FinCEN Files: State-controlled Bulgarian Bank Processes Transactions Linked to Gangsters and Arms Trafficking for Islamic State

Atanas Tchobanov

An offshore company with an account in Piraeus Bank paid USD 31 million to another offshore company with an account in the State-controlled Bulgarian Development Bank (BDB). The first offshore company is owned by a person involved in arms trafficking for the Islamic State and the other is owned by a notorious Bulgarian arms dealer, a partner of Boyan “The Baron” Petrakiev. These data are found in the FinCEN Files, a cache of leaked suspicious activity reports (SARs) filed by banks and other financial firms with the US Department of Treasury’s Financial Crimes Enforcement Network, known in shorthand as FinCEN.

The transfer in question was made on November 1, 2016. The company with an account in Piraeus Bank, which was acquired by Postbank in 2019, is called Heptagon Global Trading and is registered in Dubai. Piraeus sent USD 31 million to the account of the Seychelles-incorporated company Osiris Global Trade in the BDB. As the transfer was in US dollars, it went through the correspondent bank, Bank of New York Mellon. The US bank reported the suspicious transaction to FinCEN a month and a half later, in early 2017.

Частта от доклада SAR, в който е описан превода за 31 милиона долара между две български банки.

The detailed report on the transaction notes that Heptagon Global Trading is registered in Dubai and has a website but it contains no information. The report notes that Seychelles’ Osiris Global Trade appeared to be a shell entity as it could not be identified through internet or LexisNexis research.

Research by Bivol, together with partners from the International Consortium of Investigative Journalists (ICIJ), established who is behind these two companies.

A dealer of arms that ended in Islamic State…

Heptagon Global Trading is owned by US arms dealer Helmut G. Mertins. It had a branch in the United States, which closed in September 2017.

Helmut Mertins has an interesting biography. He is the son Gerhard Mertins, a German Nazi paratrooper, who participated in 1943 in the Gran Sasso raid of German paratroopers and Waffen-SS commandos of Otto Skorzeny, rescuing Benito Mussolini from prison. After World War II, Gerhard Mertins and Otto Skorzeny were recruited by the CIA. The two founded the arms trading company Merex AG, which secretly exported German weapons abroad for years with the blessing of the German secret services. Juan Manuel Contreras, the former head of the National Intelligence Directorate, Chile’s secret police during the dictatorship of General Augusto Pinochet, claims in his memoirs that Mertins has supplied the Pinochet regime with weapons and helicopters.

Gerhard Mertins died in Florida in 1993. His son, Helmut Mertins, inherited the arms business and was also involved in scandalous deliveries. His company, United International Supplies, founded in 1987, trades in weapons from Eastern Europe. According to a 2017 report by the Conflict Armament Research organization, United International Supplies purchased in 2003 Romanian PG-9 73 mm rockets, a number of other rocket types, and small arms that were found in the possession of Islamic State fighters.

Mr. Mertins Photo from his WhatsApp profile

Mertins’ phone number can be found in public registers and he has a WhatsApp account. Bivol’s attempts to contact him and ask him questions about the Bulgarian transaction were unsuccessful.

Postbank, where the Heptagon Global Trading account has been opened, answered our questions tersely: “the facts and circumstances concerning the balances and operations of accounts constitute a bank secret within the meaning of Article 62, paragraph 2 of the Credit Institutions Act and such information may be disclosed only if the specific requirements of the law are met.” Postbank clarifies that the Heptagon account was opened by Piraeus Bank and closed in 2017 (when the company was also closed), so its successor Postbank had nothing to do with this client.

It is a fact that there is no legal restriction in Bulgaria for banks to open accounts of foreign companies registered in offshore destinations. But in any case, a company with such a business, operating with tens of millions of dollars and whose owner is involved in arms trafficking, should be seriously investigated by both the bank and Bulgarian intelligence.

…An arms dealer associated with “The Baron”

The company Osiris Global Trade, which received USD 31 million from Mertins, has an account in the BDB and it is owned by Alexander Lyubomirov Dimitrov.

Osiris Global Trade Limited was the owner of the Bulgarian company Oro Investments until the end of 2019. Alexander Dimitrov is listed as the owner of this company in the actual owner declaration.

The same Alexander Dimitrov is also the owner of the company Alguns, which has a license for arms trade. Alguns specializes in buying obsolete Soviet-style weapons and ammunition and selling them on the international market in Asia and Africa. This business is thriving alongside the Pentagon’s program to arm Syrian opposition fighters.

Bulgaria is one of the major suppliers of weapons under the US Department of Defense’s Special Operations Command (SOCOM) program, as the Making A Killing investigation revealed. The investigation received several international awards for investigative journalism.

But in June 2015, one of the rocket-propelled grenades delivered by Alguns exploded at the rented by the company Anevo arms testing ground in Bulgaria. The blast killed 41-year-old US Navy veteran Francis Norwillo of Texas, a father of two.

In investigating the incident, the US website Buzzfeed News revealed that the American was working as a subcontractor of a US company named Purple Shovel and Alguns was its partner. Purple Shovel has received US public contracts for USD 26.7 million for the supply of weapons to Syria.

