People in Power in #GPGate Scheme for Theft from Public Procurement

by Екип на Биволъ

A company owned by the wife of the Mayor of Bulgaria’s border town of Svilengrad, Georgi Manolov, has supplied concrete for the construction works of GP Group and the associated with it consultants in the same town, an investigation by Bivol reveals. The adult day care center, built by the consultants, is among the projects financed with European Union (EU) funds that are investigated by the Prosecutor’s Office.

Company that built the sports center in Svilengrad is under investigation” is the headline of an article in local media, informing the town’s residents about some details from the #GPGate scandal.

The said multifunctional sports facility in Svilengrad has been repeatedly highlighted as an achievement of the Mayor of Svilengrad, Georgi Manolov. The facility, costing over BGN 5 million without VAT was opened personally by Prime Minister Boyko Borisov on September 15, 2014. The formal occasion was the start of the school year, but Borisov’s visit was actually part of his election campaign for the upcoming snap parliamentary elections. Borisov, the leader of the party Citizens for European Development of Bulgaria (GERB) won them on October 5.

The facility is funded with European money under the Rural Development Program (RDP). The project is listed as “Creating conditions for sports, recreation and leisure for the citizens of the Svilengrad Municipality”. The municipality is the assignor.

In addition to the sports center, the project includes the construction of two new sports playfields. Over BGN 5.5 million without VAT has been invested in the construction of the sports facilities. The company GP Group has been chosen as the contractor.

An important moment in the history of the sports center is the choice of a consultant after the signing of a contract for granting financial aid under measure 321 of the RDP 2007-2013. The contractor under the contract is Rila Consult. Manolov’s Town Hall has paid BGN 21,600 for its services.

This company is a key component in the two previous parts of the investigation #GPGate (see here and here). According to the documentation provided to Bivol, precisely Rila Consult is the central distributor in the network of consulting and construction companies that manipulate, win and carry out projects with European and government budget funding for BGN hundreds of millions.

The scheme: “I give something to you, you give something back to me”

Mayor Georgi Manolov has commissioned to GP Group to build a sports center with a standard design which has been already done and used by the company for the needs of the Plovdiv University “Paisiy Hilendarski”.

The sports center in the second largest city of Polovidv was also opened personally by Boyko Borisov two years earlier, in 2012. He then stated that the construction had cost about BGN 3 million and the center was a standard project that could serve as an example for other mayors. They had been asking for BGN 6 million for centers of this type, while the one in Plovdiv cost half of this money, said the Prime Minister. According to the Public Procurement Agency (PPA,) the cost is almost BGN 3.5 million without VAT.

The Mayor of Svilengrad has been obviously impressed by the standard project, but not by its low cost. For the design and construction of a sports center identical to the one in Plovdiv, he has paid to GP Group 2 million more. This 75% increase hardly comes from the two additional playfields that are included in the public tender.

The construction company even streamed a video to show how the construction process was running. It shows concrete mixers and a concrete pump painted in specific company colors. The same construction equipment can be seen on the site of the company STELMAN.

The partners in it are Elena Stoyanova Manolova and Stoyan Georgiev Manolov – the wife and son of Mayor Georgi Manolov.

We approached STELMAN for comment. We asked whether they had provided concrete for the sports center and other projects funded with European money. The wife of Mayor Manolov commented that her company had indeed delivered high-quality concrete to the sports center while GP Group had been building it. Manolova pointed out that her company has been delivering concrete under the best conditions in the area and has a long track record.

It is a fact that STELMAN has been in existence since 2004 and in recent years has had stable sales revenues of between BGN 2 and 3 million per year.

However, the owner of a competitor company in the town told Bivol that no one but the Mayor’s relatives could sell concrete for the big projects in the municipality of Svilengrad. The concrete trader said he initially tried to keep prices slightly below those of the competition. His tactics, however, failed. He even tried to sell 50% cheaper, but without success. All major entrepreneurs, for one reason or another, had chosen to buy from STELMAN.

While this was happening, the company had been also successfully absorbing European money under “Innovation and Competitiveness”. The project is called “Energy Efficiency -a precondition for sustainable development” and is worth more than BGN 1.1 million. STELMAN was one of the 95 approved bidders out of a total of 334.

The scheme is simple: Mayor Georgi Manolov commissions the construction to GP Group, which then buys concrete from his wife’s company, under the expert guidance of Rila Consult.

In most European countries, such a situation is considered a serious abuse of power. In our country, however, the Mayor is hardly having nightmares about the Committee for Combatting Corruption and the withdrawal of illegally acquired property (KPKONPI) (sic) and a dramatic arrest by it. On paper, he has not directly given a public contract to his wife. She only supplies concrete under such a public contract. Manolov commissions construction to GP Group and they simply decide to buy from his wife. Everything is clean and fair.

