After two publications (see here and here ) and Bivol’s inquiries under the Access to Public Information Act (APIA) about projects through which companies associated with Mario Nikolov absorbed millions, the institutions stopped his money and started probes. This emerged from the response under APIA of the Ministry of Economy and a response of Rumen Porozhanov, SFA Executive Director, to a question asked by phone.
As Bivol announced late last year, companies associated with the businessman, who became infamous in the past with the affair “SAPARD”, involving draining of pre-accession European Union (EU) funds, have applied and won bids for four projects under the EU Operational Program (OP) “Competitiveness” and four projects under the Rural Development Program (RDP) Measure 121 “Modernization of Agricultural Holdings” for 2007-2013.
So far, he has received about 5 million levs under Measure 121 where he participated with four companies: SAMI MEAT BG, HOLID, NICK FOOD BG and AGROVAL BG. These are projects to build duck and turkey farms in the village Zhivkovo near Ihtiman.
Porozhanov: “There are no ducks”
A check of Bivol on location before the Easter holidays found that the poultry farms have been built, but are unfinished, and there are no ducks in them. Even the mandatory signs indicating projects financed with EU funds are missing.
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SFA refused information under APIA on the four projects, citing a company secret. But then, the Executive Director of the Fund, Rumen Porozhanov, confirmed by phone for Bivol that a probe has started and irregularities have been established. In particular – there were no ducks in the poultry farms.
However, according to Porozhanov, the projects were fully eligible for financing and have not been investigated for links with Mario Nikolov, who, as a violator of SAPARD, should be subject to special attention by paying authorities.
The first publication of Bivol on the topic is from October last year, but the SFA acted only after the scandal with Yanaki Chervenyakov and after the raid in the Fund by agents of the National Security Agency.
Why OLAF failed to see violations?
Meanwhile, it became clear that OLAF does not see anything wrong in Mario Nikolov’s projects.
“In 2015, OLAF conducted a preliminary analysis of the available information regarding this specific matter. After this analysis, in early 2016, the office decided not to open an investigation as there was no suspicion of fraud or irregularities justifying the opening of an investigation” says the official statement on the EU anti-fraud office.
The readily available information, published at the end of 2015, reveals that Mario Nikolov’s scheme involves the same companies that popped up in the “SAPARD” case, only renamed and with new managers. Nikolov’s dummies were redeployed with one nominal manager becoming a nominal owner and another owner – manager, showed a check of Bivol in the Trade Register.
The Ministry of Economy did not know about Mario as well, but launched a probe
Mario Nikolov’s companies have received several millions under OP “Competitiveness” as well. These are the companies EUROFRIGO STAR, INTELLIGENT FOOD SYSTEMS, AVISPAL and SIKAN.
They have received advance payments for “investments in energy saving refrigeration equipment” in the amount of over 4.8 million levs. This was also confirmed by the Ministry of Economy after a request by Bivol under APIA. However, the remaining 2 million levs have not been disbursed because the Ministry of Minister Lukarski has started probing the case on their own initiative… after Bivol’s request under APIA.
“We have received requests for final payments that were approved, but the funds have not been paid since the information in the submitted request for public information is seen as a signal about a problem that is being checked,” says the Ministry’s answer to the request under APIA.
Evidence regarding these projects and the connection of companies of Mario Nikolov with computer scientist Dimitar “The Flash Drive” Kerelov, who was in charge of the Sofia City Court (SCC) servers, have been public for several months. Apparently, however, the time is ripe now, after Prime Minister Boyko Borisov announced a new course to combat corruption, which was suggested to him by the so-called “London Mirror”.
“Until receipt of the information in the application for access to public information № 94-A-99/15.04.2016, the Managing Authority (MA) has not received a signal on irregularity in the projects mentioned in the application, and therefore they have not been examined for the presence of irregularity within the meaning of paragraph 1, article 1 of the Supplementary provisions of the Regulation laying down procedures for the administration of irregularities in funds, instruments and programs co-financed by the European Union.”
The answer to the question whether a check for double billing or delivery of equipment that does not meet specifications has been conducted, reads as follows:
“The above-mentioned projects include final accounting reports. In the course of the probe, it was established that the assets specified in the relevant contracts for financing correspond with those that have been delivered. A check for double funding in the database of MA of OPC has been performed and it did not find evidence of double funding. ”
The investigation of Bivol, which refers to documents and sources, speaking on condition of anonymity, reveals step by step the process of committing fraud with EU funds.
The scheme is old, tested and applied almost without variation since 2007. In order to obtain EU funding, a company should participate with its own funds. They are supplied through loans from First Investment Bank (FIB) with which Nikolov has a privileged relationship.
The money from the bank loans is received by the companies that have won projects. Mario Nikolov stands behind each of these companies.
The beneficiary companies pay suppliers and construction companies behind which also stands Mario Nikolov.
If the project is for the supply of machinery and equipment (under OP “Competitiveness”), the supplier imports cheap Chinese machines and produces invoices with German rates. When it comes to construction (duck farms under the RDP), the construction works prices are inflated.
The European subsidies are paid on the basis of the inflated invoices and the companies use them to repay the loan from FIB with interest.
The machines, the new buildings and 20% of the total amount awarded for the project go to Mario Nikolov and his partner in this scam – Dimitar Kerelov. Kerelov is known as “Mitko The Flash Drive” from scandals in the Sofia City Court, where he maintained the servers at the time when the Court’s boss was the now-“finished” Vladimira Yaneva and the greatest abuse of the random allocation of cases was happening.
The scheme differs from the SAPARD one only in that the delivered equipment is not old and repainted from Germany, but it is new and it is imported from China.
The supplier in the affair SAPARD was the company “Hranmehanika Engineering”. In 2008, it was renamed “Technofood” and it is once again the supplier for all projects of Mario Nikolov. Dimitar Kerelov, who is a beneficiary of EU funds with the company “Intelligent Food Systems”, has also worked for “Technofood”.
However, in its response to the request under the APIA, the Ministry of Economy denied knowledge about the supplier of the equipment being connected with Mario Nikolov and Dimitar Kerelov, although the data are public in the Trade Register and in the SAPARD court file.
In reality, this means that neither OLAF nor the Bulgarian authorities have any mechanisms to audit and counter the recurrent abuse of EU funds, despite the noisy revelations and convictions in Germany in this same SAPARD affair, which continues to be quoted until today as an example of problems in the Bulgarian judicial system.
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