Tsvetan Vassilev Obtained “Petrol” against $135 Million Debt

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Ilyumzhinov and Ershov at a press conference at the Sheraton, photo Nikolay Marchenko

Bivol learned from its sources the amount of debt of the only Bulgarian oil company “Petrol” to Corporate Commercial Bank (KTB) – $135 million or 100 million euros.

The exact amount has not been disclosed even once. Some “over 100 million” were only mentioned during a press conference of Russian billionaire, president of the International Chess Federation (FIDE) and ex-president of the Russian autonomy Kalmykia, Kirsan Ilyumzhinov. Mitko Sabev managed to borrow that amount from KTB for the investment program of “Petrol” and for Football Club “Chernomorets.” According to Denis Ershov, Sabev lost most of the money of the oil holding in recent years through bets on the Stock Exchange.

The issue at stake is about 135 million U.S. dollars, which equals about 195 million levs (100 million euros). The amount includes the company’s debts, which, according to information from Bivol’s source, wishing to remain anonymous, were used for “private needs” as well as individual expenses of current CEO, Mitko Sabev.

Moreover, these expenses include the 5 million euros for impostor Sergei Baturin (as the PIK agency reported, Tsvetan Vassilev has given 5 million euros to take over “Petrol”), whose task was to show forged certificates and transfer money to the investment fund Wealth Standard Limited, which, according to various data, is associated with KTB and Tsvetan Vassilev. The banker, himself, denies any connection with the affair “Petrol” (“Tsvetan Vassilev Denies Involvement in the Pillage of “Petrol” – editor’s note), and with Mitko Sabev, to whom he granted a loan.

VTB ashamed of KTB?

The PIK agency (author Nikolay Marchenko) wrote that the management of the leading Russian state bank “Vneshtorgbank” (VTB) in Moscow no longer likes Tsvetan Vasilev’s hyperactivity regarding “Petrol Holding,” which for one year now remains in the process of being acquired by Kirsan Ilyumzhinov.

According to imposter Sergei Baturin, whose words were recounted by minority shareholders in “Petrol,” Alexander Melnik and Ilyumzhinov’s assistant, Magomethan Gamzathanov – Khan, Tsvetan Vassilev, as creditor Number One of “Petrol,” through KTB, funded the affair with counterfeiting the temporary certificates of ownership of shareholders Denis Ershov and Alexander Melnik in favor of current shareholders, Mitko Sabev and Orlin Todorov.

Ilyumzhinov – Putin’s envoy to Oresharski?

The ex-president of Kalmykia from the ruling party “United Russia,” Kirsan Ilyumzhinov, is personally close with President Vladimir Putin. Subordinates of Ilyumzhinov claim that their boss would accompany Putin in Bulgaria during a possible visit by the Russian Head of State. During protests #DANSWithMe, Mr. Ilyumzhinov has been in the country to meet with Prime Minister Oresharski in the summer state residence Euxinograd, Bivol learned from its sources. It emerged later that from favorite, Tsvetan Vassilev has become a “thorn in the side” of the Russians. (PIK wrote: “Tsvetan Vassilev Irked Moscow”.)

His effort to regain in any way possible the money invested in “Petrol” just irritates Moscow – senior officials in VTB and “Gazprom” are well informed about his attempts to take over the company from Denis Ershov and Alexander Melnik through Mitko Sabev and Orlin Todorov. According to sources familiar with the situation, in this sense, banker Vassilev is in a “very complicated situation.” Thanks to the caretaker government of Marin Raykov, the State started to withdraw from KTB the money of the companies from the Bulgarian Energy Holding (BEH), which has already led to somewhat “serious liquidity problems for the bank.”

It is even believed that if Moscow or London do not help with another acquisition of a Bulgarian company, obviously Tsvetan Vassilev will be then forced either to sell part of his assets, or seek a loan from his friends in Oman – millionaires from the state fund of the Sultan, who according to people familiar with the situation, cooperate with him at the insistence of the lifetime honorary chairman of the Movement for Rights and Freedoms (DPS), Ahmed Dogan.

Shares in offshore companies…

The coming to power of the Bulgarian Socialist Party (BSP) and DPS in May 2013 further helped the majority shareholder in KTB and his “client” Mitko Sabev. According to Gamzathanov, Sergei Baturin not coincidentally heard from Mitko Subev assurances that “nothing will happen to him” because “with Tsvetan Vassilev”everything is bought, including police, investigators and judges.”