Friendly (Prime Ministerial) consolation

Elena Manolova is not trying to conceal the fact that STELMAN is participating in the carrying out of another project financed by the EU. She remembers a three-story building next to the sports center. It is owned by the non-profit (NGO) “Friendly Consolation” – Svilengrad.

Adult day care center “Friendly Consolation” in Svilengrad

In its very first story on #GPGate, Bivol described how this same project had been invoiced at inflated prices, twice higher than the real ones. This is about BGN 1 million from the EU funds paid under the RDP by the State Fund Agriculture (SFA) to the Association with the same name – “Friendly Consolation”. Its founders are consultants from the circle around GP Group and their relatives. The same circle has absorbed European money for three similar projects in the towns of Razlog, Kavarna and Etropole.

Bivol asked the SFA for information on these projects. We wanted to study the documentation, but they refused on grounds that irregularities had been found after our first publication and all projects had been handed over to the Prosecutor’s Office.

On paper, the building, which is already completed and functions as a retirement home, has been built by Evrobuild Bulgaria. At that time, the company was run by Maya Hristova.

Maya Hristova is “that same Maya” who is known for being close to “popular investor” Ginka Varbakova, who attempted to privatized the power utility CEZ through her company “Inercom”. Half a year ago, our investigation into the relationship between Maya and Ginka led to persons from Boyko Borisov’s most inner circle (here). Media publications identify her as “the Maya from “half of Sofia knew about Maya” from #Yaneva Gate and the story about the Prime Minister’s love affairs, told by Judge Vladimira Yaneva. Hristova also has financial relations with one of the owners in the circle of consulting companies from the GP Group network – Lilyana Zorteva. The latter is the owner of Evro Build Group, which in the past has belonged to Maya Hristova.

The consultant for the “Friendly Consolation” project is another company from the corrupt hub emerging from #GPGate – “Evroprogramconsult”.

The contract for the construction and assembly works under the project “Day center for the elderly “Friendly Consolation” Svilengrad” is from September 8, 2013 and is even present in a lawsuit in the Plovdiv Administrative Court. The case has been filed on a complaint by the Association after the National Revenue Agency (NRA) Plovdiv has refused to recognize the right of “Friendly Consolation” to deduct a tax credit of about BGN 37,000 from invoices by Evrobuild Bulgaria. The court has revoked the NRA’s audit act and has ruled in favor of the Svilengrad NGO.

The project funded by the SFA is modestly mentioned in the tables with the commissions which the consultants have given to officials and government employees. In January 2014, a commission of BGN 10,000 has been paid to “SFA Svilengrad”.

Commission of BGN 10,000 for “SFA Svilengrad”

The documents that Bivol possesses show that just from this project, funded with BGN 902,314, the consultants have netted the solid amount of BGN 366,144 plus the building itself which, after the expiration of the five-year period of use as “adult day care” can be sold and turned into a cozy hotel. In that sense, their profit is even 100%.

The consultants’ interest in sites in Svilengrad continues even after the construction of the sports center and the adult day care. In 2016, another company from the group has won a public procurement contract for energy survey of nine buildings against BGN 57,840 with VAT. The survey’s progress is evident from an informal interim site report, which is in a project plan and schedule file for projects in 75 municipalities across the country, shared between Petar (Petar Elen Petrov) and Tanya (Tatyana Delibasheva), who are the leading figures in the consultancy group. This is how:

announced public invitation to a survey of 10 residential buildings on January 21, 2016; submitted a bid with the firm Energy Efficiency Project on February 1, 2016. The bids were opened on February 2, 2016. Protocol on the work of the commission issued on of February 10, 2016; winning bidder – Energy Efficiency Project. Documents sent and a contract signed by us were sent on February 18, 2016, to the municipality. Four buildings are to be surveyed, but will not be filed until March 15, 2016, because there is a problem with two of them, one has some collapsed parts and the other – an antenna for which State aid declarations are needed. Stanislava has been on location; she says that there are no construction problems. (Alex). Four coordination reports were sent to the municipality. We are still working on the other six buildings in (the city of) Shumen. The term of the contract is until April 7; backdated protocols for issuance and acceptance will be prepared.

Everything leads to (the town of) Pravets

Although on paper Evrobuild Bulgaria is an official builder, the one actually building is the Burgas-based company Gea Stroy. This is evident from the parallel and secret accounting books which Bivol has and from the portfolio of the company itself, which reports on its site every 3-4 months work on rough construction, finishing works, plumbing, electric and PV installations.

