Bulgarian Anti-Corruption Body Conceals Minister’s Cheap Property

by Екип на Биволъ

Bulgarian Agriculture Minister Rumen Porozhanov has declared his wife’s property acquisitions in 2017, but they have been concluded at an unrealistically low price. The difference for one of the properties is 43 times below its market value. In order to conceal this fact from the public, he has asked the Committee for Combatting Corruption and the withdrawal of illegally acquired property (KPKONPI) (sic) to hide the online information on the acquisitions. This has been done in an unsophisticated manner and traces of deletion can be found the source code, according to an expert analysis.

Bivol revealed recently that Porozhanov’s public property declaration is missing two apartments, a garage and meadows in the Sofia suburb of Bankya, acquired by his wife. Immediately thereafter, the Sega daily requested a hard copy of the stamped declaration, and it emerged that it contains details about the apartments and the meadow. On May 10, KPKONPI reported that inconsistencies had been found in Porozhanov’s declaration, but did not say what. There is also no comment on the missing data in the online declaration.

Then, KPKONPI announced, quoted by Sega that Porozhanov himself had requested the deletion of the data so as not to disclose his relationship with a person with whom he lives without marriage. Rumen Porozhanov is, however, married to Veska Porozhanova. There remains also the question why in 2017 Porozhanov declared all the real estate and assets of his own wife Veska Porozhanova and why in 2018 he no longer wanted to do so. Perhaps the reason lies in apparent violations of the laws of income declaration and taxation in Veska’s hidden deals.

KPKONPI’s admission, instead of exonerating Rumen Porozhanov, does more harm than good as it directly admits that he had been an accessory to the offences committed by his wife. Even worse, it turns out that precisely the Committee tasked with enforcing these laws had been an accomplice of Porozhanov by inadmissibly fulfilling his desire to conceal the property deals in question. This, in reality, makes the submission of property declarations senseless since it appears that anyone can manipulate and censor them at their own will!

Golden meadows in Bankya declared at pocket change prices

The hard copy of Porozhanov’s declaration does not match the information in the Property Register, a check by Bivol established. Specifically, there are two land plots with a total area of more than 13 decares, of which Veska owns one half ideal part, valued at BGN 95,075. It is not clear whether this is the full price or only the price of the part owned by Porozhanova.

In the Property Register, however, the deal for these meadows is entered with a material interest of BGN 2,180, which makes BGN 0.16 per square meter, or 43 times below the market price. There is no way KPKONPI could have missed this discrepancy, but instead of investigating Porozhanov, the Committee has even concealed the crooked deal.

It is clear from the cadastral map that the meadows’ location can become an urbanized area in the upscale Sofia suburb and resort. There is no chance anyone can buy farm land there for BGN 0.16 per square meter, which is probably the meadows’ tax assessment.

Is KPKONPI an accomplice in crime?

It is important to note here that the parcels had been bought by Veska Porozhanova from her own company “Private Investment Projects” Ltd. This, by virtue of legislation, means a property deal between connected parties. The situation with the acquired two apartments and a garage in Sofia, which had also been purchased from another company of Veska, named “Armar Corporation General Technical Cooperation” Ltd, is identical. What is scandalous is that all four deals are entered with prices which have nothing to do with the market ones. Such deals, especially when it comes to “connected parties”, like this specific case, are categorically defined as a violation of the Bulgaria law. According to it, financial relations between connected parties under conditions that affect the amount of the taxable financial result must be subject to market principles. Therefore, connected party transactions should be carried out at market prices, otherwise, they are prosecutable.

This is why the evidence of unrealistically low prices is troubling for Porozhanov. Had the information been included in his public declaration, anyone could discover the violation. Further, it becomes clear that Porozhanova has sold one of the apartments with very high profits in the same year.

Porozhanov’s wife has earned profits by purchasing real estate for BGN 90,720 and then reselling it the same year for BGN 152,555. As her profits exceed BGN 50,000, she should have registered in a seven-day period under the VAT Act. Whether she has done this is yet to be established.

Moreover, shortly thereafter, Veska has sold the second apartment with an even greater profit. Since the deal happened at the beginning of the next calendar year – 2018, we cannot yet see whether it will be reflected in Porozhanov’s property declaration. Bivol revealed another deal of Porozhanova and her company in 2018 at an unrealistically low price. The case is even more drastic as Veska has bought a plot of 6,723 decares near the resort town of Dolna Banya for the incredible price of BGN 0.06 per square meter! Again from her company. There, the difference with the market prices at which the farm land is currently traded in the area is 500 times!!!

The National Revenue Agency (NRA) should carry out an audit of both, Veska Todorova Porozhanova and her two companies, through which unrealistic and suspicious transactions had been done to determine whether taxes to the State budget had been paid and whether they had been correctly declared in the tax returns of the natural and legal persons.

We call on the NRA and the Prosecutor’s Office to consider Bivol’s publication as a signal to them and to launch an audit and a probe as their results are of great public interest! We urge the institutions in the Republic of Bulgaria to stop the forgery of official documents and their manipulation in favor of private interests in order to conceal illegal activity because it makes them direct accomplices in the committed crimes. Bivol will ruthlessly disclose all such unacceptable practices that cause irreparable damage to local and international trust in the essence of Bulgarian statehood and its institutions in general.

How KPKONPI veiled the discrediting information

The online version of the declarations must contain all the information from the hard copy and the taxable amount must match. Bivol analyzed the source code of Porozhanov’s declaration and found that it contains data that the properties and the meadows had been declared in the internal database of KPKONPI, but the information had been subsequently deleted.

The declarations are submitted to the KPKONPI server in the XML language with an additional decl1.xsl style file, formatting the display of fields and tables. For each table there is something declared, or “I have nothing to declare” is displayed. This text is not present in the xml file but is inserted at the end of each table with the instruction: Declared = “False”. If Declared = “True”, the text is not printed.

In Porozhanov’s declaration, the three tables “Property rights and limited property rights”, “Agricultural land and forests” and “Transfer of properties in the previous year” are in Declared = “True”, but the rows in which acquisitions and sales must be described are empty.

This means that in the KPKONPI database, from which the source XML code is generated, there is information that data had been declared, but they may not be displayed online after additional interference, at the request of the declarant. In addition, citizens have no information on the requested interference and the hidden data, because hardly anyone would go about looking at the source code to find that there is concealed declared data.

The question arises as to how many Bulgarian officials and politicians have asked for the data to be hidden. Bivol retrieved and analyzed all 3,751 declarations for 2018 on the KPKONPI site and found that 2,328 people had declared “Property rights and limited property rights”, 1,125 had declared “Agricultural land and forests” and 180 had declared “Transfer of properties in the previous year “. It also became clear that

Only Porozhanov’s data is hidden in this way

So far, this is the result for 2018, but we continue to download and analyze data for previous years. This operation will take some time and only if KPONPI does not decide to hide the data about politicians and their properties and inconsistencies all together.

We expect Prime Minister Boyko Borisov to keep his public promise, made in a TV broadcast that if he finds an indisputable violation by Rumen Porozhanov, the latter will be immediately removed. KPKONPI must also be held responsible for being an accessory to concealing evidence of tax offences. Otherwise, the government will recognize that the rule of law in Bulgaria is an “unrealistic deal”.

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