Bulgaria has granted citizenship for questionable “economic merits” to a large number of citizens of the former Soviet Union. The promised large-scale investments are either non-existing or are in the real estate sector and do not create jobs. Control on whether the investments are real is lacking. In some cases, the investors’ funds are of criminal origin, but law enforcement agencies have been closing their eyes. Different schemes for citizenship through legal loopholes exist since 2002, an investigation by Bivol’s team has established.

The Bulgarian passport – a visa for Europe

If you pull out of your wide trouser-pockets (to use poet Vladimir Mayakovsky’s catch phrase) a Bulgarian passport, you probably will not be particularly respected, but you will be admitted in the European Union (EU) without a visa. You will also be able to establish yourself in one of the 28 countries of the Union together with your family, start a business without formalities and use the local social, health and education system.

Perhaps this is the reason why many former Soviet Union citizens are looking for a way to get the document depicting a full-featured lion, not sleeping-car English lions (Mayakovsky again).

According to the most recent data from Eurostat, Bulgaria is the country which in 2016 has granted the most passports to Russian and Ukrainian citizens – 30% of those naturalized in Bulgaria in 2016 are Russians (490 out of 1,626 people) and the Ukrainians are 17% (270 people).

2016 seems to be an exception, because for the period 2007 – 2017 minorities of Bulgarian origin prevail significantly. From the report of the Vice-President’s Office, which has the power to grant Bulgarian citizenship, one finds out that the new Bulgarian citizens ranking is led by Macedonia and Moldova. Following are Ukraine and Russia, which are before Serbia, Israel, Albania and Turkey.

President’s administration report on naturalised foreigners

The majority of these citizens have been naturalized because of their Bulgarian origin. From the former Soviet republics, ethnic Bulgarians live mainly in Moldova, Ukraine and on the territory of the Russian Federation, particularly in the Crimea. There are, however, those who have become Bulgarians not because of their origin but because of vague “special merits” on the proposal of ministers from several governments. This category includes athletes, artists and investors.

A special parliamentary Committee explored in 2012 the procedures for naturalization “on merit” and found disturbing facts – missing or suspicious investments. The lists produced by this Committee (see here and here) indicate to whom citizenship had been granted, on what basis and on whose proposal. Where there are doubts, law enforcement authorities have been instructed to carry out probes.

However, the Constitutional Court later declared the Committee unconstitutional because of its ambitions to investigate pardons as well. Thus, the issue of irregularities established in the granting of citizenship subsided.

Bivol decided to check the most suspicious investors on the Committee’s lists and found that, in many cases, the lawmakers’ doubts can be confirmed.

Passport against empty investment intentions

Andrei Valerievich Kashtanov received a passport in 2008 because he had declared intention to participate in the implementation of co-financed projects in the construction of Danube Bridge 2. The seriousness of these intentions has been guaranteed by the then-Minister of Economy Petar Mutafchiev.

If Kashtanov was involved in the project, this has happened in a very covert manner. He has never had a company registered in Bulgaria. There is also no data of him having invested in the site with the official name “New Europe”, representing a road and rail bridge over the Danube, connecting the Bulgarian city of Vidin and the Romanian Calafat. With its construction, Bulgaria’s transport network largely opens to the European ones. The project is key to the entire south-east axis of Europe and the trans-European transport network and is therefore priority financed from the EU structural funds and was built by a Spanish company.

However, Andrei Kashtanov obviously had other, more realistic intentions than to build Danube Bridge 2 for us, Bulgarians. After receiving a passport, he has invested in his own home. In 2014, Andrei Valerievich paid BGN 201,450 for an apartment of 106 square meters, located on the fifth floor of a condo building on the central Sofia street “Solunska”.

Bivol’s team visited the address but did not manage to find Kashtanov. The name of the discreet investor is missing on the door bell.  

Citizenship for an oligarch from Putin’s circle, convicted of fraud in the United States

Another case of obtaining citizenship against empty promises is that of technology tycoon Sergei Nikolaevich Adoniev. He is close to the President of “Rostec” Sergei Chemezov, who is part of the oligarchic circle around the Kremlin. To this day Adoniev is one of the richest Bulgarian citizens. His fortune is estimated at USD 800 million.