The “profit” from four European projects is 43%

Gea Stroy is present as a real contractor in the table with the earnings from the four identical projects for adult day care centers financed by the EU, which Bivol published in its previous article on the affair GP Gate.

It is noteworthy that Gea Stroy is working on the “Golf Complex” and the “Country Club” in the town of Pravets, which belong to the Zlatev family. Valentin Zlatev is the boss of Lukoil Bulgaria. Gea Stroy is also working on Lukoil gas stations, the Lukoil Thermal Power Plant (TPP), the “Obelya” metro station on “Lomsko Shosse” boulevard in Sofia, sites of the Lidl supermarket chain and even on the residence of the Russian Embassy in Bulgaria.

These are all sites assigned to GP Group, and Gea Stroy works there either as a subcontractor or with a contract for the lease of people and equipment. The company’s participation in the construction of the sports center in Plovdiv – the same one and the cheap one – about which we already wrote here, is also noteworthy. Gea Stroy boasts that it has also participated in the construction of the sports center in Svilengrad. Of the 114 sites in the company’s portfolio, the work on 44 of them has been commissioned by GP Group, GP Stroy and Via Construct Group, which are connected through their owners.

Only one site has been commissioned to Gea Stroy directly by Lukoil Bulgaria. In 2017, the company has won a public tender for building refurbishment in Svilengrad.

Ivan Sazdov and Pavlin Parishev

The address of the Association “Friendly Consolation”, at least according to the Trade Register, is 4 “Dragan Tsankov” Str. in Svilengrad. The hotel complex “Romantica” is also located there. It was home to one of the casinos of the Turkish businessman Sudi Özkan. The latter is undoubtedly one of the biggest gambling bosses in Bulgaria. He owns luxury hotels and casinos in Sofia, Plovdiv and Svilengrad. According to local Svilengrad media reports, while Sudi Özkan was the owner of the hotel, the restaurant, the lobby bar and the SPA center in the hotel complex, the owner Pavlin Parishev managed the night bar and the tennis courts.

Bivol approached Parishev to find out details of how come and why “Friendly Consolation” is located at the address of the “Romantica” complex. To our surprise, however, Parishev abruptly stated that he did not know of any such association being housed at this address. According to him, this must be some mistake, because the hotel has never received any correspondence for such a legal entity.

Pavlin Parishev is among the most influential businessmen in Svilengrad. The fuel business is just one of his many activities. About ten years ago, he managed to lease one of his gas stations in Svilengrad for 15 years to the Greek company Eco. The local people remember that prior to that the site had been already working as a franchise of Lukoil Bulgaria. Another gas station in the outskirts of Svilengrad, owned by Parishev, is leased by Evrooil.

The Parishev family also owns hotel “Paris”. It is owned by the company Eltrans, which is managed by Nikolay Parishev, brother of Pavlin. The nominal owner of the assets is Elena Parisheva – wife of Nikolay.

“Paris” is one of the sites that STELMAN (the company of the mayor’s wife) boasts in its portfolio as a site for which it has supplied concrete.

Pavlin Parishev does not hide his closeness with Ivan Sazdov – owner of the Tennis Club in the Sofia suburb of Bankya, whose name is often involved in corruption scandals. They are both avid bikers and belong to bicker clubs. Pavlin’s father – Kostadin Parishev, who passed away about two years ago, was one of the most trusted people in Bulgaria of Turkish businessman Fuat Guven. Parishev was also very close to Boyko Borisov when he founded GERB. At a later stage, their relations fizzled.

Undoubtedly, Parishev, Borisov, Sazdov and Zlatev are people whose lives and interests intersect – politically, in their businesses and perhaps in personal relations and these relationships work best under certain conditions. Or as Boyko Borisov says:

“When a good mayor occurs and the government wants to help the region – things are happening,” this is how he stressed Georgi Manolov’s merit and contribution to the new sports center in Svilengrad, according to a report by the news agency BTA.

And when the government helps a powerful construction company and its satellites, things are also happening – for the mayor’s family, for the Prime Minister’s friends and for many others in the corruption hub revolving around EU funds and public procurement.

On the main photo from left to right: Pavlin Parishev, Georgi Manolov, Boyko Borisov

See also:

#GPGate: Consultancy Companies Involved in Grand Corruption with EU Funds and Public Procurement

#GPGate: Cash, Offshores, Political Parties, Russian Oligarchs and Alleged Drug Lord’s Wife

EC, OLAF, Europol: Stop the theft of EU funds in Bulgaria

The investigation is part of the project “Exposing fraud in EU-funded projects in Romania and Bulgaria” by Bivol and Rise Romania funded by the European Commission’s IJ4EU Fund and the European Centre for Press and Media Freedom (ECPMF).

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