SAME BULGARIAN MAYOR AWARDED CLEANING CONCESSION TO COUNTERPART AND A FRIEND Mind the horns!

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Former Bulgarian Mayor and football legend, Yordan Lechkov, photo by Maria Sabotinova

Continued from Part 1 BULGARIAN MAYOR AWARDED CONCESSIONS TO HIMSELF AND HIS SISTER Част 1 Йордан Лечков възложил концесия на себе си и на сестра си

On November 27, 2007, a contract has been signed between the Municipality of Sliven (City Hall) and the Civil Association (non-profit) “LTB Bulgaria HG,” represented by Evgeni Dobrev Petkov. The latter is seen as a close friend of Yordan Lechkov. This contract arranged the removal and transportation of waste and the snow removal in Sliven Municipality until 2022. Cleaning activities were assigned for the next 15 years to a newly established company, under the Responsibilities and Contracts Act, while the usual practice is to award similar contracts for 4-5 years.

The contract was announced before the European Commission with an estimated value of 30 million levs without VAT (Value Added Tax). The former mayor of Yambol, who is convicted on first instance – Georgi Slavov – has been listed as representative of “Luxkom” LTD. The company owns shares in the Civil Association “LTB Bulgaria HG,” which is registered in the apartment of Georgi Slavov’s father-in-law in the city of Sliven at the address – apartment building 53-B-Z, “Dame Gruev” street. Yordan Lechkov and Kosta Dobrev Petkov, brother of Evgeni Petkov, emerge as connected parties in the association OFC Sliven 2000, a reference in the DAXY business registry shows. Later, namely Kosta Petkov replaced Georgi Slavov (who was elected mayor of Yambol in 2007) as manager and partner in “Luxkom” LTD.

Several companies submitted bids for the “cleaning” tender. Two of them are leaders in this business in Europe – Saubermacher, Austria and Scheele, Germany. They create consortia to participate in the tender in the Sliven Municipality. Scheele was disqualified because the company’s offer was signed by a proxy and not by the manager of the company. This alone cannot be ground for removal from the tender, and is easily fixable. But the selection commission, which included municipal councilors, gave the “tasty bite” to Lechkov.

A consortium was created between the municipal Sliven company “Utilities” LTD and Saubermacher Austria (cleaning over 100 cities in the Central European countries). At that time “Utilities” LTD had experienced staff, one of the most modern in Bulgaria auto-parks with cleaning equipment; it was certified and was working under programs for effective cleaning. This consortium was ranked only second.

The bid of the newly created consortium “LTB Bulgaria” was given 90 points and the leading in Europe company Saubermacher got 80 points. A few months after the auction, the municipal company “Utilities” LTD was liquidated by a decision of the municipal council, chaired then by Desislava Taneva (now member of the centrist Citizens for European Development of Bulgaria party, GERB). The value of the assets of “Utilities” was estimated at over two million levs. However, these assets were sold for under 500 000 levs. Meanwhile, Saubermacher appealed the tender’s proceedings before the Commission for Protection of Competition. The appeal was, however, dismissed.

After winning the concession, “LTB Bulgaria” began doing waste and snow removal for over 300 000 levs per month. Before 2007, according to people familiar with the case, the same activities were performed by “Utilities” LTD for less than 50 000 levs per month.

Who Is Really Cleaning Sliven?

On April 26, 2012, the Sliven Municipal Council decided to terminate the contract with the company “Consortium LTB Bulgaria HG” LTD. A notary call for termination was sent on May 21, 2012. It turns out that after the entry into force of the contract, the rights and obligations under it were transferred to the one-man company with the same name – “LTB Bulgaria” – again managed by Evgeni Petkov. In reality, the non-profit association was created to meet the legal criteria in the tender. The profit company at the time of the procedure was indebted and had no equipment whatsoever. Its assets had lower value than its liabilities. This, however, did not prevent it from exercising the rights and obligations under the contract between the municipality and the non-profit association. Invoices for waste transportation billed by the profit company to the Sliven Municipality, not by the non-profit one, are evidence for this. Somehow “Consortium LTB Bulgaria HG” turned out to be the contractor in the cleaning tender. During this period, probes in this contract were conducted by the National Audit Office and the Public Financial Inspection Agency (PFIA), which was headed in Sliven by Galiya Tchenkova, GERB’s candidate in the 2009 general elections, who still works in the same institution.

Arbitration

In 2013, the Civil Association “LTB Bulgaria HG” launched a legal suit against the Municipality of Sliven for 10 million levs in lost profits because of the early termination of the cleaning contract. The case was heard before an emergency arbitration court – ad hoc at the Bulgarian Chamber of Commerce and Industry, as the contract had clauses for handling trade disputes in this way. The lawyer of “LTB Bulgaria” was Trifon Balevski, husband of the judge from the Supreme Court of Cassations, Emanuela Balevska. The same lawyer had represented the Municipality of Sliven when Lechkov was mayor. He was contracted in the claim of “Bull – Gate” LTD of late councilor Radostin Roussev against the Municipality of Sliven for damages from the wrongful termination of the contract for the execution of the “water cycle” of Sliven. The Municipality of Sliven was ordered then to pay damages of over 5.5 million levs, although defective construction was established. Lawyer Balevski received a fee of 160 000 levs from the Municipality of Sliven for losing the arbitration case.