According to the Economy Minister, who recommended him for citizenship in 2008, Adoniev “had undertaken major investments and would invest EUR 10 million in the country”.

He would, but he did not, a check by Bivol in the company and property registers established. Adoniev has not even bought property in Bulgaria after he and his wife Maria received European passports. 

Sergei Adoniev (on the right)

Adoniev’s biography has some dark spots. Before becoming a multi-millionaire and getting close to the Russian elite around Putin, he had been convicted of fraud in the United States, Nezavisimaya Gazetta (Independent Gazette) reveals. According to the Russian edition of Forbes, he had served 30 months in prison in Arizona and had been expelled after that without the right to return to the United States. Nevertheless, he had been granted citizenship “for special merits to Bulgaria”.

According to Associate Professor Atanas Slavov, expert in constitutional law, the granting of citizenship to Adoniev has compromised national security. “Our services, in this case the National Security Agency (DANS), have not done enough research to pinpoint the origin of the money of this Russian citizen, his previous activity. The information that he had been convicted in an American federal court is publicly available. We allow a person who is part of Putin’s oligarchic circle, who is part of the Russian military-industrial complex under the control of the Russian Intelligence, to become a Bulgarian citizen and to trade freely in the EU,” Slavov stresses.

It is a curious fact that the owner of the apartment in which Adoniev’s company was registered in 2008, is Vasil Stiliyanovic Nanish, an arms dealer who is wanted by the Bulgarian authorities through Interpol for participation in an organized crime group (OCG).

Our attempts to reach Adoniev through the contacts of the connected to him Russian legal entities remain fruitless. We were able to reach on the phone lawyer Hristo Mandalchev, who has a power of attorney from Adoniev to run his company in Bulgaria. However, he declined any comment on his client. Lawyer Ivan Nanev, who had a power of attorney from Adoniev before Mandalchev, also refused to comment.

Investor hub in a shed

Citizens Lev Efimovich Irovich, Yuri Vyacheslavovic Tsipulev, Zhyaudyat Assadovich Valeev and Viktor Ivanovich Torhov, together with the wives of Irovich and Tsipulev as well as Tsipulev’s son Dennis received citizenship in 2008. They had been recommended for naturalization by former Social Minister Emilia Maslarova (for Irovich) and former Minister of Health Evgeni Zhelev.

Tsipulevi’s citizenship motivation has been “to invest” in Bulgaria. According to Health Minister Zhelev, Tsipulev’s special merits stemmed from his investments in SPA hotels in Sapareva Banya and “the forthcoming (at the time) new hotel complex in Panichishte, a SPA complex at the Germanea hotel, a new sports and recreation complex in Panichishte, etc.”

The other three Russians were naturalized for other “special merits”: similar donations to the orphanage “Nadezhda” (Hope) in the town of Belogradchik of BGN 20,100 (Irovich and Valeev) and a donation for the Home for Children and Youths with Mental Disabilities “St. Panteleymon” in the village of Vidrare, of BGN 20,000 (Torhov).

The common for all of these persons is that their own companies that invest in the hotel business and in lands around the resort town of Sapareva Banya. All companies are registered at the same address: 29 “General Parensov” Street in Sofia.

Our reporter visited the above address, where there is no trace of developers. From a conversation with neighbors, it became clear that there is a “shed” in the courtyard where 20 companies had been registered.

Our check in the Trade Register showed that one individual – Alexei Ivanov Melhanov – is at the center of this peculiar Russian investor hub on 29 “Parensov” Street. In 2004, he acquired the building in the courtyard. Melhanov has been originally a partner in “BIG Sofia Holding” and its manager. He is also the manager of one of Lev Irovich’s companies.

A year later, “BIG Sofia Holding” became the owner of the building. To date, the end owner is the offshore “Orlando Limited” through the company “Bryag Sofia”, whose managers are Dennis Tsipulev and Ventseslav Stefanov. “Orlando Limited” is represented by the Uzbek citizen Andrei Danilov.

There are also many intersecting points between Valeev, Torhov and Melhanov. The companies through which Torhov and Valeev had invested are named “Avers Group” and “Avers-A”. They are also registered at 29 “Parensov” Street. “Avers Group” was deleted in 2015. Melchanov also had joint ownership in “Avers-A” through the company “A1”.

