Dubious Bulgarian Companies Provide ‘Cover-up’ Construction Equipment for TurkStream 2

Nikolay Marchenko

А company associated with the son of a former high-ranking functionary of the Bulgarian Communist Party, partnering with the Movement for Rights and Freedoms (DPS, the party largely representing the Bulgarian Muslim minority ) and the nationalist VMRO, together with a bankrupt company from the western city of Pernik, have sent their construction equipment to the TurkStream 2 site near the village of Makresh. This happened four days after the Civil Association BOETS (Fighter) and a reporter of Bivol made public a video showing the lack of Bulgarian workers and Bulgarian construction equipment at the site, with machines only from Turkey and Serbia seen at the location. It is not clear how the company Verda-008, based in the western city of Pernik, whose machines were photographed by BOETS during a protest at the site on October 10, had won a European project for over BGN 1.49 million in 2017. In early 2017, the assets of Verda-008 had been frozen by a collection company, according to data in the Bulgarian Commercial Register. Separately, according to the Information System for Management and Monitoring of EU Funds in Bulgaria (EUMIS), the equipment obtained with European Union (EU) money is to be used only in the production facility of Verda-008 in the village of Dolno Belotintsi (near the western city of Montana). However, BOETS found at the Dolno Belotintsi site the company Caro Trading, which is a beneficiary of the Road Infrastructure Agency, Irrigation Systems and countless of municipalities with BGN 348 million in public tender contracts for a total of 170 projects. Caro Trading was a sponsor of football club CSKA – Sofia and has partnered over the years with the company of the brother of a former DPS Deputy Minister and with an MEP candidate from VMRO.

During BOETS and Bivol’s visit to the construction site of TurkStream 2 near the village of Makresh on October 6, the team noticed only equipment from Turkey and Serbia where the Russian company IDC, a subsidiary of energy giant Gazprom, has worked on the Russian gas pipeline project.

But only four days later, during the protest at the site on October 10 organized by BOETS, Green Mladost, other civil society organizations and the political party Yes Bulgaria, the activists found brand new heavy machinery of the Pernik-based company purchased under a European project.

“This is a Potemkin village,” one of the activists said.

One of the machines was marked with the inscription Eltrak. According to EUMIS, Eltrak Bulgaria (part of Eltrak Greece) is one of the suppliers of Verda-008. The machines’ registration address matches the addresses of the headquarters of Verda-008 and Caro.

The reasonable assumption is that these shiny, brand new heavy machines have never been used, and their sudden appearance at the construction site serves a single purpose – to demonstrate the presence of Bulgarian workers and Bulgarian equipment there.

European money for an indebted company

A check by Bivol in the EUMIS showed that Verda-008 has received European money, a total of BGN 1.48 million for the purchase of construction equipment under the Energy Efficiency Program for small and medium enterprises.

The project “Energy efficiency, Verda-008” states that “the activities aim at expanding the capacity of an existing production facility to increase the energy efficiency of the production of fractions of excavated materials in the enterprise.” With this, Verda-008 would achieve “the goals set in the company’s strategy to reduce production costs, increase its environmental friendliness and competitiveness.”

Verda-008 is otherwise a quite modest business, according to entries in the Commercial Register, to be a successful bidder for a project for about BGN 1 million. The company was founded on May 10, 2008. Its headquarters are in the city of Pernik and the initial capital amounted to only BGN 5,000, which is hardly sufficient for the realization of projects worth millions.

Since Verda-008 states in its project bid that the equipment funded with EU money will operate only within the company’s production site near the village of Dolni Belotintsi, the firm had committed a violation by bringing the machinery to the TurkStream 2 site.

A company with government contracts for BGN 350 million

At the same time, BOETS activists found during a visit to the village of Dolni Belotintsi a facility for the extraction of excavated materials owned by a large Bulgarian construction company, Caro Trading, as evidenced by the signs showing it is a project under the same European program under which Verda-008 had acquired the construction equipment. There is no information at the location about Verda.

But interestingly enough, Caro Trading is a subcontractor not only for European projects. According to data from the search engine of Bivol’s partner site BIRD.bg, the company has government contracts for 170 different projects worth as much as BGN 348 million.

Most projects are municipal ones, such as projects in the cities of Pleven, Vidin, Burgas and the town of Lom, among others. The company also works on projects of the Road Infrastructure Agency at the Ministry of Regional Development and Public Works (MRDPWs) and the State-owned Irrigation Systems, which became infamous when its Board Member Georgi Harizanov, appointed by the ruling Citizens for European Development of Bulgaria party (GERB) during its first term in office, was subsequently removed when it emerged that he had been investigated for particularly large scale theft and had been convicted for racketeering in the past.