This time, in his new capacity, lawyer Balevski is against the Sliven Municipality. For a while, Trifon Balevski has been partner with Krasimir Uzunov Asenov in “Focus – Nunti” LTD. The company is the business entity of the commercial media brand “Radio Chain Focus.” Krasimir Uzunov, known in political circles as the “Lieutenant” and agent “Zawadzki” from the former Communist State Security, was a leading PR in Yordan Lechkov’s election campaigns in 2003, 2007, and 2013. Lechkov’s political opponents argue that Uzunov was the person providing “media comfort” for the former mayor of Sliven. The arbitration case against the Sliven Municipality is listed as No. 1 in the inventory of the fatal 2013. Now, the ad hoc court must rule on the amount of compensation for the non-profit association over the early termination of the cleaning contract. During the arbitration proceedings, a claim was filed before the Sliven District Prosecutor’s Office for violations of the Public Tenders Act in the contract. Another hearing is scheduled for June 13, 2014, when Yordan Lechkov is expected to appear as witness.

What Will the Court Rule?

No contradiction has been established in all identified cases of conflicts of interest involving Yordan Lechkov. The current Act for Preventing Conflict of Interest does not affect the puzzle of the imaginative national darling, Yordan Lechkov. No conflict of interest was established in the numerous claims before the Commission for Protection of Competition, the Supreme Administrative Court and PFIA. Only the ad hoc institution is yet to rule in the case. The Prosecutor’s Office, on their part, must answer was there a syphoning of the Sliven Municipality through the cleaning contract.

Yordan Lechkov: There were no connected persons. The Wolf (nickname of shady businessman Rumen Gaytanski, whose company with the same name – “Wolf” – was cleaning the capital Sofia until 2009 – editor’s note) is now in charge of the cleaning due to political party affiliations.

Bivol: Hello Mr. Lechkov. I have a few questions for you about the terminated waste removal contract of “LTB Bulgaria.” Are there people connected to you among the managers of the three companies? According to a reference in DAXY, Kosta Petkov, who replaced Georgi Slavov as manager in “Luxkom” LTD, is associated with you through OFC Sliven?

Y.L.: It could not be a connected person. I understand, but there is no way it can be a connected person.

B: How would you comment on the fact that the deal, which was sealed during your term, is terminated?

Y.L.: Currently, there are arbitration proceedings. The contract was terminated without any grounds. While I was in office, I sought long-term solutions for the lighting and the waste removal and optimization of the operations. I have made long-term contracts; there was a public tender as it was required under the law. There were no connected persons. The law, as it was at the time, was adhered to.

B: Why were Saubermacher and Schteele disqualified from the cleaning tender?

Y.L.: They were dropped because they did not offer attractive prices. The company, which has the most attractive prices, wins. And it has been doing its job for 4.5 years, and with the new mayor taking office, the contracts were terminated.

B: Is it true that the company, which is now in charge of the waste removal and transportation, is doing it at a cost that is cheaper by about 100 000 levs per month?

Y.L.: It is not true. The cost now is 280 000 levs, provided that before the waste was removed 4 times a month, and now it is two times. And all the villages were cleaned before. The amount was previously 330-360000 levs per month with optimized multiplicity and optimized villages – cleaning, removal, and transportation and now it is 250 000 per month, with much less frequency of cleaning. Here’s the catch, you know. Ostensibly less, but in fact it turns out that there is more money in costs.

B. What is the company that now does this waste removal?

Y.L.: Connected with the Wolf again, over party affiliations.

B: Do you expect that the concession for the stadium will be attacked?

Y.L.: I do not expect anything because there the work has been done not 100%, but 1100%. But who knows at the end; we see how the waste removal contract was terminated… but he will have to pay back now (referring to the current mayor of Sliven, Gen Nikola Milev). And the cost will be quite high. They have now launched arbitration proceedings against him.

B: As far as I know, they are not over?

Y.L: Yes. It is a partial case, for about 5 million, but it will probably go to 10-12 million (for loss of profit).

B: There are claims of conflict of interest in the concession for the stadium. Is that correct?

Y.L.: No conflict of interest. I can tell you since you are asking. The football club was registered as nonprofit. And I was the mayor. According to the law, I should transfer my business, whether to my wife or my sister. Anyway, my wife and I were the owners of the football club 100%. There was no way I could give up the concession. When we signed the contracts, I, as mayor, took leave, so that my deputy could sign, and he had the right to replace me. I was also president of the football club. This was 2004. There was no law on conflict of interest then. The law was passed in 2007 or 2008, when we joined the EU. Anyway, now I’m 100% owner of both, this business and of this football club and of this concession. There is no conflict of interest. My money, which I have earned from football, I’ve invested in the hotel complex “Imperia” (Empire). There is one company – MM9. All this money that was used to build these things is my own personal funds. And one day I can ask these companies to give them back to me as an individual entity. This is a matter of accounting procedure.

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