Bulgartabac Sold Cigarettes for More Than One Billion Dollars Annually to Iraqi Smuggler Mind the horns!

The company Andalus Al Sharq General Trading, registered in Dubai, has bought just in 2014 more than 12,000 tons of Bulgartabac cigarettes. At 0.75 grams of tobacco per cigarette, this is about 800 million boxes of cigarettes. One of the owners of Andalus Al Sharq is Iraqi national, Salam Faraj Qader (Quadir), considered a smuggler by the Turkish authorities, according to documents from the Dubai Company Register, which Bivol obtained.

Exports to Salam’s Dubai-based company exceed many times the exports of the Bulgarian tobacco holding to other major markets such as Iran and Syria, according to data that Bivol possesses. In 2014, 5,700 tons were exported to Syria and 510 tons to Iran. In 2015, Iran increased sharply its imports to nearly 5,000 tons, and the official importer was the company Nilasa Tarabar International. On the other hand, exports to embargoed Syria in 2015 fell to 700 tons, imported by the Al Shahab Company. More than half of the production exported to Salam came from the already closed factory Sofia BT – 7,000 tons in 2014, while the remaining 5,600 tons came from the factory in the southwestern city of Blagoevgrad.

The Bulgartabac cigarettes are exported through the port of Varna. The ships don’t have Dubai as a destination, although according to the documents, the cigarettes are exported to the United Arab Emirates. Their routes are mainly to Black Sea ports (Constanta, Burgas, Odessa, Novorossiysk, Poti, Istanbul, Trabzon and Samsun) and Mediterranean ones (Izmir, Mersin, Larnaca, Latakia, Beirut, Alexandria, Piraeus, Thessaloniki, Durres and Valencia). There is virtually no direct cargo to Dubai, which defies all economic logic, unless the goal is to cover the trail to the final destination. In the intermediate ports the cigarettes are loaded to other ships or trucks to be transported by land and to disappear into the smuggling logistics black hole of “Mullah Salam” as the Iraqi is respectfully called in northern Iraq.

Documents from Dubai reveal: Bulgartabac Sold Cigarettes for More Than One Billion Dollars Annually to Iraqi Smuggler

Salam Quader Faraj holds 25% of Andalus Al Sharq General Trading. His partners include another Iraqi national, Adel Fouad Mohammed Ali, who is also managing director of the company. The third partner is a so-called local sponsor, citizen of the Emirate of Dubai, without whom business cannot be launched there. Curiously, a company from North Korea – Marshal Appliances – is also listed among Andalus’ suppliers. There is no office at the address indicated by Andalus Al Sharq, but there is a building that is intended for destruction, established a check of Bivol. In 2015, Salam has tried to register for Iraq the brand “Prestige”, which is the most popular and the most sought after brand of Bulgartabac in the area. His attempt was unsuccessful, perhaps because not even a box of Prestige enters Iraq through legal channels.

Contraband business worth billions

If we estimate the production cost of a pack of cigarettes at about 30 cents, and the selling price on the black market in Turkey is $ 2, the profit from the sale on the black market of 800 million boxes reaches an impressive amount of 1.3 billion US dollars only in 2014.

A significant portion of these funds are “fees” paid to various terrorist groups, mainly the PKK, but it is possible that a tax for the transit of the consignments of cigarettes is also paid in the territories controlled by the Islamic State.

Salam Quader Faraj appeared by name in the publication of the Turkish newspaper Milliyet in May 2015. The article cites a report by the Turkish customs and financial intelligence MASAK, according to which Salam was a major figure in the smuggling business. According to the same report, more than half of the contraband cigarettes sold in Turkey is produced by Bulgartabac, while their traffic, passing through northern Iraq, finances the terrorist organization PKK.

In addition, Salam’s name shows in documents that lawyer Alexander Angelov sent to banker Tsvetan Vasilev before the finalization of the transfer of ownership of Bulgartabac from the Russian VTB Bank to Liechtenstein offshore companies. He wrote that Salam would like to deal with a company that has the word Bulgartabac in its name. Complex schemes of companies that redistributed the ownership were created in Liechtenstein and Dubai. In Dubai, the cash flows pass through the local BT (Bulgartabac) ME FZE, whose “external customer” is Salam Faraj. The five companies that own BT (Bulgartabac) belong to controversial businessman and lawmaker Deliyan Peevski (Dalia Trading with 17.5%), Tsvetan Vasilev (Samora Trading with 17.5%), and the owners of the alcohol beverages maker “Peshtera” (Grevena Trading with 35%). Three companies with 10% stake correspond to the commissions collected by current second-term Prime Minister Boyko Borisov, his friend Alexander Staliyski and Ahmed Dogan, Honorary Lifetime Chairman of Peevski’s party Movement for Rights and Freedoms (DPS), largely representing the Bulgarian Muslim minority. This was their reward for the political blessing for the privatization of Bulgartabac, which was passed in the Parliament in late 2011, with the votes of Borisov’s party Citizens for European Development of Bulgaria (GERB) and the tacit collaboration of DPS.

Bivol already published a document showing that Peevski’s attorney – Alexander Angelov, who is the author of the scheme, is listed as the owner of one of these companies. This is exactly what he described in the letter to Vasilev, which confirms its authenticity. “Customer” Salam through Andalus Al Sharq General Trading, is the second definite element confirming Angelov’s writings.

