Bulgarian judiciary – a crate of “bad apples”

А “special” judge declared a company bankrupt over its debt and appointed a not-so-random trustee, who quickly sold the company to offshore owners. Subsequently, the Court held that there was no debt, but the company was never returned to its rightful owner. This classic scheme of theft of a company gained particular notoriety over the demarches of the French Ambassador in Sofia.

The case “Belvedere” and the “bad apples”

“Bulgaria is not a safe place for foreign investors. Each company can be stolen with the help of the “bad apples” in the Bulgarian judicial system,” said French Ambassador H.E. Xavier Lapeyre de Cabanes three weeks ago live on bTV. The diplomat directly announced that there has been an attempted theft of the French company “Belvedere”, operating in Bulgaria. Mr. De Cabannes explained that the scheme has been implemented by declaring bankruptcy of the companies “Domain Menada” and “Belvedere Distribution”, owned by the largest French company “Belvedere” (with an annual turnover of 900 million euros).

The case is an emblematic example of the flaws in the harshly-criticized system of “random” distribution of legal cases in the country. The case in question has been distributed to and tried by the quite-infamous judge Rumyana Chenalova. The statement of the French diplomat forced even the Supreme Judicial Council (SJC) to act. “There is a general problem in the judiciary; there are “bad apples” everywhere. This is a backstage game of who knows what groups, parties and companies and connections between them,” said the Ambassador.

A judiciary that generates crime

Theft of companies has become a vicious mafia practice in Bulgaria and it did not start yesterday. The criminal schemes have been tested; the teams have been formed. In them, the “captain’s role” is always assigned to acting magistrates – judges and prosecutors. They in turn know that they have serious cover-up by the higher echelons of the judiciary, directly from the SJC, and political backing in the Parliament, which secures minimal risk of exposure and sanctions for them.

The theft of a company or a business is planned very carefully, to the smallest move, by all parties involved in the robbery. The victim is doomed in advance, since there is no opportunity for own defense, and since the institutions in charge of avenging the rule of law, are, themselves, involved in the crime.

The French screamed “bloody hell” once they felt in turn the sinister grip of the mafia, acting through the State. However, they cannot even begin to imagine to what the ordinary and honest Bulgarian business has been subjected for decades. The reaction of H.E. Monsieur de Cabanes is an unpleasant surprise for the local mafia magistrates, but they view it as a “storm in a teacup”. They will solve the French case “piece by piece”; will rebuke Chenalova and everything will continue as before, simply because the system in Bulgaria is criminal at all levels, and there isn’t and has never been political will to change it. Of course, they will now examine the companies identified for pillage more carefully, so as not to become lame ducks again, affecting diplomatic interests. This is some sort of a feature of the Bulgarian business climate.

The scheme – one example

In such attacks for appropriating companies, they typically look for some dispute, which is then used for judicial reprisal.

The company “Bulcons” JSC was created with the assets of the former large enterprise for the production of lyutenitsa (chutney from tomatoes and peppers) and other vegetable products – the plant “Partizani” (Communist Guerilla Fighters) in the town of Parvomay. It was sold by the State to one of the so-called management-employee companies (RCD) in solid economic condition. Immediately after the privatization, claims for the ownership of the plant were suddenly made by the former head of the scandalous company “BulgarLeasing” – Dimitar Tadarakov. Tadarakov is known as one of the largest credit millionaires of the transition period after the fall of the Communist regime. He is listed and described in the so- called “White Book” of bank bankruptcies as a person involved in the draining of 11 large companies.

Widely known for his very close ties with the party largely representing the Muslim minority in Bulgaria – Movement for Rights and Freedoms, DPS, and personally with Ahmed Dogan, lifetime honorary chairman of DPS, Tadarakov was appointed during the term of the government of the Three Party Coalition, after strong political lobbying, as head of the institution, which allocates the largest share of EU funds – the State Fund “Agriculture”. This period remains in history with the freeze of EU funding under the SAPARD program over major abuses established by OLAF.