In 2014, Caro Trading joined a consortium with the company of the brother of a DPS MP for the construction of a sewerage system in the “Meden Rudnik” district in the Black Sea city of Burgas for BGN 16 million. Techno-Energy is a company owned by two businessmen from the coastal town of Nessebar Dimitar Hrusafov and Hussein Koulov. The latter is also known by his Bulgarian name Yulian Iliyanov. Koulov-Iliyanov is the brother of the former DPS MP and former Deputy Minister Fatme Iliyaz.

Caro Trading was not the leading participant and was rather carrying out sideline activities for the sewerage project. According to Burgas media publications, the owners of Caro Trading, Krassimir Karaivanov and Bozhidar Roev, are just proxies running the numerous companies of Yancho Takov, the son of the former member of the Politburo of the Bulgarian Communist Party, Peko Takov.

Research by Bivol showed that Caro Trading and Krassimir Karaivanov are partners with Yancho Takov in the company Hydro Slavovo. Meanwhile, Yancho Takov has bankrupted one of his companies, Lotus I&I, whose liabilities to the National Revenue Agency exceed BGN 27.6 million as of September 28, 2020, according to entries in the Commercial Register.

Successful partnership with DPS and VMRO

Zov News, a site based in the western city of Vratsa, wrote in 2013 that Yancho Takov had taken the Dabnika Dam for pocket change from Irrigation Systems, whose subcontractor had also been Caro Trading, and had traded land plots around the dam.

The newspapers “Banker” and “Struma” reported in 2013 a partnership of Yancho Takov with the manager of the water supply and sewerage system in the southwestern city of Blagoevgrad Peter Tunev.

According to “168 Chasa” weekly, in 2017, Yancho Takov’s sons, Yancho Takov Jr. and Ivan Takov, had been running for MPs on the ballots of the Bulgarian Socialist Party and the Bulgarian National Union.

Caro Trading also build the rural road between the town and SPA resort of Separeva Banya to the mountain resort of Panichishte, together with the scandalously fired Head of the Road Infrastructure Agency Svetoslav Glossov under a contract for over BGN 5 million. This partnership with a former top manager of the MRDPWs is a prerequisite for a conflict of interest. The scandalous project was described in 2016 by Bivol’s investigative journalist Dimitar Stoyanov in an investigation titled “How to steal from a country road”.

“A 5-km rural road is financed under the Rural Development Program with BGN 5,394,108.36. The commission for the mayor was 40%, according to participants in the construction works. To achieve this corruption target, the construction had to be of poor quality as materials listed in the project were replaced with cheaper ones. The project designer, the construction control and the State Fund Agriculture, all closed their eyes to this,” Bivol wrote then.

“Capital” weekly wrote in 2017 that a consortium with the participation of Caro Trading had won the project for the treatment plant in the Black Sea town of Aytos for BGN 12 million. According to the publication, Caro Trading then reported revenues of BGN 27.5 million in 2016 and BGN 70 million in 2015.

Again according to “Capital”, Caro has also built the treatment plant in the northwestern town of Knezha together with Interprom and two other companies for BGN 6.6 million, as well as the Knezha water cycle for about BGN 17 million.

In 2012, Caro Trading was one of the companies sponsors of the Sofia football club CSKA.

According to BOETS, the partnership between Verda-008 and Caro Trading may have been established with the purpose of syphoning EU funds.

“We can assume that Verda-008 is a shell company used to syphon EU funds. Their projects are very similar and Caro also owns the production facility specified in Verda’s project, which speaks of a connection between the two companies. This must be established by authorities and the European institutions, which we will alert,” the leader of BOETS Georgi Georgiev, who visited the site in the village of Dolni Belotintsi, told Bivol.

But Caro is working not only with the Communist party heirs and with DPS but also with one of the ruling political parties, VMRO. The publication “Fourth Estate” wrote in 2019 that Krassimir Karaivanov is a partner of VMRO’s MEP candidate Vergil Katsov.

“Krassimir Karaivanov and Vergil Katsov bought a property from the state for nearly BGN 1,000,000 in the resort of Panichishte and the two are building the largest SPA center in the Balkans for BGN 35,000,000,” the online media wrote.

Update:

Following the publication of this article, Bivol’s site received a message from a man named Bojidar Roev, who introduced himself as “the boss of Caro Trading”.

“We have never worked on Turk stream, and I probably want more than you to see these traitors who rule us disappear for good. If you want information, call me and I will tell you everything about this stream and all the schemes in the region,” the entrepreneur commented.

***

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