• About
• Latest Posts

Последвайте:

Николай Марченко

Николай Марченко е зам.-главен редактор на "Биволъ" от ноември 2022 г. Той е журналист, специализиран в икономически и международни теми. Работил е във в.“Сега“, бизнес портала LiveBiz.bg. Бивш кореспондент в София е на авторитетния руски в.“Коммерсантъ“.

Последвайте:

Latest posts by Николай Марченко (see all)

• Auditor reports: Monstrous corruption involving EU funds
  

  UPDATE: OVER 0.5 BLN BGN OF EU FUNDS EMBEZZLED THROUGH SOCIAL MINISTRY

  - 30 March 2023
• CORRUPTION SCANDAL WITH SUSPICIONS OF ESPIONAGE
  

  BULGARIAN GOLDEN PASSPORT. SCANDAL IN URUGUAY WITH A COLONEL FROM THE RUSSIAN INTERIOR MINISTRY

  - 2 March 2023
• Bivol’s findings - ignored for months
  

  Bivol exposed our secret weapons in Ukraine; Petkov and Ninova denied it

  - 19 January 2023

Financial abuse valued at a couple hundred million euro have been exposed at the Ministry of Labour and Social Policy. The embezzlement is primarily tied to funds from different European Union programs awarded under the law for public procurement. The procedures, however, were conducted in gross violation of the law. The scheme was exposed when two thorough audits were performed in 2021 – 2022. The embezzlement took place over 5 years. The Ministry for Labour and Social Policy’s responded to Bivol’s investigation and their full response can be read here.

Dragomir Nikolov

The first audit resulted in 6 prosecution files, signals to the Public Financial Inspection Agency (PFIA) and the European Anti-Fraud Office – OLAF.

Despite the data suggesting theft on a monstrous scale, the Prosecutor’s Office of the Republic of Bulgaria has stalled the investigation, which has been put in the hands of the National Investigative Service. The problem is that the individuals accused of the crimes have not been removed from their positions at the ministry.

Their termination from active duty pending the conclusion of the investigation is imperative when such drastic breeches have been discovered. This is due to the danger of tampering with witnesses and destruction of incriminating documents, say lawyers familiar with the case.

To give an example, the former director of the Agency for Employment – Dragomir Nikolov was just transferred to a different sinecure position – chief of the Agency for Employment for the district of Russe.

Nikolov has been investigated on every pre-trial material produced up to this point. This extends to the present, according to information seen by Bivol.

“The destruction of evidence and obstruction of the investigation continues.”

It is hardly a coincidence that during this period of audits, the chief secretary and primary driver of the process was Kremena Kalcheva, who was brought by Nikolov from Russe.

Today she has risen to the rank of deputy head of the Agency for Employment and has been given the powers to control all new projects. The absurdity of such a decision can only have one explanation…(!)

Kremena Kalcheva

Wiping of evidence and witnesses

Between August 2022 and the end of the year the Ministry of Labour and Social Policy fired around 130 employees without concrete reasons, sources within the ministry say. Former minister Georgi Gyokov (BSP), who was part of Petkov’s coalition cabinet, even enquired officially as an MP about the reasons for such a dramatic wave of layoffs but did not receive an adequate answer. Asking the same question to the current active caretaker minister Lazar Lazarov, Bivol was told that “The claim  about drastic layoffs is emphatically not true. In the interval 3.08.2022 to 31.12.2022 the Ministry of Labour and Social Policy has dismissed 13 employee. ”

Whether employees were removed because they stood in the way of the embezzlement scheme can be easily ascertained by an independent check of the ministry’s human resources archives. It is a fact, however, that the Director of the Agency for Employment Smilen Valov, who got the ball rolling on the audits and was informed about the embezzlements was fired suddenly without warning and without a clear motive.

“According to him, his expulsion was undertaken because he was inconvenient.”

The only motive is to have no employees who can validate information on the corruption scheme in the ministry. Valov maintains that his firing is paradoxical, as he was able to achieve the best employment rates and lowest unemployment figures for all time since statistics began, despite the economic crisis and the war in Ukraine. The explanation by minister Lazarov does not sound serious and is almost comical:

“In accordance with the law for public administration, the CEO of the Agency for Employment is part of the executive branch and his position can be terminated without warning by the authority that appoints him, according to its judgement (article 19 a, paragraph 2 to 3A). This notice of termination is special and the judgement has no relation to the conditions for dismissal stipulated by the Code of Labour. It is decided holistically and doesn’t require a motive.

