Israelis Sue Bulgaria in Washington after Bulgarian Court, Trustees and Companies Linked to Influential Politicians Ruin Their Business

by Екип на Биволъ

The owners of Vitosha Resort 2000, Moti Ramot and Rami Levy, have filed an arbitration claim against the Bulgarian State at the International Center for Settlement of Investment Disputes (ICSID), part of and funded by the World Bank Group, headquartered in Washington, D.C., in the United States. The notice of registration of a request for arbitration proceedings by the Acting Secretary-General for the institution had been published on December 27, 2018.

According to unofficial information obtained by Bivol, the claim is for over BGN 100 million. The Israeli investors had filed it against Bulgaria after having alerted Bivol in an interview as early as in 2016 that they had been the victim of a blatant attack by companies close to powerful people, and their business had been seized through deliberate insolvency cases similar to those in the “Belvedere” scandal.

The two Israelis acquired Vitosha Resort 2000 in 2007 and invested through the company in a luxury residential development in the Sofia suburb of Simeonovo, at the foot of Vitosha Mountain. They commissioned the construction to Ultrastroy. The development was built but Ultrastroy claimed additional payment. Vitosha Resort 2000 refused on grounds of poor construction quality. Instead of having the dispute legally resolved under the law on business claims, set out in the Civil Procedural Code, the builder initiated low-cost bankruptcy proceedings against the investor Vitosha Resort 2000/ case 5019/2013 on the docket of the Sofia City Court.

Court and trustees “finish” the investors

In the process, the court literally “finishes” the Israelis by not recognizing their investment as a valid claim, but only allowing the claims of Ultrastroy.

At the request of Ultrastroy, Hristina Stamova has been appointed as trustee. Since the beginning of 2017, she began selling the apartments in the development for EUR 500-600 per square meter, which was three times cheaper than the market prices in the area. Bivol’s check in the Property Register established that buyers of apartments and garages in the development included companies close to the ruling party Citizens for European Development of Bulgaria (GERB) and emblematic figures such as Mariyana, the wife of infamous businessman Mario Nikolov and Hristina Stamova, herself.

This is the same Hristina Stamova who was appointed conservator of the collapsed Corporate Commercial Bank (CCB) after its closure and after it was placed under special supervision before declaring it bankrupt. This is the time when the infamous loan assignments begun, causing the melting of much of the outstanding loans. This enabled certain companies to “clean up” their long indebtedness to CCB and reduce the insolvency mass. The former owner of the Bank, Tsvetan Vasilev, himself, said in TV interviews that the collapse of the lender was staged in typical gangster style through political means.

Hristina Stamova was later transferred as conservator to the bank “Victoria”, which had been acquired by CCB shortly before its collapse. Together with her colleague Bozhidar Arshinkov, Stamova was accused by employees of the Bank of syphoning it through shell consulting companies and lawyers (see here). Protests demanding her replacement followed. Reports, published later, showed that in six months Stamova and Arshinkov received a personal remuneration, determined by them, amounting to BGN 165,000.

Sub-contractors of WHO?

Ultrastroy Ltd. is a trading company whose sole owner is Ivan Borisov Borisov, 43. Ultrastroy is a partner and subcontractor of the associated with controversial lawmaker and media mogul Delian Peevski  company Vodstroy 98 in a number of major public procurement tenders. Ultrastroy has worked on the reconstruction of the south wing of the National Art Museum, known as the Bulgarian Louvre. The company has also been a subcontractor in the repairs at the Sofia Central Railway Station, where the main consortium has been between GLAVBOLGARSTROY and Vodstroy 98.

Outside public procurement, Ultrastroy is working on reconstruction and repairs of private sites related to tobacco manufacturer Bulgartabac Holding, such as the factory for cigarette filters “Yuri Gagarin”. In a series of changes in ownership, the factory has passed from the State-owned “Bulgartabac” to offshore companies associated with local high-ranking politicians. In several investigations, Bivol explored evidence of corruption behind the privatization of Bulgartabac pointing to current Prime Minister Boyko Borisov and to Peevski.

Ultrastroy is also indebted with BGN 8 million to the Bulgarian Development Bank (BDB), but, at the same time, it has been chosen to build the Bank’s new headquarters. Furthermore, the company is a partner in a consortium which is tasked with the construction of the most expensive segment of the third line of the Sofia subway.

The on-paper owner of Ultrastroy, Ivan Borisov, told one of our reporters that he had been deceived by the Israelis as early as the moment of signing the contract. Apartment building #10 had been much larger than the rest of the buildings, and that is why at the last stage of the construction, Borisov had claimed an additional BGN 1 million, which had actually caused the conflict, according to him.