With the money of Tsipulevi, Torhov and Valeev, Melhanov had tried to develop SPA tourism in Sapareva Banya. However, he had not been very successful, as our filming team discovered. The outskirts of Sapareva Banya provide a futuristic sight with the unfinished buildings. According to local people, the many abandoned buildings can be linked to Alexei Melhanov and Denis Tsipulev. The Sapareva Banya Town Hall refused to comment on the situation with the abandoned buildings at the foot of the Rila Mountain.

With the blessing of reputed criminals?

Until 2009, the regional and national media often talked about the large investment projects of “BIG Sofia Holding” in tourism and real estate. Melhanov, who represented the company in Bulgaria, claimed to have investments of more than EUR 10 million in Sapareva Banya and the Panichishte resort. At that time, the Holding planned to invest another EUR 50 million. Melhanov and Tsipulev had relied on selling their properties in Rila on the Russian market.

This is the rosy side of the projects, while from the dark one lurks evidence that Melhanov and Tsipulev had advanced their business with the blessing and cover-up of now convicted fugitives Anguel Hristov and Plamen Galev, known as the Galevi Brothers, who are linked to drug trafficking. This protection had allowed the Russians to build within the Rila Nature Park without having to worry about environmental legislation restrictions.

In 2012, the Galevi Brothers were sentenced to five years in prison for involvement in a criminal gang for racketeering and extortion, then mysteriously disappeared and are still wanted through Interpol. At the same time, the Russians’ projects collapsed. All of the hotels owned by the holding – Mountain Lakes, Magnolia, Edelweiss in Panichishte and Germanea in Sapareva Banya had been rented.

We tried to get in touch with the investors and obtain their comments.

The new manager of “Bryag Sofia”, Ventseslav Stefanov spoke with us on the phone but refused to put us in touch with Dennis Tsipulev and to reveal who is behind the offshore “Orlando Limited”.

Bivol also managed to contact the accountant of Lev Irovich’s company “Leos AA” and asked questions about his investments: “Nothing is done on these lands. They are just coming into regulation, plumbing, water pipes are being laid and so on …” However, our request to get in touch directly with Irovich was denied: “I want to talk to Lev Irovich first, or only with his consent, or for you to meet directly with him.” We did not receive a call back.

We also contacted a proxy of Torhov and Valeev, who wished not to be identified. According to him, their investments are mainly in agricultural lands where nothing had been built.

Alexei Melhanov, himself, answered our questions by e-mail in detail. According to Melhanov, the investments of Irovich, Tsipulev, Thorhov and Valeev are real, and each of them has invested in Bulgaria at least USD 500,000 to obtain a permanent residence status under the current legislation. Subsequently, they have invested in hotels and lands.

“I know there have been cases when some people have received Bulgarian citizenship for small investments in a corrupt way. But the case of Mr. Tsipulev, Valeev, Torhov and Irovich is certainly not such,” Melhanov says.

He admitted that he had met with the Galevi Brothers to whom he was introduced by the Mayor of Sapareva Banya at a municipal celebration. But he denied having any common business or other common interests with them.

According to him, the collapse of the large-scale projects in Sapareva Banya is due to the local government, which has not respected its commitments.

The municipality of Sapareva Banya declined to comment on the failed projects worth more than EUR 25 million.

Despite the collapse of large investment projects for which they had received passports, as private individuals, the Russians from 29 “Parensov” Street are rather successful investors. Torhov and Valeev have bought in their own name apartments in the vacation village “Andalusia 2” in the beach resort “Elenite”, north of Sunny Beach. They have purchased them from Melhanov’s “A1” company, which, it turns out, is a successful business with real estate on the Black Sea coast. Tsipulev and Irovich have also acquired vacation properties. However, hundreds of thousands of foreigners have done such deals in Bulgaria without any reason to grant them citizenship over their investor capacity.

Investment in own property by the sea

The Ukrainian citizen Oleksi Belenky arrived in Bulgaria in 2004. He was sent to our country by the Ukrainian subsidiary of oil giant Lukoil. He took over the management of the Bulgarian subsidiary but was quickly removed for failing to handle the tasks. Only nine months after arriving in the country, he obtained a Bulgarian passport under the name of Alexei Belenkiy.

