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The owner is not clear; they only have 1 million pounds available; they will build in two protected areas, and there is no feasibility and environmental impact assessments; their plots are not regulated. And with all this, they are pushing to obtain a first class investor certificate to sell unbuilt apartments and there is a risk to lure clients with guarantees from the state and defraud them. They are not good for investor supported by the state,” this is a summary of the opinion of MEE about the “investors” from the company Madara Europe.

The letter, which Bivol acquired, is addressed to Paul Riley from “Madara Europe” and has been sent by Dragomir Stoynev, current Minister of Economy and Energy. It is signed by Deputy Minister Anna Yaneva on September 29, 2013

“It is not proven that the owners of Madara Europe have the means to finance projects worth over 300 million levs… The assets of Rainbow Group Services Limited (British Virgin Islands) and of Madara Bulgaria Property Fund (British-Normand Islands) are mainly financial in the capital of the Bulgarian companies, which own real estate. Liquid assets are cash in the amount under 1 million pounds, and the company’s revenues are about 15 thousand pounds (for “Rainbow Group Services Limited”) and cash amounting to about 5 thousand euros (for “Madara Bulgaria Property Fund”)” – Minister Stoynev demonstrates excellent knowledge of the financial state of the offshore companies.

The Minister further points out that bare promises to increase the capital do not represent cash and cannot be accepted as liquidity.

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The letter also reveals who will build the vacation complex – this is the company Donas Holdings Limited, selected as partner in the project; the funding must come from floor plan sales – sales made prior to construction (the contract with “Donas Holdings Limited” is also based on this). However, information about such construction company was not found in Bulgarian trade registries or anywhere else online.

“Moreover, in a letter to the Bulgarian Investment Agency, you indicate that a “large number of customers are ready to proceed to sealing final purchase contracts” and are only awaiting certification of the project. MEE cannot support such use of the investment class certificate,” Minister Stoynev fumes and explains that if the project fails, it could lead to violations of the rights of third parties, misled by state guarantees.

“The signing of the memorandum and the definition of the project as a priority investment project under the Investments Encouragement Act is serious recognition from the state and there should be no reasonable doubt that the project cannot be completed,” says the Minister.

Environmental arguments have not been omitted in the letter either:

“We expressly specify that in the decisions/letters of the Regional Inspectorate of Environment and Waters in Burgas that you have submitted under the Environment Protection Act from the period 2005-2006 concerning the part of the property on which Phase 1 will build, it is noted that the planned at that moment buildings should not be used as hotels, a vacation village and the like.”

Only six months later, the state, represented by the government of Prime Minister Plamen Oresharski (in which Stoynev is the Economy and Energy Minister –editor’s note) inked a memorandum with the same investor for a project that envisions precisely the construction of hotels for 100 million levs. The speaker was Minister Stoynev, who, as seen from the letter, was well aware of the financial and environmental deficits of the project.

This memorandum is not public, and even proved to be one of the best kept secrets in the state. So far, however, there is no data whatsoever that the offshore companies behind Madara Europe have raised capital over the established by MEE “under 1 million pounds” in liquidity. There is no evidence of a change in the opinion of the Regional Inspectorate of Environment and Waters in Burgas that hotels cannot be built on this terrain. However, the British investors spoke of a “friend in the government” who helped them, so that all arguments of Minister Stoynev to protect state interests have suddenly vanished.

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