This was permitted to Bulbrokers only, not to the investment intermediaries in the sale of CEZ and EVN stakes. Apparently this is conflict of interest,” Gramatikova said further in her testimony. She added that the money from privatization went to the State Consolidation Company instead of the Silver Fund. Before court Gramatikova confirmed her statement given during the interrogation in 2015.

The court also read out the testimony given by Mitko Simeonov on 22 July 2015. His sphere of responsibility was specialised administration comprising directories of Post-Privatisation Control, Legal, Deals and Finances.  “I don’t remember who took the decision on the privatisation of the minority stake in EVN. It was a public secret that the money from privatisation flow to the State Consolidation Company and not to the Silver Fund. The state treasury needed the money from privatisation of power distribution companies. On 22 June 2011, Bulbrokers was selected as intermediary for the sale of EVN stake.

“On two occasions I saw minister Djankov’s advisor Doroteya Pandova. Once it was at the Ministry of Finance where she chaired the extended meeting dedicated to the sale of EVN. I attended that meeting as then I was the deputy executive director of PPCA. The representatives of the stock-exchange, the intermediary and EVN were also present. One or two times Pandova said that minister Djankov was expected to come but he didn’t show up. In my opinion, Pandova controlled the sale process. She was pushy, domineering and behaved like a mentor. I think that Pandova danced attendance on the finance minister. During the meeting it was discussed when the sale will take place and the prevailing opinion was that it will happen before the New Year,” Simeonov said in his testimony.

He confirmed his words before the court. As regards the meeting in question, he said in the courtroom, “Now I realise that the lady’s conduct was strange. She was nervous, even edgy and couldn’t tolerate opinions different to hers. She conflicted with the reps of the stock exchange. During the meeting the discrepancies arose over the date for the sale of the EVN minority stake.

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