Bulgarian Ex-Deputy Minister’s ‘Guesthouse’ Mortgaged against Large Loan, No Attachment by KPKONPI

The villa in the southern Bulgarian resort town of Sandanski, built with European Union (EU) money by the former Deputy Minister of Economy Alexander Manolev, had been mortgaged through a proxy in November 2019 against a loan of BGN 431,000. The loan had been granted by the company of Bulgarian financier Emil Harsev. The National Revenue Agency (NRA) imposed a lien on the property as late as the end of April 2020. The Committee for Combatting Corruption and the withdrawal of illegally acquired property (KPKONPI) (sic) has not seized the property and did not answer Bivol’s question whether there are any proceedings in the case.

The scandal with Manolev’s guesthouse and other guesthouses of people in power started with the revelations by Bivol and the site Blagoevgrad News in April 2019. The former Deputy Minister of Economy turned out to be the owner of a property on which he built a “guesthouse” with money from the EU’s Rural Development Program. The house was built on Manolev’s land by the company “Agrotrade – Ana Dimitrova” with a loan from Manolev. The State Fund Agriculture (SFA), the body in charge of allocating the EU’s agricultural subsidies in Bulgaria, subsequently paid BGN 380,000 to “Agrotrade”. The luxury villa has an area of 500 square meters. There is even a pool with mineral water, diverted from Sandanski through a specially built pipe. The building has been used only by Manolev and his family and has never accommodated guests.

The revelation sparked a scandal and caused the resignation of the Deputy Minister and the intervention of the prosecutor’s office, which revealed that Ana Dimitrova is the daughter of the babysitter of Manolev’s child. The former Deputy Minister and Ana Dimitrova were charged with document forgery but the case stalled in the Blagoevgrad District Court, where ten judges removed themselves from it on grounds they knew Manolev’s sister, who is a district judge in Sandanski.

“Risk credit” or money laundering from criminal activity?

In addition to the prosecution of Manolev and Dimitrova, the SFA should claim back the money from the subsidy, and the property should be the subject of a lawsuit for confiscation by KPKONPI in favor of the State. Nothing like that happened and Ana Dimitrova has managed to mortgage her villa against a large loan, according to a reference in the Property Register.

The loan of BGN 431,000 has been granted by the company Harsev Co. of the financier and former Deputy Governor of the central bank (the Bulgarian National Bank, BNB) Emil Harsev. When reached on the phone, he said that he knew Ana Dimitrova, was aware of the case with the guesthouse and his company had granted a so-called “risk loan” with a high interest rate. He refused to provide more details about the loan and the intentions of his client. Harsev confirmed that he also knew Alexander Manolev, but according to him, he had nothing to do with the deal.

The mortgage had become possible because, at the time of its granting, the property had no attachments and liens. It was not until April 27, 2020 that the NRA imposed a lien on the property of “Agrotrade – Ana Dimitrova” and on Dimitrova in her personal capacity of a debtor, probably because of the subsidy of BGN 380,000 from the SFA, which has not been refunded to date.

However, no seizures by the NRA of the company itself have been entered in the Commercial Register. Meanwhile, after the scandal with the guesthouse, “Agrotrade – Ana Dimitrova” moved its headquarters to Sofia in July 2019 and opened a branch in Sandanski at the address of the guesthouse.

An inspection by Bivol further revealed that the company of Manolev’s straw person is absorbing agro-subsidies for livestock breeding. Despite not having any employees, the young babysitter is the tenant of large land plots in the region of the Pirin mountain where she breeds hundreds of cows. She has received over BGN 67,000 in subsidies in 2018 and BGN 50,000 in 2019.
So it turns out that while looking to recoup European money for the fake guesthouse, the SFA continues to grant other European funds to the same company.

Borisov: “I did warn him”

The guesthouses are the topic of discussion in a leaked recording of a phone conversation of Bulgarian Prime Minister Boyko Borisov, in which he shows interest in the ordered by him probe into the guesthouse and threatens Manolev:

“Manolev will burn, we will bring charges against him today or tomorrow, we will ruin him. I did warn him.”

The authenticity of this remark was de facto recognized by Borisov in his answer to a question by Free Europe asked at a press briefing on the occasion of the leaked photos from the Prime Minister’s bedroom.

– Well, did you know in advance from the prosecutor’s office that Mr. Manolev will be charged?

“I can be sure of what I’m saying. That doesn’t mean I know for sure but I know how things will turn out.

This move by the Prime Minister is essentially a crime against justice but so far the prosecution has not taken any action. However, when it comes to abuse of EU funds in the guesthouse cases, the European Prosecutor’s Office has the authority to investigate them when it starts working at the end of 2020. A Bulgarian citizen association has already referred the case to it.

Where is KPKONPI?
So far, nowhere. No freezes of Agrotrade’s accounts have been entered in the Property Register by KPKONPI, which should have initiated proceedings for confiscation of property acquired through criminal activity.

Bivol sent several questions to KPKONPI but they remain unanswered:

– Are there proceedings by KPKONPI in connection with the abuse of EU funds by the defendant Alexander Manolev?

– Have actions been taken for the seizure and confiscation in favor of the State of the guesthouse associated with him and the company “Agrotrade – Ana Dimitrova” in the village of Lilyanovo, in the municipality of Sandanski?

– Are there other proceedings by KPKONPI related to guesthouses built with EU funds?

In the midst of the scandal with the guesthouses, the prosecutor’s office initiated probes of all such sites built with EU funds. Earlier this year, it became clear that most of the inspections had ended with a pro forma review of the projects’ documentation and in many cases, without an investigation into whether the guesthouse had provided accommodations or had been used only as a personal vacation home.

Thus, after months of inspections of a total of 746 guest houses funded by the EU, the prosecutor’s office boasted about only 21 case files that had turned into pretrial proceedings, most of which are in the capital Sofia – 11, while there are three proceedings in city of Montana, two in the city of Veliko Tarnovo and one each in the cities of Pazardzhik, Haskovo, Varna, Pleven, Silistra and Yambol.

The SFA, which distributed the money for the guesthouses, announced that they would impose a 100% sanction on hundreds of sites. However, these sites do not include the guesthouses of high-ranking politicians from the ruling party Citizens for European Development of Bulgaria (GERB) and the party largely representing the Bulgarian Muslim minority, Movement for Rights and Freedoms (DPS) on the convenient grounds that the monitoring period for them had expired. The prosecution also sees no problem with the five guesthouses in the village of Borino owned by the family of DPS leader Mustafa Karadayi.

Atanas Tchobanov and Dimitar Stoyanov worked on this article

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Атанас Чобанов

Специализиран в журналистика на данните и фанансови разследвания. Член на борда на OCCRP от 2016 до 2018 г. Global Shining Lights Award за 2017 и 2019 г.

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