Despite this possibility, the current leadership at the Ministry of Labour and Social Policy has been cooperating with OLAF, monitoring and assisting the work of the Agency for Employment and more specifically its director for over 5 months. During this period the Agency for Employment didn’t undertake the necessary action to guarantee swift organisation, mobilisation and coordination between the different levels and branches and didn’t undertake the adequate actions needed with regard to changes in the labour supply and demand and the use of financial instruments planned under the Recovery and Resilience plan to guarantee the growth and modernisation of its operations.

Moreover, up until his termination from duty Smilen Valov did not undertake the creation of a plan of action to implement the recommendations of the above-mentioned audit report.”

Protocols of the Public Financial Inspection Agency (PFIA), which is currently burdened with checking the discussed breeches,show that Smilen Valov was a driving force in the investigations and it was through him that the reports were sent to PFIA and OLAF.

A more concrete reply on the subject from Lazar Lazarov was never received. His press centre referred us to official replies to parliamentary questions on the subject but added that:

they did not have them in their possession and had no idea where they could be found(!)

When we searched for the suggested reference, it became clear there were no answers, just many questions to the minister that still remain.

Polina Marinova

Here are some of them:

“On the 12th of December 2022 Minister Lazar Lazarov gratuitously fired the head of the Agency for Employment Smilen Valov and appointed Polina Marinova in his stead without citing a reason for the change. 

This change is unacceptable for everyone working in the system, and not just them. Reaction from everyone including syndicates and clients of the Agency for Employment, with whom it has been discussed, have been negative, as is visible even from the pages of the Ministry of Labour and Social Policy. Delete them as much as you want – they are still an indication of the fact that this firing was not the result of professional reasons”.

The current minister, Lazarov, was previously deputy minister for many years during the term of Plamen Oresharski, Borissov’s second cabinet, Ognyan Gerdzhikov’s interim government, Borissov’s third cabinet, and in the interim government of Stefan Yanev… He has taken up the position 5 times in the last 7 governments, including that of Kiril Petkov. For this reason

he has been christened the “Eternal Minister of Labour and Social Policy”

Projects for 500 million BGN and an EU funding program – marred by corruption

The audit report’s excerpt has revealed breaches, some of which are stunning:

– applicant companies wrongfully disqualified;

– discriminatory conditions in favour of a certain applicant company; 

– failure to adhere to correct procedure;

– direct agreements with certain companies;

– fraudulent claims about the completion of existing contracts;

– defective or forged protocols for the approval of completed work. The list of errors is huge, the auditors also adding that there are multiple instances of:

– direct assignment of funds, where only one applicant has been allowed – for massive amounts over 100 000 leva;

– payment for uncompleted work;

– wrong, improper, and forged documents, or

– documents significantly delayed ,

– start of operation protocols benefiting the implementing company;

– discriminatory conditions;

– lack of coordination of technical requirements, etc.

The audit itself is a record in itself, consisting of over 200 pages of judgments and conclusions. The institutions within the Ministry for Labour and Social Policy obvously worked well since they were able to identify and describe the financial breaches in such a detailed and well-argued form, and with more than enough indicators and examples of corrupt practices on an especially large scale. Some of the breaches described can even be classified as 

crimes related to document fraud and abuse of office.

This is just an excerpt that landed in the auditors’ hands, with the conclusions drawn leading to doubts about the completion of entire projects valued at over 500 million BGN. The scale of the revealed breaches is so large that it is a jeopardy to the EU’s Human Resources Development Operational Program (HRDOP). The Agency for Employment has denied the auditors’ conclusions, but the auditors have accepted almost nothing from the Agency’s claims.

Some examples from the epic audit report uncover data pertaining to monstrous corruption, which has turned into a way of life for the entire system in the ministry, tasked with the most humanitarian mission of caring for the weakest people in our society. Instead of this,

we see a picture being painted of brutal mishandlings of massive financial assets

which is an indication of the bizarre role of a state seized by the mafia.

A couple of random samples from the audit in the Ministry of Labour and Social Policy:

“MB Engineering 2001” Ltd. page 43 Contract for 162 thousand leva, just one candidate invited, incomplete technical specifications, the delivery is allowed to unify their positions. A protocol is created from the beginning of operations, later the candidate is given the opportunity to work more.