BuzFeed’s investigations also revealed that Dimitrov has a connection to Boyan “The Baron” Petrakiev, a major Bulgarian organized crime figure. Before starting the arms business, Dimitrov was a partner with Petrakiev in the scrap trading company SIB Metal, founded in 2004.

Document showing Petrakiev and Dimitrov were associates in SIB Metal

The US publication examines in detail the relationship between the two and asks why the US government spends budget funds for transactions with suspicious persons and for weapons of dubious quality.

Petrakiev told Buzzfeed in an interview in Sofia that he had introduced Dimitrov to “powerful people” and that it was his connections that helped Dimitrov become a successful arms trader.

Here is the office of Osiris Global Trading Suite 1, 2nd Fl, Sound Vision House, Mahe, Seychelles. Photo ICIJ

Petrakiev boasted that Dimitrov “was nothing” before he helped him.

“Petrakiev is a known criminal, with a lengthy criminal record spanning decades,” Commissioner Yavor Kolev, head of the Bulgarian Interior Ministry’s Transborder Organized Crime Department told Buzfeed. “Among the law enforcement community, he is considered to be a notorious representative of organized crime in Bulgaria.”

Osiris Global Trade also appears in the Pentagon-paid arms scheme, according to a court document from a lawsuit filed in the United States. It shows that Purple Shovel owes millions of dollars to both Alguns and Osiris.

Bivol attempted to reach Alexander Dimitrov but the questions sent to Alguns company e-mail remained unanswered. The company, which has declared net revenues of BGN 300 million over the last five years, is extremely discreet and does not have a public website and contact numbers.

A reporter of Bivol also visited the address where Alguns and Oro Investments are registered in Sofia at 6 “Pop Bogomil” Street, floor 1, apartment 3. This a modest building and there is no designated office of any of the companies. An employee came out of apartment 3, greeted our reporter and was told that Bivol wanted to talk to Alexander Dimitrov. After a consultation in the office, the employee came back and said that a conversation with Dimitrov “would not happen”.

The office of Alguns and other companies linked to Dimitrov is modest

Dimitrov, the boss of the successful arms trading company, has not invested in an impressive office but drives a flashy Maserati, Bulgarian media reported in 2015 after the US subcontractor died at the testing ground in Anevo. The reports also reminded that Dimitrov’s name is associated with other scandals such as the explosions of ammunition in Chelopechene in 2008. Another company of Dimitrov, Alma De, also registered at 6 “Pop Bogomil” Street, was involved in these explosions.

The scandal with the dead American and the publications in the US and Bulgarian press in 2015 obviously have not harmed Dimitrov’s business with the United States. Despite them, he still received at the end of 2016 USD 31 million from a US arms dealer with a controversial reputation. Moreover, it happened with the cover-up of a State-controlled financial institution. In recent years, the BDB, itself, also gained the controversial reputation of a bank that finances oligarchs and politicians with State funds instead of supporting small businesses by granting them low-cost loans.

Silence by banks, institutions and intelligence

The fact that a State-owned bank, established to encourage the development of small and medium-sized Bulgarian enterprises, is moving tens of millions of dollars of a suspicious offshore company owned by a person linked to organized crime is obviously of great public interest. But the BDB did not answer Bivol’s questions sent by e-mail.

In search of answers, Bivol approached the press office of the Ministry of Finance, which is in charge of the BDB. All attempts to obtain information on how it is possible for the offshore company Osiris Global Trade owned by a person with the reputation of Alexander Dimitrov to have a dollar account in the State bank were unsuccessful. Vladislav Goranov from the ruling Citizens for European Development of Bulgaria party (GERB) was the Minister of Finance at the time when the account was opened. Goranov resigned recently amid mass street protests against the GERB government.

A bank transfer of USD 31 million (BGN 50 million) would hardly go unnoticed by the services responsible for national security, especially when it is associated with the strictly regulated and scrutinized arms business. But Bivol’s questions sent to the National Security Agency (DANS), specifically addressed to its Financial Intelligence Directorate, remained unanswered.

Maybe Dimitrov owes this protection to the “influential people” to whom he has been recommended not by anyone, but by a prominent Bulgarian organized crime figure? Whoever they are, apparently their influence reaches the highest levels in Bulgaria since “The Baron’s” partner has been granted the opportunity to bank in the BDB. And, of course, it would be important to find out how many more such offshore and suspicious entities are moving dollar transactions worth millions through the State bank.

Bivol is a partner of the International Consortium of Investigative Journalists ICIJ, which has organized a team of more than 400 journalists from 110 news organizations in 88 countries to examine more than 2,100 documents from the US Department of Treasury’s Financial Crimes Enforcement Network, FinCEN. The reports spanning the 2011-2017 period first leaked to BuzzFeed News which shared them with the ICIJ. ICIJ launched the publications known as the FinCen Files on September 20, 2020, in 108 media outlets around the world. They reveal shocking evidence of the participation of global banks in serving oligarchs, criminals and terrorists.

The author Atanas Tchobanov is a member of ICIJ and part of the team that has been working on FinCEN’s secret documents for 16 months.

Dimitar Stoyanov also contributed to this article.

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