Bulgaria’s Anti-Corruption Body Breaches Law, Launders Senior Politician’s Money

A probe in 2015 by the Committee for Confiscation of Illegally Acquired Property (KONPI) against Tsvetan Tsvetanov, Deputy Chairman of the ruling Citizens for European Development of Bulgaria (GERB), former Head of the GERB Parliamentary Group and former Interior Minister, has found a discrepancy between income and property in the amount of BGN 119,000. Nevertheless, the probe has been terminated because this amount does not exceed the confiscation threshold of BGN 250,000. This is revealed in documents sent to the Civil Association “BOETZ” (Fighter), which Bivol analyzed and confirmed from an independent source. The detailed report shows that the KONPI has grossly violated the law and has applied a number of accounting tricks to reduce the discrepancy. The real scope of property for which Tsvetanov and his family cannot prove income is more than BGN 500,000, Bivol calculated based on the data in the report and open sources of information. The report also contains information from a probe of the National Revenue Agency (NRA), which found tax evasion in particularly large amounts, for which Tsvetanov was had not been charged.

The full report (in Bulgarian) and the KONPI’s decisions can be downloaded here: https://bivol.bg/wp-content/uploads/2019/03/cvetanov-konpi-2015.pdf

The context and the cause for the investigation are the pre-trial proceedings against Tsvetan Tsvetanov, launched by the Sofia City Prosecutor’s Office, and charges against him for obstruction of justice, after which he was sentenced at two instances, but later acquitted. The Head of KONPI at that time was Plamen Georgiev, who was later nominated by Tsvetanov for Chairman of the new Committee for Combatting Corruption and the withdrawal of illegally acquired property (KPKONPI) (sic). The 2015 probe has been conducted by the Territorial Directorate of KONPI – Sofia, whose boss is Georgi Apostolov. He is the husband of investigator Plamena Apostolova, promoted as Head of the Sofia Investigation.

The probe encompasses a ten-year period from December 4, 2003, to December 4, 2013, and lists salaries, real estate, cars, bank accounts, travels abroad and any other income and expenses of Tsvetanov’s family. The probe itself started in December 2013 and ended in May 2015. As of the end of the probe, Tsvetanov was in a difficult moment of his career – he has already been sentenced at a second instance to four years in prison and has filed an appeal with the Supreme Court of Cassations but the Supreme Court has not yet issued a rule.

The press office of the KPKONPI refused to answer Bivol’s questions regarding the documents from the probe against Tsvetanov, consequently Bivol submitted a request under the Access to Public Information Act (APIA), which means at least a 14-day-delay in obtaining some answers. However, Bivol was able to confirm the authenticity of these documents from another source and decided to publish them because of the enormous public interest and Tsvetan Tsvetanov’s public statement that “there is no one to punish me“.

These documents explain in detail the mechanism of impunity and how the law is applied selectively and even violated to spare a person vested in power from prosecution.

Apartments at non-market prices

The main trick used to diminish the unexplained property of the second in command in GERB is again linked to the market appraisal of the real estate he has acquired. In 2008, Tsvetanov bought two apartments and two garages on “Elemag” Street from the company TVB of Todor Boyadzhiev at whose wedding he had been the best man. Instead of conducting a market appraisal of the property, which is the KONPIs obligation by law (Article 28, paragraph 2 and 3 of the law in force at that time), the inspectors have assumed that the properties are valued at only BGN 306,120.

The size of the apartments is 80.22 square meters and 112.54 square meters or a total of 192.76 square meters, and the average price per square meter in the area in November 2008 was EUR 1,493 per square meter, which only for the two apartments amounts to EUR 287,000. Separately, one must add the garages with a total area of 33 square meters.

Thus, it emerges that the market value of the properties acquired by Tsvetanov at the end of 2008 is about EUR 300,000, not BGN 306,120. This discrepancy of BGN 300,000, concealed by the KONPI, is already a precondition for initiating proceedings for seizure of illegally acquired property in particularly large amounts. However, the KONPI led by Plamen Georgiev has violated the law, has concealed the discrepancy and has not launched proceedings.

This is not all that happened in 2008. On December 15, 2008, Tsvetanov’s daughter Gergana acquired as a donation from her maternal grandmother and grandfather an apartment of 62.50 square meters and a garage of 29.49 square meters in the “Dianabath” district. The same apartment was bought a year earlier by Tsvetanov’s mother-in-law. The “Balkanstroy” company sold it at the preposterous price of EUR 193 per square meter against the backdrop of market prices of over EUR 1,000 per square meter.

For this property, with a market value of at least EUR 70,000 at the time of acquisition, the KONPI has spared Tsvetanov’s father-in-law and mother-in-law from a check of their income.