“MB Engineering SMR”  – page 34, only one candidate was invited. Totally rigged operation. A contract worth 516 thousand BGN without VAT. Paid despite incomplete work – 3856 BNG Targovishte, 2.3.2 – 3458 BGN, Razgrad, 2.3.3. 6158 BGN,  – Russe.

The Company “MB Engineering 2001” has received 9.5 million BGN from public procurement, primarily from the Ministry for Labour and Social Policy.

There are clear indirect links to circles close to GERB and the network around Borissov

The owner of this priority beneficiary of millions co-owns another company with Stanislav Nedkov (Staki), who has evolved within a short span of time from an MMA fighter to a politician.

“Clima Engineering”, SMR, two contracts in two positions, 66,000 BGN and 132,000 BGN. A protocol was created at the start of operations, later the candidate is given the opportunity to work again. There are no clear technical specifications, which allows the provider to cheat.

ET Perla 2013 –  Galina Alexsandrova. Page 49, assigned directly, lying in the finished product and during its executions.

ET Perla 2013 –  Galina Alexandrova, page 53 –  69,000 BGN, a call for offers, limited conditions for participation, which don’t correspond to the requirements for an auction of this kind. The entire auction is designed to benefit ET Perla 2013.

ET Perla 2013 – Galina Alexandrova, page 56 –  36 thousand leva, assigned directly.  Forklifts, which aren’t being used and are in storage despite their purchase supposedly being urgent when they were bought.

The private company from the town of Lukovit, which is clearly a priority beneficiary of the Agency for Employment, is registered with an average of two employees throughout the years according to the National Social Security Institute (NSSI). How can a company like Perla 2013, whose main area of business according to registration documents is hospitality and family tourism, have the resources and capabilities to win a series of  large public procurement contracts is a question that must be asked to the investigative bodies and the judiciary.

“Siscom Engineering” – Video surveilance, 748,000 BGN, page 57. The prognose price of 750,000 BGN, without the appraisal of an expert whether this is the right prognose amount. A lot of funds are being spent foolishly.

“Siscom” is one of the emblematic winners from public procurement competitions in Bulgaria across all institutions. The total sum of the projects in which the company participated is up to 15 million BGN. The investigation suggests that it is connected with a web of companies close to the infamous casino boss Vasil Bozhkov (The Skull), who is currently hiding in Dubai.

4 years ago “Siscom” gained notoriety with the news that it was chosen, alongside a Romanian company, to make an intelligent system for traffic controll on the Trakia highway. There have been no results on that up to the present moment. A Capital investigation discovered that:

the company is linked to countless public procurement contracts in the country mainly in Sofia,

The company also received money from public funds and according to the investigation the “Siscom” network involves many employees, dozens of other companies and a Cyprus offshore firms.

Siscom Engineering – video surveillance, 669,000, page 51, the procedure is not included in the planned schedule for public procurement, large funds are being spent without a clear purpose.

 “Lead Vision” – video surveillance, 299,000 BGN, page 65. The procedure is not included in the planned schedule for public procurement, many funds are being spent without a clear purpose.  

“Lead Vision” is a part of a network of connected companies including “Siscom Engineering”. “Siscom Engineering – video surveillance, 355,000 BGN, page 69, agreement without prior announcement, for the maintenance of out of warranty video surveillance equipment.

This is sheer robbery.

I sell you something under a contract that does not include maintenance and then I ask for more money to perform that maintenance.

“Stemo Ltd” – 4 million leva, page 72. Printing, copying, scanning, – clear robbery, money is being given away without consideration whether the spending is necessary.

“Stemo” is one of the oldest IT companies in Bulgaria and the beneficiary of more than 130 million BGN on public procurement contracts over the last few years. The company was bought by the mobile operator A1 last year.

“Red star Bull”– cleaning for 1.9 million BGN, page 75 – it’s not clear whether this cleaning was necessary. Activities are generalised and lumped together instead of being split into smaller parts. The company is the only one to benefit. Money is spent foolishly.

“Ciela Norma” AD – 149,000 BGN, page 84, software development for an online labour exchange. Yet another clear robbery.

“Lead Vision” – IT maintenance, 69,000 BGN, page 94.