Sergei Baturin received 5 million euros for the transfer of shares, by falsifying certificates of shareholders Denis Ershov (47.5%) and Alexander Melnik (5%), to the offshore company linked by some media, (such as “Capital”), with KTB . Though prosecution, after a one-year investigation (see Kommersant, January 29, 2013), proved fraud and a court issued a rule, shareholders and the new owner, Kirsan Ilyumzhinov, still have not managed to take control of the company.

Meanwhile, according to estimates of the Russian monopoly “Gazpromneft,” the price just for the network of gas stations of “Petrol” in the country reaches 400 million euros (LiveBiz wrote: “Gazpromneft Can Buy the Stations of “Petrol” for € 400 million). There are about 400 such gas stations at a cost of about 1 million each, according to information from the magazine’s correspondent in Sofia. But because of the court liens and large debts, in 2010, the Russian company (which is now already entering the Bulgarian market through its Serbian subsidiary NIS Petrol) backtracked and began buying small gas stations.

The renowned Russian business newspaper “Kommersant” wrote last year that the assets of a company such as “Petrol” cannot be less less than $1 billion (1.40 billion levs). The price was mentioned as indicative by an expert before the publication.

The interest of KTB is clear. By taking control of “Petrol” as major creditor, it is trying to acquire a company with assets, which, according to different estimates, are between 3 and 6 times more expensive than the debt (the practice in Bulgarian banking and credit institutions is to have the loan for years to come and with the famous “preferential rate” of KTB, not one time for 195 million levs). It means “to buy a company for a billion” with less than 100 million. This “American Dream,” for which in the U.S. they can only aspire, is possible in Bulgaria.

In “Petrol” – an expensive cell phone business…

One of the most absurd stories in the saga “Petrol” relates to personal expenses of its managers. It is known that Mitko Sabev drives a Bentley, and according to Denis Ershov, he has 27 business cell phones. (“The “Petrol” Boss’ Raked a Cell Phone Bill of 150 Grand under Ilyumzhinov’s Name”)

Kirsan Ilyumzhinov, himself, during his last visit to Bulgaria, told a story how a director in “Petrol,” raked a bill of 150 000 levs for his cell phone. The most amusing thing is that the phones have been registered under the name of Ilyumzhinov, who, apparently, has not yet set foot in the offices of his company. The scheming director used three cards through contracts made with “Petrol’s” money under Ilyumzhinov’s name.

The Russian politician complained to journalists that during his entire life he earned money for only one phone, but directors of the company have a minimum of three: “Now I understand why everyone is so pressed to work in “Petrol.” People have good employment benefits! See how my work was assessed; I have only three cell phones, some have a lot more!”

The cost of mobile calls is listed as example of mismanagement and corruption committed by the previous management of “Petrol,” controlled by Mitko Sabev. (“Denis Ershov: Mitko Sabev Steals not only from “Petrol,” but from Chernomorets”).

Kirsan Ilyumzhinov even suggested to journalists to go with him and make an audit of his assets in “Petrol.” “Let’s see who has how many phones?”

The former President of Kalmykia assures media and representatives of the Board of Directors of “Petrol” that the new management “does not intend to sell assets, but to restore the company.” According to him, he already sealed an agreement with Vagit Alekperov, president of the leading private Russian oil company “Lukoil” and the head of “Lukoil Bulgaria,” Valentin Zlatev.

He also promised to pay off debts of Mitko Sabev to banker Tsvetan Vassilev. Just before the completion of the deal, scheduled for December 16, it, however, became clear that the shares were again stolen through machinations, according to information from one of the victims in the case, a co-shareholder Denis Ershov. It is suspected that they went to the creditor KTB , which already controls Mitko Sabev’s shares (a journalistic check is complicated because court judgments, together with prosecution orders, alternate and interrupt each other for several years now – editor’s note ).

Where did the money come from?

Kirsan Ilyumzhinov, himself, is hardly afraid of Tsvetan Vassilev, as he manages assets exceeding $10 billion through his Swiss company Credit Meditaranee, which is the buyer of “Petrol”. Recently, the head of FIDE also received assets from Chinese investors for about $5 billion. Not surprisingly, Ilyumzhinov promised to implement a recovery program in “Petrol,” as Denis Ershov promised to be his advisor without salary – this happened at a news conference in hotel “Sheraton” in the Bulgarian capital (see photo – editor’s note).