The dispute between “Bulcons” and Tadarakov was over a claim for four million German marks. Tadarakov claimed that “BulgarLeasing” was to receive money from the plant because of an old deal from before the privatization. The claims of “BulgarLeasing” were, however, rejected by the Court as no documents and contracts to prove them were found. Moreover, the Court ruled that Tadarakov’s “BulgarLeasing” was not the successor of the State company “BulgarLeasing” that was to be considered a guarantor in a deal for equipment conducted many years ago.

Without having any serious evidence for the claims, the last “State” Director Nedelcho Kichukov launched himself into action, probably in exchange of some serious motivation. Without the permission of the principal – the Ministry of Industry and of Minister Alexander Bozhkov, Kichukov signed a “promissory note” for four million German marks in favor of Tadarakov’s company.

A legal battle followed and “Bulcons” proved that Tadarakov’s “BulgarLeasing” was registered in Vienna and in fact was different from the State-owned “BulgarLeasing”. Thus, it appeared that the case was closed. The plant “Partizani” was privatized by “Bulcons Asset”. The group purchased a 70% stake and 30% remain owned by the State, represented by the Ministry of Industry.

However, in 2001, suddenly another document signed by Tsvetan Tsvetkov – manager of the subsidiary “Bulto” – emerged “from nowhere”. “Bulto” is owned 50/50 by “Bulcons” and “Meditsinska Tehnika” (Medical Technology) Sofia. “Bulto” is the owner of a production line for packaging ketchup. The manager signed without the knowledge and the consent of the owners, who have appointed him, without being entitled to it and without any grounds and documents. This signature, however, unlocked again the vicious legal proceedings for the seizure of the enterprises. Tadarakov was again on the move.

The protagonists – a “special” judge and a “special” trustee

The timeframe has been profitable. The production was in excess of the demand of the domestic market and was exported by the ton. The profits amounted to millions of US dollars. The plant had stabilized and had become a major employer in the Parvomay municipality. It gave work and bread to about 1,500 families.

But then, the persistent claims of Tadarakov became the reason for the launch of insolvency proceedings against the thriving company that refused to just give some millions and self-drain voluntary. The case was assigned to Judge Vesselin Dimitrov, who has been specifically sent to the Plovdiv Court to take over it. Dimitrov in turn appointed as trustee for the company Siyka Petrova. She is a former investigator in Sofia and

wife of another “magistrate-hero of our time” – Petio Petrov, a former prosecutor and now Head of the Sofia Investigation Services, who became especially popular by the euphonious nickname – Petio The Euro.

Years later, Judge Vesselin Dimitrov became known as a defendant in the case of the draining of shopping center “Iliyantsi”. Then-Chief Prosecutor Boris Velchev proudly brought during his first visit to Brussels in 2006, 40 pages if a case with the indictment against administrative Judge Dimitrov over major embezzlement.

“Iliyantsi” is another story, but also indicative of the tough old and current connections. The termination of the case for the draining of “Iliyantsi” against Veselin Dimitrov went through judges Svetlin Mihailov, Georgi Kolev, Petya Kruncheva and Vladimira Yaneva, the site “Court Reports” revealed. There is more, Vesselin Dimitrov is now the owner of a computer firm “Stone Computers”. After the scandal “Belvedere”, which exposed to the extreme the problem with random assignment of cases, the Head of the SJD Georgi Kolev pushed to have this company provide the new software for random distribution.

Let’s go back to the case Bulcons. Then, in 2001, the judge had the exclusive power to subjectively decide whether Tadarakov had a real receivable in the amount of four million German marks from the former State enterprise, or was it all a bluff for its appropriation. He decided that the claim was completely valid and appointed Siyka as a trustee.

As early as the 10^th day at the post, trustee Siyka asked for an order for the dismissal of the plant’s management.

Engineer Petko Dimitrov, former Executive Director of the plant says the following: “I was dismissed as well. After my removal, it was around noon, a group arrived, tool the disks of the computers and the rest is not even something I want to remember. All available production was sold out. It was worth about four million levs. The taxes and the insurance were not paid. No one knows where the money went. The accounts in Central Cooperative Bank disappeared. I began to litigate.”

