Lovech-based businessman Grisha Ganchev is often mentioned in Bulgarian media as “an emblematic figure of Bulgaria’s transition”. The precise meaning of the phrase is open to interpretation, but it is likely no coincidence that the term is often used to refer to those who got very rich during Bulgaria’s transition from communism to a free market economy in the 1990s.
Many such “emblematic figures” are no longer around, their passing aided by an assassin’s bullet – billionaire Ilia Pavlov and banker Emil Kyulev most famously so ¬¬¬– but Ganchev finds himself in a different spot of trouble.
In the last week of May, prosecutors charged Ganchev with organising a criminal group that engaged in value-added tax fraud, as well as threatening to kill the head of Bulgaria’s National Revenue Agency, Krassimir Stefanov.
The first charge came as no surprise, given that just two weeks earlier, Bulgarian law enforcement arrested six people on suspicion of avoiding taxes worth hundreds of thousands of leva, owed for commercial transactions with sugar. Ganchev’s son, Danail, was among the six.
Now Grisha Ganchev himself is being charged with organising the scheme, as well as issuing threats against Stefanov’s life, albeit not directly, rather in a phone conversation with another person.
Ganchev has denied any involvement in the VAT fraud scheme, but has made no effort to deny the threats, caught on tape by law enforcement surveillance, saying instead that the transcript released to the media was not that of one conversation, but separate remarks made during several phone calls.
Ganchev was released on bail shortly after his arrest on May 29, with bail set at a record 500 000 leva.
Describing the case as “a set-up”, Ganchev told local broadcaster Darik Radio on May 31 that he intended to sell all his business interests over the next year and retire. These include the joint venture with China’s Great Wall Motors for the assembly of Chinese cars in Lovech, fuel retail, four of Bulgaria’s six sugar refineries, a number of small hydro-power plants, several hotels, construction and transport companies.
Ganchev had earlier said that he was already ceasing all investment in the Litex Lovech football club (named after his flagship company, Litex Commerce), which won four domestic titles since its acquisition by the businessman in 1996, most recently in 2011. However, his plans to buy a significant minority stake in CSKA Sofia, one of the country’s two most successful and widely-supported clubs, have been relegated in his list of priorities following the charges levelled at him, Ganchev told Darik.
A former wrestler (yet another trait he shares with other controversial business figures from the 1990s), Ganchev became a member of Bulgaria’s Olympic Committee in 2007 and the Bulgarian Football Union in 2009.
In a diplomatic cable on Bulgarian organised crime, dated July 2005, the US embassy in Sofia described him as “one of the first organised crime leaders to use a sports team to launder money, through the Litex soccer team”. Some of his investment in sport was on a national scale, but mainly these were focused, as were many of his other business endeavours, on the Lovech area, which became known as “Ganchev’s town”. Although many local residents did not relish the association, Ganchev’s ventures did provide employment for thousands in one of the country’s areas that were hit the worst by changing economic realities.
It remains to be seen whether Ganchev will go through with his announced intentions to sell off his businesses, but one certainty is that the trial will take years to conclude, given the track record of Bulgaria’s judiciary in such cases. Any sentence is certain to be appealed repeatedly and it is not unlikely that Ganchev might yet walk away without doing any time in prison (much as Hristo Kovachki, accused of avoiding taxes worth 16 million leva, was exonerated by the Sofia Appellate Court on May 29, which overturned a three-year suspended sentence).