According to Russian press, and especially the newspaper “Vedomosti,” Kirsan Ilyumzhinov is more of an investment mediator and diplomat than direct investor. Kirsan Ilyumzhinov, himself, both in interviews for Nikolay Marchenko and for Russian media, such as “Kommersant,” denies that a quick resale to the Russian state monopoly was his purpose (these options are concocted by Yukos, “Rosneft,” or a powerful corporation with dominant state ownership “Gazpromneft”) or to another foreign strategic investor.

The resources of Chinese businessmen, for example, will be used for “acquisition of European companies from partner companies, legal entities and natural persons,” i.e. in theory “Petrol” could be bought by a subsidiary of Petrochina for a price not lower than the one offered so far.

Who will ultimately play for “Petrol”?

According to the Russian business newspaper “Vedomosti” (edition of The Financial Times Russia – editor’s note), partner oil company “Lukoil” could become one of the investors in the consolidation of the assets of “Petrol” (see Vedomosti: “What Is Kirsan Ilyumzhinov Working On? – editor’s note).

Information that the leading Bulgarian oil company (which, according to Kirsan Ilyumzhinov has the potential to be “leading the Balkans” – editor’s note) could be acquired by “Lukoil” was refuted by its representatives – the explanation boils down to antimonopoly legislation as “Lukoil Bulgaria” and “Lukoil Neftohim Burgas” already have a “dominant position” on the fuel market in the country.

If “Lukoil” makes such attempt to acquire “Petrol,” the deal would have to encounter the Commission for Protection of Competition (CPC) and the company can be sanctioned as a monopolist. “Lukoil” does not need such scenario.

However, leading energy corporations and companies in Europe: the Russian “Gazpromneft” (trough Serbian NIS Petrol), the Azeri state company SOCAR (it recently bought the gas operator in Greece) and the Kazakhstan state “KazMunaiGaz” (which bought a few years ago Rompetrol in Romania) are also among the interested potential strategic (rather than financial / portfolio) investors in “Petrol.”

All roads lead to the Kremlin

“Have you seen the Indian god Shiva? He has ten hands, not two as you and I. So I imagine that the Kremlin has ten hands like Shiva! And each one of them wants to eat,” quote from the Russian film “Oligarch” (1998).

In this regard, Bivol only mentioned links already known to the public, and according to sources around “Petrol,” from the economic and political circles in the country.

Former owner Mitko Sabev is controlled by his creditor Tsvetan Vasilev (Chairman of the Supervisory Board of KTB), which in his words is “advertiser” in the media of the MP from DPS Delyan Peevski. With which camp the government of Oresharski is in greater cooperation is a matter for political scientists, but the active cooperation of KTB with the “Bank of Putin” VTB is a fact.

It is difficult to say with whom Kirsan Ilyumzhinov is friends – with ex-President Georgi Parvanov, with ex-Prime Minister Boyko Borisov or the current Prime Minister Oresharski, whom he visited in the hot summer of protests in Euxinograd. In Russia, he is tipped as equally close to Putin’s “United Russia,” and to the Deputy Prime Minister for Energy Arkady Dvorkovich, representing the more liberal circle of power formed around Prime Minister Dmitry Medvedev, according to unconfirmed reports in leading Russian business publications.

An interesting research question is whether the Bulgarian branch “Yukos Petroleum Bulgaria,” as “Petrol Holding” JSC was named until 2004, appears in the assets that Russian oil monopoly “Rosneft” usurped after the arrest of Mikhail Khodorkovsky (2004) and the nationalization of Yukos? According to Denis Ershov, Mikhail Khodorkovsky and his partner Leonid Navzlin “left” him the “meager” for that time liabilities of $7-8 million. Ershov alleges that the assets then have reached 1-2 billion dollars, because there was an idea of also having operating branches of “Yukos Petroleum” in Hungary and Romania.

Whether the release of Khodorkovsky will affect the fate of “Petrol;” whether his refusal to file financial claims could mean that the only Bulgarian oil company will be consolidated by yet another Russian energy monopoly – “Gazpromnelt” related to close to the Kremlin “Friends of Puti “or “Rosneft” in whose boards Putin’s “shadow right hand” is a member – the almighty Deputy Prime Minister for Energy and author of the operation “Yukos”- Igor Sechin? Namely “Yukos” was the beginning of consolidation of power in Russian state and close to the power structures.

Copyright material of economic journalist Nikolay Marchenko correspondent of “Kommersant” in Bulgaria.


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