The scheme, to put it mildly, is shocking. In addition to revealing massive corruption and trading influence at the highest levels in the country, it shows that senior Bulgarian politicians have been trading for years with smugglers and earning billions from illegal business also used to finance terrorist organizations.

The retaliation

Such brazen smuggling in violation of international trade conventions cannot flourish undetected and without attracting due attention from both, the directly affected Turkish authorities (losing huge amounts from excise duty) and from countries that are fighting in the troubled areas of northern Iraq and Syria through which the traffic passes. After all, Bulgartabac deals directly with the company of smuggler Salam Faraj, who in the past has been given exclusive rights of distributor for the Middle East, as shown by documents published by Bivol in a previous investigation. Along with Salam, the documents related to the exclusive distribution rights also show the registered in the US company “Caledon Invest”, which was investigated for massive smuggling and money laundering. After Bulgartabac learned that the Iraqi authorities have listed Salam as outlaw, the business not only did not stop, but expanded, however, Caledon was abandoned. Since 2012-2013, the business has been going through the new company of Salam – Andalus, which is registered in Dubai.

This fact has been concealed and ignored by all Bulgarian special services including the Customs Agency, which refused to provide information under the Access to Public Information Act (APIA) on the Bulgartabac counterparties. Another little known fact is that in 2014 Turkey returned to 1,000 tons of Bulgartabac cigarettes to the port in Varna because of irregular documents. This warning was, however, ignored and the smuggling continued unabated in 2015, but via bypass routes.

Nonetheless, this flourishing illegal business stopped abruptly at the beginning of this year after Turkish authorities arrested hundreds of Salam’s containers in the port in Mesrin and according to some information, also Salam himself. After this blow to the “external customer”, Bulgartabac announced it was stopping production for the Middle East with the grotesque explanation that this was caused by negative media publications. The factory in Sofia was hastily closed and currently the machines are being dismantled and shipped somewhere. The main factory in Blagoevgrad is also threatened by bankruptcy and 3,000 workers can be left on the street as their 400 colleagues from Sofia BT.

True to Salam to the end

The stubbornness with which Bulgartabac refuses to sell its products to other contractors is also striking. Bivol published a bid from a company from Iraq, which was subsequently presented at a hearing in the Economy Committee in the Parliament. The latest offer of the Iraqis, represented by lawyer Daniel Penkov, was to take on franchise the factory Sofia BT and to preserve all jobs. Despite several proposals addressed to the management of Bulgartabac Holding, the Iraqis faced a solid wall of silence, even since the time when Bulgartabac was State-owned. The letter to Prime Minister Borisov from August 2015, in which Penkov warned of the illegal smuggling business and possible severe economic consequences had not helped either. As if Salam and the owners of Bulgartabac are bound by wedding vows.

All Bulgarian institutions are ignoring and downplaying with the same tenacity the problem with the collapse of Bulgartabac The amnesia is ubiquitous, starting with the office of the Prosecutor General Sotir Tsatsarov that sees no problem in the smuggling, despite persistent Turkish signals, through the Ministry of Economy that pretends that nothing depends on it, to the Privatization Agency. We should also mention the Commission for Protection of Competition, which claims that it knows the name of the individual who is the majority owner of Bulgartabac, but is carefully hiding it.

There is also a powerful pressure on the media to keep silent about everything related to Bulgartabac, though this wasn’t a major enterprise, and, at least until recently, the largest company by market capitalization on the stock exchange. The continuous trade union protests in front of the Ministry of Economy, asking Minister Lukarski to engage in negotiations to implement the franchise offer for Sofia BT, are not helping in tackling the media omerta either.

In addition to Lukarski and to the owners of Bulgartabac, the unions have reason to direct their anger at the Privatization Agency as well. Because it remains idle before the obvious facts that

The evidence about smuggling and indirect financing of terrorism is in a gross violation of the privatization contract

which creates grounds to initiate an investigation in breaking the deal. We will cite verbatim violations of an article of the contract (which is secret):

4.5. Keeping the core business of the Company. Investments;

4.5.1 Activity of the Company

The buyer shall keep for a period of ten (10) years after the Completion the main business of the Company and its Subsidiaries, as it is by the date of Completion and secure that the Company and the Company through its subsidiaries operate in accordance with requirements of the legislation of the Republic of Bulgaria, international treaties and the legislation of the European Union.

Specifically, both Bulgarian (art. 234a of the Penal Code) and European and international legislation prohibit transactions with excise goods with smugglers as Bulgartabac has undoubtedly done with Andalus.

The penalty for terrorist financing as defined in Art. 108a paragraph 2 of the Penal Code is even more serious and provides for three to 12 years of jail time.

It is obvious from the so-far-collected data and evidence that the corpulent owners of Bulgartabac have made the informed choice to sell huge quantities of cigarettes to smuggler Salam Faraj, who in turn is financing the PKK. That is, the individuals behind Bulgartabac have directly provided resources though they knew for sure after the reports of the Turkish authorities that these resources would be used in part to fund terrorism!

There we already have sufficient grounds for intervention by foreign law enforcement agencies as well, while Tsatsarov is standing in stupor, held on a short leash by Peevski. However, the so-called “withdrawal” of Peevski and the abrupt moves of Borisov, who is acting like Peevski’s spokesperson, are a sign that the targets are clearly identified, and the outcome of the deal worth billions is predictable, and perhaps sad.

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