Son of Bulgaria’s Ex-Director of EU Rural Subsidies Audits Guesthouses

The scandal of the guesthouses, which turned out to be houses and hotels of children, in-laws and other relatives of empowered persons is growing. It has emerged that Antoan Porozhanov, son of the former Director of the State Fund Agriculture (SFA), the body in charge of distributing the European Union (EU) funds, and current Minister of Agriculture, Rumen Porozhanov, who has approved the scandalous houses, is among the auditors of the SFA. Deloitte’s audit has reassured Brussels because in 2015 it has not detected the massive abuses that are now shaking the political establishment.

The guesthouses scandal is a sequel to #ApartmentGate and began with Bivol’s revelation of a luxury villa of the now-former Deputy Minister of Economy Alexander Manolev, built with European money. The approval of the subsidy happened during Rumen Porozhanov’s term as head of the SFA, when Alexander Manolev was Deputy Minister of Tourism. Manolev resigned and is charged with crimes against the financial interests of the European Union.

After Brussels raised eyebrows because of this, mass inspections of all guesthouses were launched in Bulgaria, including by the Prosecutor’s Office, the SFA, the Ministry of the Interior and the National Revenue Agency (NRA). Until now, the inspections have led only to another resignation – that of the Deputy Director of the SFA, Ivanka Bagdatova-Missova. It turned out that her own phone number has been listed as the one for contact for a guesthouse built under the European Union (EU) Rural Development Program (RDP) by the Mayor of the resort village of Yundola, Mehmed Mustafa Mestan.

On Monday, April 30, Bivol published several scandalous cases of guesthouses registered to straw persons behind whom are mayors of the ruling party Citizens for European Development of Bulgaria (GERB), of the party mostly representing the Muslim minority – Movement for Rights and Freedoms, (DPS), municipal councilors, and even a person connected with serious organized crime. So far, there is no information that the people in question have lost the confidence of the parties they represent. There is no information about charges pressed against Yanaki Chervenyakov, a former senior employee of the SFA, who registered a guesthouse to his mother-in-law. Bivol’s investigation into the guesthouses, which grew into a detailed database of all houses built with subsidies under the RDP and their owners, started in 2016 precisely with this case. This investment in data journalism now pays off with exposure of more and more guesthouse scandals.

Dad distributes money, son audits

In 2014, Bulgaria risked losing EUR 1.65 billion under the RDP due to the lack of a Certifying Authority. Three public procurement contracts, launched by the former Minister of Agriculture Dimitar Grekov and chosen by an auditor, were declared illegal. The then-caretaker Minister of Agriculture Vassil Grudev carried out the direct negotiation procedure, which led to the selection of Deloitte as the auditor.

For the audit of direct payments and the RDP, Deloitte received from the State budget over BGN 0.5 million. At the same time, Antoan Porozhanov had been an auditor of Deloitte, where he had started work in 2012, as he, himself, states on LinkedIn and on the website of his company “IRP Management”.

The Deloitte report presented to the European Commission in 2015 is not known for containing data on massive violations of the RDP. Clearly, this concealment of the outrages with the allocation of European money by the SFA has been successful and has reassured Brussels.

Subsequently, the professional career of Porozhanov Jr. has advanced in the field of agriculture, through consultancy companies, which consult beneficiaries of the SFA. Bivol learned that because of the potential conflict of interest, a signal has been submitted to the Committee for Combatting Corruption and the withdrawal of illegally acquired property (KPKONPI) (sic). It has been closed on grounds of the wise conclusion that Antoan Porozhanov is his father’s son, but there is nothing wrong with him advising and auditing the programs his father manages and from which he allocates billions.

Currently, the former head of the SFA Rumen Porozhanov, who has approved the financing of most guesthouses of politically exposed persons (PEPs), does not intend to resign as Minister of Agriculture. In his defense, he points out that checks have been carried out and everything is legal on paper. Such are the conclusions of the lenient report of Deloitte, where his son Antoan Porozhanov has worked.

Or, as all PEPs that have gotten into the ugly scandal with the cheap apartments, undeclared terraces and free villas say: “Everything is correct, everything is legal, there is no conflict, no abuse”.

Meanwhile, Bulgaria is set on the path to the new tranche of European funds that Porozhanov Sr. will distribute and Porozhanov Jr. can again audit. Why not? The boy is obviously inherently competent and has already gained experience.


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