There are a total of six guesthouse projects funded under the European Union (EU) Rural Development Program (RDP) 2007-2013 in the Bulgarian SPA resort town of Velingrad. Only one of them does not seem to be associated with persons who have political backing, according to Bivol’s research. Such a “political” selection is also found elsewhere in the country. So far, however, the auditing authorities have ignored the suspicions of influence peddling and money laundering.
Bivol already visited and told about the konak, built by the wife of local hotelier Dimitar Katrandzhiev – Diana Zashkeva (the headline photo). Katrandzhiev is considered a close friend of the Mayor of Velingrad, and they have attended the same college. The huge building, with a support wall on the side of the river, has “swallowed” BGN 557,117 of which BGN 389,982 have been paid by EU funds. It does not have a sign advertising it as a place of accommodation, while the mandatory sign for funding under a European project is hidden in the yard. The inspection of the State Fund Agriculture (SFA) from a few days ago found that the house is not used for its intended purpose.
It turns out that Katrandzhiev has another project in Velingrad paid with EU funds under the same measure 311 of the RDP, which should not be possible under the program rules. These are five Dixy-64 guesthouses funded with BGN 304,122 under the RDP. They do operate as a place of accommodation.
Assen Daskalov, son of the municipal counselor in Velingrad, Aleksandar Daskalov, from the Agrarian People’s Union party, has also built a family hotel with BGN 309,334 from the EU funds. The St Georgi hotel, built by Gia Holidays, is operating as such.
The former boss of the Forestry Agency, Stefan Yurukov, has built the guesthouse “Steliya”, through a company owned by his son. It has received BGN 234,464 from the RDP with a total investment of BGN 336,038. It is operating as a guesthouse.
The parents of football player Ivan Goranov have invested BGN 260,398 in a guesthouse, of which BGN 181,751 have been reimbursed from the European funds. Their guesthouse is advertised on booking sites and accepts guests.
The guesthouse of Kostadin Shulev, a former consultant of the Bulgarian Socialist Party (BSP) and son of the former secretary of the Bulgarian Communist Party in Velingrad during the Communist regime, is located in the nearby resort of Yundola. It has received modest funding of BGN 65,634 under confirmed expenses of BGN 100,143. It is registered to the company “KISH”. It became clear earlier that the wife of the Mayor of Yundola, Mehmed Mustafa Mestan, of the Movement for Rights and Freedoms (DPS, the party largely representing the Bulgarian Muslim minority) also has a house in Yundola. The Deputy Director of the SFA Ivanka Bagdatova-Mizova resigned after the revelation that her phone number had been listed on the site of the house for contact.
In the former village of Sarnitsa in the municipality of Velingrad (now a town and a municipal center) there are several projects funded under the RDP, one of which is of the local leader of the ruling party Citizens for European Development of Bulgaria (GERB) Mustafa Alikanov. Together with his wife, they run the “Alicante” hotel, which has received BGN 82,271 in EU funding.
All these cases confirm the observations made in other regions of the country that above all, local party leaders, high-ranking officials and businesspersons with political ties have access to European subsidies for guesthouses. The most dramatic is the case in the village of Borino, where almost all guesthouses with EU funding are owned by relatives of the DPS leader Mustafa Karadayi, as revealed by an investigation by Bivol.
Guesthouses – a money laundering operation with EU funds?
In order for a guesthouse project to win funding, substantial funds, which are subsequently reimbursed, have to be invested in it. The origin of this money is an issue that all institutions circumvent particularly delicately.
The case of Ani Ivanova, secretary of the municipality of Slivnitsa and former secretary of Bankya municipality, is particularly noteworthy. She has pulled some BGN 376,000 from somewhere else and has given them as a loan to a front person to build a guesthouse in the village of Gurgulyat. The house has almost 1,000 square meters of total living area. The loan had been reimbursed with EU funds – a subsidy of BGN 391,160.
In this case, and in many others that Bivol studied, there are no data about a bank loan. This means that BGN hundreds of thousands have been poured in the houses and their origin must be subject to scrutiny, especially if the project is associated with political figures or civil servants whose income does not allow such a large investment.
In reality, all this may be a particularly offensive and cynical operation to launder money through EU funds. Whether the houses operate as a place of accommodation or are used as private homes is a separate and secondary issue. The main issues surrounding these projects are – is there influence peddling, are there funds of unclear origin and is there money laundering.
Indeed, the Prosecutor’s Office undertook some action after the scandal with Deputy Minister Alexander Manolev and began to check all 746 guest houses funded under the RDP. However, what do they check for? Are they looking into the origin of funding? Judging by the charges that the Prosecutor’s Office has so far pressed against the former Deputy Minister of Economy Alexander Manolev, the source of the money for the construction of his luxury house has not been investigated, and we are talking here about a total of BGN 564,174 claimed as costs and accepted as such under the SFA contract.
Meanwhile, the Ministry of Agriculture and the SFA started joint inspections of guesthouses whose five-year after the signing of the contract sustainably deadline has not expired. This happened after Bivol sent questions to Prime Minister Boyko Borisov about several projects associated with mayors, government employees and regional governors. The Prime Minister’s press office replied that he had ordered probes and would have a say after he sees the results.
These probes are based on formal criteria – whether the terms of the contract have been met, whether the house is also functioning as a place of accommodation, whether there is income from tourist activity and whether the objectives of the project are met. There is no evidence of investigations and reporting to the Prosecutor’s Office and the Committee for Combatting Corruption and the withdrawal of illegally acquired property (KPKONPI) (sic), suspicions of influence peddling when the project is obviously linked to persons in power positions. If these links, as well as questions about the origin of the money, are overlooked by those conducting the probes, all of these probes will turn into another smokescreen to legitimize the theft.
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