Tax evasion in particularly large amounts

The proof that at the time of the purchase of the apartments Tsvetanov did not have such resources is the results of the tax audit of the NRA for the period January 1, 2007 – December 31, 2012. This was his second tax audit, which started after GERB fell from power. It was launched on the grounds that Tsvetanov had influenced the first one, following the scandal with him owning six apartments. We recall that during the first audit, the Head of the NRA was Krassimir Stefanov, who later became an activist of GERB and a lawmaker on its ballot.

The second tax audit had established tax liabilities under Article 48 in the amount of BGN 15,533.92 for Tsvetanov and BGN 1,054.72 for his wife Dessislava. The audit findings had not been challenged in court and the family had quietly paid the liabilities on October 21, 2013.

Given the fact, that income tax in Bulgaria is 10%, the amounts paid by Tsvetanov’s family correspond to BGN 160,000. In other words, the family has admitted to undeclared income of over BGN 160,000.

It is also obvious that in the course of the audits, Tsvetanov and his wife had presented false declarations, which is a tax offense under Articles 255 and 256 of the Penal Code. It is important to note that all these findings had been included in Tsvetanov’s legal case, which is why the investigation had been initiated. However, they remained unexplored and new charges were not pressed.

Six apartments and 27 bank accounts

Apart from the six apartments, Tsvetanov’s family has had 27 bank accounts over the years, according to the data from the KONPI’s probe. Tsvetanov has had 14 accounts in DSK, three in EIBank, two in Eurobank and one in Investbank. Dessislava Tsvetanova has two accounts in United Bulgarian Bank (UBB), one in Bulgarian-American Credit Bank (BACB) and one in UniCredit. The daughter Gergana has two accounts in First Investment Bank (FIB or Fibank) and one in DSK.

These accounts’ activities are described in detail, and it is clear from that large amounts of cash had been moving between them, while part of the money comes from Tsvetanov’s father-in-law. The popular joke that Tsvetanov has taken the money for the apartments from a drawer where it has been left by his father-in-law can also be applied to the bank accounts. The KONPI did not investigate the income of Tsvetan Tsvetanov’s in-laws and parents.

In the end, even if we exclude the apartments, the family obviously spends more than they earn. It is enough to mention the trips abroad, valued at BGN 175,395.45 or Gergana’s education at an expensive boarding school abroad, where she spends more than 100 days a year and the tuition fee is over EUR 10,000.

All of these expenses, described in the probe’s results, are entered into a formula for calculating the income-property discrepancies that can be seen here. Two annual cost of living values are reviewed – those of the National Statistical Institute (NSI) and the more realistic cost in relation to the Consumer Price Index (CPI). In the latter case, the discrepancy between income and family expenses exceeds BGN 505,000.

According to this formula, with the exception of income from work, all other income of Tsvetanov and his family can be interpreted as a transformation of illegally acquired property.

There is also one detail that suggests that Tsvetanov may have been informed about the course of the probe and has taken measures to prove income. Exactly on December 4, 2014, on the last day of the ten-year period encompassed by the probe, Gergana, the daughter, sold her apartment in “Dianabath”, donated by her grandparents. She received EUR 72,000 for it, and Georgi Krastev Aydanliyski was the buyer. On the same day, Gergana also opened an account in Fibank, in which the money from the sale had to be deposited, but the probe did not establish such a deposit of EUR 72,000 and therefore it was not included in the final balance from the report.

Accidentally or not, Aydanliyski, a well-known scientist, was briefly appointed during the third GERB government term on the Board of Directors of the Maritza East Thermal Power Plant.

The double standard of K(PK)ONPI

The squished probe against Tsvetanov, the concealed hundreds of thousands in discrepancies in his income, and the refusal to initiate a procedure for the confiscation of property acquired in a criminal way must be perceived in the light of other probes by the same Committee – KONPI that was transformed into KPKONPI with the same Chairman – Plamen Georgiev, nominated by Tsvetanov. He now has to conduct the new probe against Tsvetanov after the scandal #ApartmentGate, in which Georgiev, himself, was exposed by Bivol for an undeclared terrace of 186 square meters and acquisitions of properties at prices below the tax assessment.

The decision fully delegitimizes both the former Committee and the new anti-corruption body. Under the law, the KONPI should have launched proceedings, imposed precautionary measures and given Tsvetanov the opportunity to prove income, including the income of his in-laws. This, however, has not happened because, as Tsvetan Tsvetanov bluntly says – “There is no one to punish me”.

However, there is another side effect. Everyone with confiscated property, including convicted criminals, now has grounds under the current law to complain. They have every chance of winning to the expense of the taxpayers because in a State where there is a rule of law, this law cannot be selective – one for the empowered people like Tsvetanov and another for all others.

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