Ivan Borisov then explained the fact that his company is involved in some of the most significant construction works and public procurement in the country together with companies associated with Peevski as “normal business”. He also said he did not know Delyan Peevski.

It is a curious coincidence that a company named Vitosha Resort exists since 2017 and owns the emblematic Hotel “Berlin”, considered to be Peevski’s leaving quarters. The former name of Vitosha Resort is Walton Associates-Eco. In 2010, Walton Associates-Eco sold to Balkan Media Company of Irena Krasteva, who is Peevski’s mother, several apartments and the garage in the hotel building.

But besides Peevsky’s corpulent shadow, the saga with the Israelis brings to light a link to the circles close to Boyko Borisov. It emerges through the company Blick Trade to which Ultrastroy had assigned part of the claimed amount. Its manager is

Samir Iskander Francis (Ibrahim) – a partner of Borisov from the gangster years

The Iraqi national has been known in Bulgaria since the dark mafia times in the 1990s, when he was a partner of Bulgaria’s current Prime Minister in their joint company Prayhim.  A classified report of the National Security Services (NSS) reveals that the case with the capture and killing of Bulgarian truck drivers in Iraq is actually connected to outstanding disputes over money from the traffic of amphetamines and Borisov had a direct bearing on the mafia affair, but at that time as Chief Secretary of the Interior Ministry.

Later, Samir became a business partner of the infamous gangster Zlatomir “The Beret” Ivanov. In March and August 1998, Samir Francis registered two companies with Zlatomir Ivanov: “New Bingo” and “Z.E.S.” in which he was manager.

Bivol described these connections in its investigation “Boyko Borisov – from the town of Cherven Bryag to Iraq”. The scandalous facts are confirmed in a classified diplomatic cable of the former US Ambassador in Sofia, John Beyrle, (here) and the Congressional Quarterly article on the criminal past of Bulgaria’s current Prime Minister, exposed by US journalist Jeff Stein (interview with Stein here).

People from powerful mafia circles tell stories about Borisov’s exceptional trust in Samir, who has been his own personal driver and bodyguard before the start of the former political career. After Boyko Borisov became Mayor of Sofia, the business of the Iraqi as property developer flourished. He has earned millions through his companies “Stroy Commerce 2004” and “Bildko”, beneficiaries of scandalous swaps orchestrated by the Sofia Municipality.

Apparently, Samir Iskander was not just anybody, because he has also become son-in-law of General Stoimen Stoimenov, a former adviser on security issues of former President Rosen Plevneliev. Stoimenov is as a former functionary of the Central Committee of the Bulgarian Communist Party.  The general’s son-in-law and former partner of Borisov and Zlatomir Ivanov has also had a joint company “SIT-1” Ltd. with notorious Russian mobster Konstantin Tziganov, head of the criminal group Uralmash, who in 2011 was expelled from Bulgaria for being a threat to national security. The Russian further became famous for his photos with Boyko Borisov at a charity soccer game. 

A “Belvedere” repeat

So far, there is no information about the Israeli investors’ arguments before the ICSID and whether they include claims that the Bulgarian court is influenced by powerful political and business connections, but the course of the case certainly raises doubts about a scheme in favor of Ultrastroy and Blick Trade.

The judge, who has allowed hearings in the case and has presided over it, is Hayguhi Bodikyan, whose name became known in the case “Belvedere”. In the course of the proceedings, judges and trustees have been replaced and dismissed; nevertheless their actions have remained irrevocable. Namely, trustee Veselin Vangelov has reported that there was a danger of property plundering (for the most part real estate with 24 hour security and video surveillance), and on these grounds has requested  to declare the company insolvent. Judge Bodikyan has seen this trustee report as a sound reason to announce the insolvency, preventing any possibility of recovery. Moreover, the temporary trustee has immediately unlisted the company under VAT, which has inflicted serious additional damage to the investors and problems with the Bulgarian National Revenue Agency (NRA)

Nonetheless, the most scandalous fact in this absurd court saga is that the judges have refused to recognize the rights and the expenses of the main creditors of Vitosha Resort 2000 – the Israeli businessmen, but have ruled at the same time that their company is over-indebted because of their loans. Only Ultrastroy has been accepted as a claimant.

In the framework of the arbitration case, the Bulgarian State is going to have to explain a very simple fact: How come three court instances – the Sofia City Court, the Sofia Administrative Court, and the Supreme Court of Cassations cannot provide a logical explanation as to how the housing development was built and the origin of the money used to pay Ultrastroy for the construction works?

International arbitrators will also learn that in Bulgaria a company owner of 160 apartments, a restaurant, a squash court, and a SPA center with no obligations to credit institutions or investors can suddenly become insolvent and over-indebted; that investors can lose their investment and their assets can be sold for nearly nothing, but to some not so random people.

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