Bulgarian financial watchdog asks prosecutors to investigate former ministers

Written by on September 13, 2013 in Business - No comments

The chairperson of Bulgaria’s Financial Supervision Commission (FSC), Stoyan Mavrodiev, has said that the regulator has asked prosecutors to investigate two former ministers and an investment brokerage, alleging that their actions in the sale of the state’s minority stake in a power distribution company has caused damages worth 87 million leva to the Bulgarian state.

In an interview with Austrian newspaper Der Standard earlier this week, Mavrodiev said that following a year-long investigation, the FSC asked the prosecutor-general to investigate former finance minister Simeon Dyankov and former economy minister Traicho Traikov, as well as Bulbrokers brokerage, in relation to the sale of the state’s 33 per cent stake in the two Bulgarian subsidiaries of Austrian utility EVN.

EVN paid about 90 million leva in two separate auctions on the Bulgarian Stock Exchange on December 21 2011, increasing its stake in the electricity transmission subsidiary to 97.75 per cent and its stake in the power distribution unit to 99.73 per cent, the company said at the time of the sale.

Mavrodiev told Der Standard that that “stock market manipulations” resulted in the state getting a price below the market value, but gave no further details about how exactly the market was manipulated. He did not level any accusations against EVN, which acquired the bulk of the shares.

Asked by Bulgarian National Television on September 12, Mavrodiev declined to comment further on the issue, saying that “there are other institutions that have to do their job from here on.”

Bulgarian news website Mediapool.bg reported on September 13 that the prosecutor-general’s office confirmed receiving a request to investigate the circumstances of the sale and that the case has been assigned to the Sofia City Prosecutor’s Office.

Commentaries in Bulgarian media interpreted Mavrodiev’s interview as a two-pronged attack – both against Dyankov (some reports said that Mavrodiev felt slighted that he was overlooked for the portfolio of finance minister when centre-right party GERB won the elections in 2009, which went to Dyankov instead) and against Bulbrokers owner Ivo Prokopiev.

Prokopiev also owns a Bulgarian newspaper, which alleged, in articles earlier this year, that Mavrodiev had represented two offshore companies that were alleged to have laundered funds for Evelin Banev, alias Brendo, sentenced to 20 years in Italy for drug trafficking and, in another trial in Bulgaria, to seven and a half years in jail for laundering money from illegal drug deals.

Mavrodiev denied being implicated in any way and prosecutors later dropped their request to have Mavrodiev heard as a witness in the court action.

Prokopiev said that the price paid for the minority stake in EVN’s subsidiaries was above the minimum threshold set by the government at the time and that the public offering prospectus, drafted by Bulbrokers, had been approved by the FSC and Mavrodiev.

Prokopiev said in a statement that Mavrodiev was using the regulator to put pressure on the media in order to “cover up the fact that, years ago, as a lawyer for offshore entities, he was involved in operations to launder money from drug trafficking.”

(Stoyan Mavrodiev. Screengrab from Bulgarian National Television)

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