Two plus Two Make Two or How the Bulgarian Regional Ministry Manipulated Wild Beach Concession Mind the horns!

According to George Orwell, “freedom is the freedom to say that two plus two make four. If that is granted, all else follows”. And what is corruption? One of the answers – to calculate the result from a public procurement procedure as “two plus two make… two“, and use this result to award the contract to the most convenient bidder.

The emblematic for Bulgarian civil society wild beach “Coral” was saved from development due to the mobilization of this civil society, protests and a series of publications in international media. It had to be given to a concessioner under special conditions, the so-called eco-concession, announced by the Ministry of Regional Development and Public Works in the spring of 2015. Once it became clear that the same people who wanted to pour concrete on “Coral” submitted a bid for the concession and won it, the procedure was terminated by the Council of Ministers.

Bivol’s investigation reveals the real reason for the termination of the eco-concession. An internal audit of the Ministry of Regional Development and Public Works has established an extremely scandalous manipulation of the tenders. 404 square meters were calculated as 200 square meters by the Tender Commission and this was crucial for the ranking. In order to shove this blunder under the rug and protect the concessions boss, the Council of Ministers canceled the entire eco-concession procedure and announced a new one.

This was followed by an attempt to rent the beach, but it was stopped after a new civil protest. Leasing the beach for five years, as the Ministry of Regional Development and Public Works plans, can actually hand “Coral” to thugs for an indefinite period of time. There is nothing that could prevent the winning bidder from filing endless appeals contesting the concession and keeping the beach more than five years as tenant. And during all this time he/she can dispose of it without any environmental restrictions, “planting” it with a huge number of umbrellas and restaurants.

Two and two makes two

The irregularities around the concession would have remained secret, however, on November 4 the Commission for Protection of Competition (CPC) published a decision that shed light on an extremely scandalous fact. The Concession Commission at the Regional Ministry made errors in simple arithmetic calculations and used them to rank first in the tender for eco-beach “Coral” the bid of “Commerce Project”, a company owned by Sava Choroleev.

Choroleev is a former business partner of Dimitar Nikolov, Deputy Chairman of the ruling Citizens for European Development of Bulgaria (GERB) party and Mayor of the Black Sea city of Burgas. What connects them are huge profits from the most scandalous corruption land deal – 130 decares adjacent to “Coral” were taken from the Tsarevo Town Hall for $7 per square meter and sold for 300-400 euro per square meter (see the note at the end of the text).

The Concession Commission prepared a report for the Minister Regional Development and Public Works, Lilyana Pavlova, and a draft decision of the Council of Ministers which designated “Commerce Project” LTD as the concessionaire of the beach “Coral”. The report was filed with entry number 91-M-1835 / July, 3, 2015, CPC wrote in its decision.

Three days later, on July 6, 2015, the Director of the Directorate Concessions at the Ministry of Regional Development and Public Works, who is also Chair of the Commission in charge of organizing and conducting the tender, submitted to the Minister an annex to the report, “pleading guilty” and admitting that neither one of the submitted bids had met the requirements.

A financial analysis was commissioned to the Directorate “Financial and Economic Activities” of the Ministry, which was prepared on July 13, 2015. It showed how in the offer of “Commerce Project”

404 square meters were calculated as 200 square meters

“In their offer for the functional location of service and activities areas under article 3.1-3.6 of Decision № 275 / April 2, 2015, and for the movable objects and elements of the technical infrastructure, the bidder proposes that movable objects take an area of no more than 0.50% of the active area, namely 202 square meters, and the proposed sites are as follows:

– Fast food restaurant № 31- 101 m2;

– Additional commercial area 101 m2;

– Fast food restaurant № 32- 101 m2;

– Additional commercial area 101 m2

————

Total 404 square meters”

Here, the overall area of the facilities is equivalent to 404 square meters, which is 1.01% of the total area of the beach. The discrepancy between the proposed and the calculated percentage may lead to a change in cash flows,” is written in the report of Directorate” Financial and Economic Activities”, cited by CPC.

How four times one hundred and one made two hundred and two? The change in cash flows in this case does not matter. The following two facts are important here – 404 square meters are more than the maximum of 400 square meters provided in the conditions of the concession and the bidder had to be disqualified. Secondly, the offer was ranked first because of the adopted 0.50% instead of 1.01%.

Instead of appointing a probe in #WHO at the Ministry of Regional Development and Public Works has made the calculations and benefited a particular candidate, and then forward the findings to the prosecution, the Ministry concealed the facts, while Lilyana Pavlova pressured the Council of Ministers to revoke the scandalous concession. The entire State machine was mobilized to coordinate the cover-up between several ministries.

The Ministry probably relied on the fact that since the tender was secret, nobody would ever find out about the scandalous manipulation. The scheme, however, emerged thanks to the very Choroleev who appealed the suspension of the concession with CPC, prompting the latter to reveal in its decision all the details of the procedure.

We will repeat the facts here to make clear how simple this scheme was. Choroleev’s company offered 404 square meters of movable objects, which is 1.01% of the area of the beach. This exceeds the maximum 400 square meters (1%) and the bidder should have been disqualified. But at the opening of the offer, the Concession Commission at the Ministry announced that the 404 square meters were 200 square meters or 0.5%. This was recorded in the report and this figure turned ultimately crucial for ranking Choroleev’s company first in the competition.

This case also raises suspicion of a crime linked to document forgery, committed by an official under articles 308 and 311 of the Penal Code. It is not clear why CPC failed to alert the Prosecutor’s Office, after it noted and described the above facts.

Now, let’s imagine that the tender in question is not for 60,000 levs a year, as is the amount for the concession of “Coral”, but it is for hundreds of millions to build a highway. A Commission is appointed; it opens envelopes; reads bids, but somewhere in the calculation, some helpful clerk has decided that “two and two make two” and the right person wins the contract.

Who is behind “Commerce Project”?

A check of Bivol in company records showed that until August 7, 2015 “Commerce Project” was owned by the company “SVS” with Executive Director Sava Choroleev. The main shareholder of “SVS” is “Victory AD” in which the main shareholder is… “SVS”. After August 13, 2015, the company was transferred to a shell company from Plovdiv.

“Coral” – the biggest ever corrupt land deal on the Black Sea coast

As journalists from Bivol revealed in a series of investigations, the deal “Coral” was negotiated between the “red” (Socialist) Mayor Petko Arnaudov and the former “blue” (right-wing) coordinator of the party Union of Democratic Forces (UDF) Dimitar Nikolov in the latter’s office in the sugar factory “Victory”. Nikolov and Arnaudov agreed to sell 130 decares for pocket change against UDF votes in Tsarevo in favor of Arnaudov, who was elected mayor. After the elections, the municipal council voted to sell the land to a company behind which stood Choroleev, Nikolov and Milko Milkov from “PonsStroy” for just 7 US dollars per square meter and a promise to invest. The promise was never fulfilled, and a few years later, the land was sold at a price of 200 to 400 euro per square meter. The make-believe “investors” scored a profit in the amount of tens of millions of euro. Meanwhile, the local UDF activists, who supported Arnaudov, received lucrative waterfront municipal property as needy persons and built their hotels on it.

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