Another company from the “Siscom” network, a major recipient under suspicious public procurement contracts from the Ministry for Labour and Social Policy. Perla 2013 – Galina Alexandrova, page 97 – 69,000 BGN, for the delivery of doors. It was not included in the plan for the money.

The usual “piggy banks” for money from public procurement including EU funds have been outed as illegal in the audit – they stand out.

Corruption suits us

A new irregularity is added to the audit protocol. The dates on the protocols entered in the Information System for Management and Monitoring of EU Funds in Bulgaria don’t match up with the original protocols. This is done to avoid corrections for the companies which don’t complete the work under their contracts on time. It is pure forgery of the protocols.

The PFIA and the Chief Prosecutor’s office have come out with no corrections and decisive actions against the staggering breeches. Despite the fact several investigations have been initiated, work on them seems to be deliberately stalled with the sole purpose of gaining time so that

the crimes can disappear into the abyss of ubiquitous theft

by those in power and ultimately be forgotten.

Which is absolutely unacceptable from the practical point of view in this scenario, especially when we are talking about embezzlement on a massive scale and suspicions of the abuse of office. Both qualify as crimes under the Bulgarian Penal Code (!).

Presumptions of lawlessness and impunity

When the public finds out about these previously hidden facts, they will inevitably get the impression that there are too many indicators of corruption and fraud inside the public procurement system involving EU funds. And that those funds have often been distributed among certain ‘friendly’ companies. What did the government do and did it take action against those responsible?

in a normal organisation persons would get fired and taken to court.

It’s absurd that the main individuals responsible for the infractions (so far) – the previous CEO of the Employment Agency Dragomir Nikolov and his direct superior, former deputy minister and current minister Lazar Lazarov – are not at all worried about the PFIA investigations, the prosecutor’s inquiry and the internal audit(!):

In cases like these it is imperative that the implicated individuals are released from duty until its conclusion. This didn’t happen with any of the investigations here. Nikolov just returned to his old position – head of the regional division of the Agency for Employment in Russe, whereas the “eternal minister” Lazarov was appointed as head of the entire institution. The resoning for the dismissal of individuals for whom there is serious evidence of crime and coruption is to prevent them from using their position to influence the outcome of the investigations. Sources from within the Ministry of Labour and Social Policy said that 

They not only impeded the search for the truth through their staffing and administrative decisions but key documents within the ministry disappeared or were destroyed.

Employee clearouts and continued embezzlement through public procurement contracts worth dozens of millions can not be challenged by anyone. Such actions would be a serious setback to the success of the investigations, they could make them completely pointless.

Long time workers in the system shared that the main “umbrella” over Lazarov and Nikolov for years was the former GERB regional coordinator and former MP – Plamen Nunev.

Plamen Nunev

Nunev is known as the most powerful man whose approval and blessing is a must for all corruption projects and public finances in the region must pass. Especially those linked to one of the biggest recipients of EU funding, the Agency for Employment.

That is exactly the link behind Dragomir Nikolov’s return as regional head in Russe instead of being dismissed while being investigated and interrogated by the NIS.

Evidence and documents for some of the key checks in the ministry have disappeared and been destroyed(!) Such actions would greatly diminish the likelihood of a successful end to the investigation.

Bivol continues its investigation, because the Ministry for Labour and Social Policy is giving no indication of the existence of a second audit report about the substantial infractions and financial corrections. Bivol’s specific question:

“Are you aware of the existence of a second audit report in the period 2021 – 2022 regarding assigned and completed public procurement contracts in violation of the public procurement law?”

The answer from minister Lazarov was the following:

“In the above mentioned period the internal audit directorate of the Ministry of Labour and Social Policy has carried out an audit (i.e. one – editor’s note) to assess the procedures according to which public procurement was planned and administered by the Agency for Employment.”

Plamen Nunev

As our editorial office is currently in possession of that so far unknown but very interesting and important document revealing the actions of the government institution and its spending of millions of European funds, our investigation will be continued(!)

Bivol’s publications will be coupled with the relevant documents and submitted to the European prosecutor’s office, to be seen by Laura Kovesi. 

(To be continued).

Screenshots and collage: Bivol 

*Updated on 6 April 2023 to include the link to the Ministry of Labour and Social Policy’s right to reply.

***

If you find this article useful, support our work with a small donation.

Pay a Bivol Tax!

We will highly appreciate if you decide to support us with monthly donations keeping the option Monthly

This post is also available in: Bulgarian