The hidden data in the declaration of the now-former Bulgarian Agriculture Minister Rumen Porozhanov for 2018 turned out to be unique. There is no such case of data concealment among all the declarations posted on the website of the Committee for Combatting Corruption and the withdrawal of illegally acquired property (KPKONPI) (sic), a check by Bivol showed. These are 77,923 declarations for the period 2008-2018. Most of these are from the time when the declarations were published on the website of the National Audit Office (NAO), but the system is the same.

Bivol has been maintaining for years a public search engine for the declarations that is updated every year. To find out what happened with Porozhanov’s declaration, we extracted the current data from the KPKONPI website, analyzed the source code of the declaration, and looked for another similar case among all 77,923 declarations. There is no such other case. To make possible an independent verification of these claims by IT experts, we provide the declarations extracted from the KPKONPI site in one file here.

Why is Porozhanov’s declaration unique?

The analysis of the source code of Porozhanov’s declaration clearly shows data that the properties and the meadows had been declared in the internal database of KPKONPI, but the information had been subsequently deleted.

The declarations are submitted to the KPKONPI server in the XML language with an additional decl1.xsl style file, formatting the display of fields and tables. For each table there is something declared, or “I have nothing to declare” is displayed. This text is not present in the xml file but is inserted at the end of each table with the instruction: Declared = “False”. If Declared = “True”, the text is not printed.

In Porozhanov’s declaration, the three tables “Property rights and limited property rights”, “Agricultural land and forests” and “Transfer of properties in the previous year” are in Declared = “True”, but the rows in which acquisitions and sales must be described are empty.

This means that in the KPKONPI database, from which the source XML code is generated, there is information that data had been declared, but they may not be displayed online after additional interference, at the request of the declarant.

In addition, it is alarming that citizens have no information on the requested interference and the hidden data because hardly anyone would go about looking at the source code to find that there is concealed declared data.
After downloading a current copy of all available declarations on the KPKONPI site, we checked whether that they contain a code where the tables are marked as Declared = True but contain no information other than the field description. The only such case is with Porozhanov’s declaration.

This fact is somewhat assuaging because it shows that KPKONPI does not generally apply such secret deletions, but on the other hand, it demonstrates that Porozhanov’s case must be very special. He, himself, claimed to have declared everything but had mistakenly listed his spouse as a person with whom he cohabited on a family basis.
Up to now, KPKONPI has not removed the deletion of the data despite Porozhanov’s assurances that he has requested that all information about the properties acquired and sold by his wife in 2017 become public.

The information on the (not) wife of Porozhanov’s business is highly discrediting

The inspection of property deals of Veska Porozhanova, Porozhanov‘s wife or not, reveals staged deals at unrealistic prices as well as doubts about tax evasion on a particularly large scale, which makes the theory of accidental deletion of data in the online declaration very improbable.

Bivol established that Veska Porohanova had acquired two apartments for BGN 240,000 leva, which she had sold with a profit of BGN 160,000. She has acquired 14 decares of meadows in the Sofia suburb of Bankya for only BGN 2,180 in material interest entered in the Property Register. In the hard copy of Porozhanov’s, published by Sega daily, this meadow with a very attractive location in the popular Sofia suburb and resort is assessed at BGN 95,075.

Here, it is important to note that the parcels were bought by Veska Porozhanova from her own company “Private investment projects” Ltd. This, by virtue of legislation, means a property deal between related parties. The situation with the acquired two apartments and a garage in Sofia, which had also been purchased from another company of Veska, named “Armar Corporation General Technical Cooperation” Ltd, is identical.

What is scandalous is that all four deals are entered with prices which have nothing to do with the market ones. Such deals, especially when it comes to “connected parties”, like this specific case, are categorically defined as a violation of the Bulgaria law. According to it, financial relations between connected parties under conditions that affect the amount of the taxable financial result must be subject to market principles. Therefore, connected party transactions should be carried out at market prices, otherwise, they are prosecutable.

There is also the doubt that there might be additional damage to the budget by the Porozhanov family by failing to pay VAT. In the hard copy of the declaration, one of the two apartments acquired by Veska Porozhanova is declared for BGN 90,720. She resold it the same year for BGN 152,555. As her profits exceed BGN 50,000, she should have registered in a seven-day period under the VAT Act. Whether she has done this is yet to be established.

In the other cases from “ApartmentGate”, where such discrepancies and bogus prices were found, the Prosecutor’s Office, KPKONP and the National Revenue Agency (NRA) launched probes and audits. In this case, the NRA should also carry out an audit of both, Veska Todorova Porozhanova and her two companies, through which unrealistic and suspicious transactions had been done to determine whether taxes to the State budget had been paid and whether they had been correctly declared in the tax returns of the natural and legal persons.

Update: Minister Porozhanov resigned from the post on May 14 and his resignation was accepted by Prime Minister Boyko Borisov.

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