The terminated manager appealed and won the case at two consecutive instances and at the Supreme Court of Cassations (SCC). When he returned, he was shocked because he realized then that the property of the plant was meanwhile cashed, although at two consecutive instances the Court made it clear that the insolvency case was illegal! Ten days before the SCC rule, the “special judge” Vesselin Dimitrov has signed and Siyka has cashed. They sold the whole plant for the symbolic 350,000 levs, while according to the management’s data only the finished goods in the warehouses have been worth over four million levs. Separately, they got hold on the substantial bank accounts of the enterprise. When Engineer Petko Dimitrov went with the final rulings to take over the documentation, everything had already disappeared. With the “go ahead” of the judge, the trustee has speedily sold everything without waiting at all for the ruling of the last instance.

Judge in, judge out

The plant was acquired by an offshore company. It operated through the Plovdiv-based company “K & K Bulgaria”. The company is registered with activity “wholesale of electrical household appliances and lighting, radio and television sets”. This did not prevent it, however, from acquiring and managing one of the largest enterprises in the food industry on the Balkans. The manager of the company Stoil Arabadziev, in a conversation with a reporter of Bivol, admits he was appointed “under pressure” by the judge who sold the food plant – Vesselin Dimitrov. The pressure was applied through Stefan Fachev, a person who was informally present in the management and dictated its decisions. The said Stefan Fachev was close to the judge. Years after the events in the seizure of the plant in Parvomay, both were convicted as accessories in property fraud. The verdict of the SCC in 2012 was three years suspended sentence for an offense committed 13 years ago. Fachev and Dimitrov have fraudulently taken the home of Todor Todorov in the Sofia district “Hadzi Dimitar”.

The judge and Stefan Fachev have other exploits as well. Both were accused in the above mentioned major case in the draining of millions from the shopping center “Iliyantsi”. Before entering the judicial system of the Republic of Bulgaria, Dimitrov has been a CEO there, at the time of the unlimited power of the gangsters from VIS in the shopping center. Fachev, on his part, was owner of “Telecommunication Systems”. One of the “tricks of the trade” was the following – the shopping center “Iliyantsi “sealed a contract with “Telecommunication Systems” for the lease supply of computers for the huge amount in the time of the great inflation of 350,000 US dollars. Naturally, the amount was not paid and Fachev sued. The Sofia City Court imposed at first instance a garnishment on the warehouses and the land beneath them. The garnishment is dated December 1997 and was imposed at the request of the company “Telecommunication Systems” JSC over the 560,000 levs overdue from “Iliyantsi”. The payment for the lessor has been secured by Vesselin Dimitrov with a “promissory note”. After its removal, shopping center “Iliyantsi” started to pay contributions, but “Telecommunication Systems” had nevertheless claimed rights under the order… Such well-known scam, indeed!

“Among other things, this is his style of work; under the same scheme he owns a second facility in Iliyantsi. These are the former warehouses of Korekom which he again acquired through proxies before 2002. In the end, a case was launched on February 25, 1998, for the illegal privatization of the Sofia shopping center Iliyantsi,” said Stoil Arabadziev.

According to documents in the case, in the period 1994-1997, Vesselin Dimitrov and his accomplices – Peter Doldurov and Stefan Fachev – drained from shopping center “Iliyantsi” a total of 86,543 million non-denominated levs (together with interest) and three charges were brought against them under Article 203 of the Penal Code, which reads “for large-scale embezzlement, representing a particularly serious case, the punishment is imprisonment from ten to twenty years“.

At the time, Peter Doldurov and Vesselin Dimitrov were executive directors of shopping center “Iliyantsi”, while Stefan Fachev was their dummy person and managed the companies that Doldurov and Dimitrov used to siphon the State enterprise and to prepare it for illegal privatization. The case has not ended with convictions due to the expiry of the prescription period. For years, it purposely simmered in the prosecution and the Court, until all deadlines for the issuing of an effective verdict expired. This is also a traditional scheme of our judicial system for sweeping serious crimes under the rug. This did not preclude, however, the immediate appointment of defendant Dimitrov straight from Director of “Iliyantsi” as a judge and moving him especially to Plovdiv, where he became the only one to be entrusted with the bankruptcy cases. Guess who was Chairman of the Plovdiv Regional Court at that ominous time? The current Chief Prosecutor of the Republic of Bulgaria – Sotir Tsatsarov.