Belenkiy’s candidacy for citizenship had been backed by then-Minister Miroslav Sevlievski. According to latter, the Ukrainian should receive Bulgarian citizenship on the grounds of his “background, professional and life experience as an entrepreneur and head of one of the leading companies in the world with motives to strengthen bilateral relations … to use his ability to direct the company’s investment potential, as well as the one of similar companies to Bulgaria.”

An investigation by Bivol, however, found that Belenkiy’s investment potentials in Bulgaria had been directed exclusively towards the purchase of his own properties in attractive locations. He owns plots on the shore of the beautiful mountain lake Dospat and a waterfront villa floor in the site “Budzhaka” near the beach town of Sozopol.

The origin of the funds for these acquisitions is questionable. It turns out that to date, Belenkiy is charged by the Ukrainian Anticorruption Prosecutor’s Office with abuse of public procurement for millions of euros from tenders of the Ukrainian railways.

The court order to locate Belenkiy has arrived in Bulgaria via Interpol. The Bulgarian authorities, however, are not keen on finding him. The police had not even visited his coastal property, documents which Bivol has examined, reveal.

Bivol’s team did not find Belenkiy in his vacation property. We contacted his Ukrainian lawyer with a request for comment, but did not receive a reply by the publishing of this article.

A town of doom with the money of a criminal group

Konstantin (Kostya) Tsiganov has become notorious in Russia as the ringleader of the criminal group “Uralmash”. In the mid-1990s, he even drove a tank on the central square in Ekaterinburg against a rival Chechen group. While wanted by the Russian Ministry of Interior, he had managed to acquire Bulgarian citizenship and settled in Bulgaria in 2001.

During the pre-crisis construction boom on the Black Sea coast, Tsiganov invested tens of millions in the “Costa del Croco” (Coast of the Crocodiles) project – a luxury vacation village for 5,000 people in the beach town of Tsarevo.

ciganov-borisov

Kostya Tziganov playing football with PM Boyko Borisov

The origins of Tziganov’s millions can be traced to the criminal amassing of capital in Russia, but there had been no one to investigate him in Bulgaria. Kostya Tsiganov had protections. He was close to the brother of the former deputy head of DANS Ivan Drashkov and kicked ball with then-Mayor of Sofia, former Chief Secretary of the Interior, Boyko Borisov (current third term Prime Minister of Bulgaria – editor’s note).

However, the investor “honeymoon” ended in early 2010 when Tsiganov was arrested along with several other Russian citizens. After several months of staying in the shelter for foreigners in Busmantsi, near Sofia, Tsiganov was expelled from the country on the order of then-Head of DANS Tsvetlin Yovchev as a threat for national security.

The naturalization of such a person, shows how all of the institutions in charge in our country are doing nothing of what they have to do – financial intelligence, the DANS, etc.,” is how attorney Nikolay Hadjigenov, expert in procedures for obtaining Bulgarian citizenship, commented the case.

Today “Costa del Croco” is abandoned unfinished on the southern coast of Tsarevo and offers an impressive decor for scenes from apocalyptic movies. The failed project is something like a monument of the savage construction on the Bulgarian coast with money from criminal activity, as well as of the inaction of the Bulgarian authorities that have not done a thing in over 10 years to remove these ruins from the criminal “concrete era”.

Cows and marijuana

In search of a positive example, we discovered the investment of Evgeniy Alexeevich Poyarkin. “Since 2007, he is the owner and manager of the “Gendov” livestock breeding cooperative in the town of Rakovski, Plovdiv Region. He has invested EUR 2 million in the cooperative and owns 435 select cows and has created 33 jobs,” – this is how the citizenship, granted to Poyarkin in 2008, has been supported. The Committee did not announce which minister has proposed and defended his candidacy, however, it has stated that the reasoning “lacks a specific contribution by Poyrinkin in the relevant area, as well as his special merits for the country”.

