Owners of Bulgarian media group indicted on charges of money laundering

Lyubomir Pavlov and Ognyan Donev, the two Bulgarian businessmen that own the country’s two top circulation dailies, Trud and 24 Chassa, have been indicted on charges of money laundering. Separately, Pavlov faces charges of document fraud.

Prosecutors also plan to impound the accounts of the two businessmen, Sofia city prosecutor Nikolai Kokinov said on June 13.

The charges stem from the controversial transaction in March 2011, when the duo acquired control of Media Group Bulgaria Holding. Previously, Pavlov and Donev were minority partners in a group that acquired the publisher from Germany’s Westdeutsche Allgemeine Zeitung (WAZ) in December 2010.

The two had raised the bulk of the funds for the purchase, reported to have cost in the 50 million euro to 60 million euro range. Only Pavlov owned a minority stake, the bulk of the shares held by an Austrian-registered vehicle owned Karl von Habsburg, Bulgarian businessman Hristo Grozev and Daniel Rutz, described at the time as a German financial expert.

On March 27 2011, a notary confirmed the transfer of 83 per cent in the publisher from BG Printmedia (the publisher’s parent company) to Donev, and then the transfer of 40 per cent from Donev to Pavlov. The first transfer was authorised by Pavlov, one of the two managing directors of BG Printmedia, who used a power of attorney letter from Grozev to authorise the deal. Grozev said later that he had no knowledge of the transfer and would not have authorised it if he knew about it.

The justification for the initial transfer, as shown by paperwork filed with Bulgaria’s Registry Agency, were loans extended by Donev personally and a company he controls to BG Printmedia, secured with shares in the media group.

This transaction started a protracted battle for control, with Grozev and his partners securing a court order in October 2011 that gave them a “special representative” seat on the publisher’s board, whose approval would be required for any major decision.

Grozev and his partners threatened litigation against Donev and Pavlov, but it is not clear whether they have lodged a lawsuit prior to the prosecution’s indictment. The indictment itself came only three days after a competing daily published by Tosho Toshev – the long-time editor-in-chief at Trud who was phased out by Donev and Pavlov following their acquisition of the title – ran a story based on an alleged wire-tap that had Pavlov saying that any prosecutors who pressed charges against him would find their career advancement prospect stymied.

Pavlov has denied the veracity of the transcript, calling the tape a “forgery and manipulation” and said that the charges against him and Donev were in retaliation for participating in a Bulgarian media freedom panel in the European Parliament earlier this month. Pavlov said he was threatened before the panel and claimed that prosecutors were paid off one million euro to prosecute him and Donev.

On June 13, Kokinov said that Pavlov was yet to present proof that the prosecutors have been bribed. “I am still hearing accusations in the media, but at this point I see no reasons for us to launch an investigation,” he said.

Prosecutors had not ordered wire-taps on Pavlov and Donev, so the published transcript was likely a private affair, but prosecutors would nevertheless investigate whether the recording had been tampered with, Kokinov said.

(Photo: datarec/sxc.hu)



Alex Bivol

Alex Bivol is the Deputy Editor-in-Chief of The Sofia Globe.