I.e., before the scam with “Bulcons”, the Judge and Fachev already had long experience in joint suspicious and criminal cases. The dummy firm, buyer of “Bulcons”, was quickly replaced with another offshore company – owner – “Euro Atlantic Projects”. It was represented by the registered in Bulgaria “Bulgarian American Industrial Holding” based in the city of Petio The Euro and trustee Siyka – Vratsa. Fachev’s sister, Stanislava Petrova, with maiden name Facheva, participated in its management. The theft of a profitable venture is a fact.

At the beginning, the activity was done by the company “Zharava 77” with the same sister as manager. Then, a majority stake in “Bulcons” JSC was nominally sold to Ivo Georgiev Nikolov. He currently owns about two thirds of the capital of the enterprise. It is not clear with what means he acquired the offshore companies, but it is clear that the same person was a former driver of the “Iliyantsi“ Director Vesselin Dimitrov. And the sister of his buddy Fachev – Stanislva – is in the management of the joint-stock company. The duo Dimitrov-Fachev continues to operate full steam. On a separate note, the trade representation of “Bulcons” is now registered on 3, “April 20” street in Sofia. This is also the address of Vesselin Dimitrov’s law firm. Several of the companies of Stefan Fachev are also registered there. After he was finally removed as judge from the Sofia Administrative Court by the SJC in 2008, the magistrate started a successful law practice. Regardless of the convictions for fraud, his lawyer’s rights remained intact! However, everyone in the enterprise knows who the real owner behind the dummy individuals and companies is, witnesses reveal.

Offences under “legal cover-up”

According to lawyers, all officials, such as the Judge, the Trustee and all subsequent judicial panels have clearly acted within the scope of their procedural obligations. But as a final effect, the first instance decisions led to a wrongful result. In the given situation, the judge has legally appointed the trustee. The trustee has legally sold all the assets of the company. Only that it has been proven later that the shattered company did not owe anything to those who claimed that they were entitled to ask for its bankruptcy. Thus, under the guise of legal procedures, Bulgarian legislation provides opportunities to carry out illegal activities.

The next Court instances have ruled categorically that Dimitrov’s decision on the bankruptcy was contrary to the evidence in the case and revoked it. But the revocation did not lead to counter effect and legal justice. The actions of the trustee and judge Dimitrov were not revoked for being vicious. The property was stolen. The trademark of the unfairly convicted company was not recovered either. This is a stark example of the absurdity of the entire judicial system in Bulgaria. Likewise, it makes it possible to appropriate real estate, cars, and as it is obvious, entire companies, factories and brand names.

Final (open)

The Parvomay District Prosecutor’s Office had defined Siyka Petrova’s actions as crimes under Article 227 g, in conjunction with Article 227 b, Paragraph 1, Item 1 from the Penal Code. The texts relate to malpractice in bankruptcy proceedings. The law provides for imprisonment of up to 3 years for “causing deliberate bankruptcy”.

The prosecutors, however, refused to launch criminal proceedings against the wife of The Euro, despite the identified offenses, because… the five-year prescription period had expired.

Some of the biggest criminal offenses from the Bulgarian transition period were practically legitimized through this classic pattern of expired prescription. Bivol has exposed this vicious loophole in its investigations in illegally acquired large land plots on the southern Black Sea coast by shady lawmaker Yordan Tsonev and architect Kalin Tiholov, together with related persons and dummy companies. (Link)

Dimitrov is currently registered with the Sofia Bar Association. The former magistrate came recently into the spotlight for being the best man at the weeding of the Member of the Parliament from the Bulgarian Socialist Party (BSP) Dimitar Gorov and BSP’s PR Janet Pashalieva.

Business operator “Bulcons” JSC, behind which the said persons with a “rich biography” stand in the shadows, received several months ago a special privilege from the Agriculture Ministry for a product with “geographical indication” – Parvomay. This led to a monopoly in the production of the famous Parvomay lyutenitsa, and many other products in one of the most fertile areas of Bulgaria.

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