Nevertheless, his investment can be considered a positive deed because a large number of cows can still be seen in the Gendov cooperative farm. The business has been transferred to the “Milkcom” company of another Russian citizen – Boris Azarkevich. Poyarkin, himself, has long since left the livestock company, a check by Bivol in the Trade Register, established. According to documents, he left the Board of the Gendov Breeding Cooperative at the end of 2010, but continues joint activities with Boncho Gendov in the company “Azpo Agro”.

Still, the lucky investor fairy tale became marred by a criminal story about marijuana growing by other members of the Gendovi family in the same farm in Rakovski. In 2016, the anti-mafia police busted an entire marijuana factory on the same farm in Rakovski. So far there is no evidence of Russian citizens’ participation in this illegal activity, which had been obviously organized by their Bulgarian partners.

Citizenship on loan

After the handing out of passports “on merit” became grounds for media scandals on several occasions, in 2013 Bulgaria regulated the trading of citizenship against investments with amendments to the law. “Gold Visa” rules, also existing in other European countries, were introduced.

Today, a person wishing to receive a Bulgarian passport must invest at least EUR 1 million in government securities or in a bank deposit. Against this, the State guarantees citizenship after two years. The bare promises of investment and ministerial recommendations should no longer be an argument for naturalization.

At least that is on paper.

Bivol tried to obtain from the Ministry of Justice the names of the investors who had benefited from the Golden Visa program but received a denial. According to the Ministry, the identities of these new Bulgarians are protected as personal data.

There is reason to suspect that granting citizenship without real investment in the economy is still probable, but through another legal loophole. For example, instead of actually bringing EUR 1 million to the country, it is possible to obtain a loan from a bank that is close to the government, and to apply for citizenship by showing proof of having EUR 1 million in cash in an account in the same bank.

If the candidate is “deserving” enough, the clerks will not ask them for an explicit proof of the origin of the money from abroad. And the trick works.

In the following few years, the foreigner expecting Bulgarian citizenship pays the bank only the interest on the loan. After all, there is no real investment of EUR 1 million, but the bankers are getting richer with EUR 200,000. The new citizen is also pleased because he has paid only the price of an apartment in a city like Moscow, for example.

Bivol’s investigation as part of the OCCRP “Golden Visas” project showed with concrete evidence that the above scheme exists and works. So far, there is no response from the government and the authorities in charge.

Ten years later, a Bulgarian for life

According to the Bulgarian law, the naturalization can be canceled in up to ten years after it has been granted. This can happen if the Citizenship Council at the Office of the Vice-President finds hidden data or facts which, if known at the time, would not have allowed issuing a decree for obtaining Bulgarian citizenship for said individuals.

For example, the citizenship of Konstantin Tsiganov was granted on March 12, 2001, and on the same date nine years later it was revoked on the grounds that he had presented an invalid document certifying his Bulgarian origin. Meanwhile, his Russian citizenship had been revoked, and Russia did not want to issue any ID documents for him. This legal case has delayed Tsiganov’s expulsion from Bulgaria for months.

Only a month remains until the expiration of the deadline in which the citizenship of Sergei Adoniev can be revoked. He had been naturalized with a Presidential Decree from May 23, 2008. Besides being a threat to national security, there is also a very formal reason to review his citizenship status. The Committee has found a lack of a notary certification of Adoniev’s declaration, which is a violation of the Bulgarian Citizenship Act.

Citizenship can also be revoked if the person has not maintained the investments that have become grounds for acquiring Bulgarian citizenship for at least two years from the date of naturalization. Adoniev falls under this clause as well. But there is no control over whether the investments are real.

“Actually, all these investments, no one controls whether they exist at all. Second, what happens to them? Third, the origin of the money, whether this is actually clean money?” asks attorney Hadjigenov

By the end of 2018, the deadline for the “investors” from 29 “Parensov” Street. (Valeev, Tsipulev, Torhov, Irovich) will expire, as well as the one for the builder of Danube Bridge 2 – Andrei Kashtanov. The breeder Poyarkin has been naturalized much later than them, in 2011.

For the wanted by the Ukrainian Anti-Corruption Prosecutor’s Office Alexei Belenkiy, the deadline expired on April 28, 2016. His Bulgarian passport can no longer be taken away.

Author: Dimitar Stoyanov, Editor Atanas Tchobanov

This publication was supported by OCCRP

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